Strategic Planning for Construction Contractors - Unwound
I have witnessed several strategic planning attempts which have resulted in many successes and a few failures. From afar and with discussions with construction contractors (some of which are clients of mine), I have summarized my observations and subsequent analysis of strategic planning efforts in construction contracting companies below.
1) If a consultant is utilized to facilitate this effort, make certain he or she has the following characteristics:
a. Construction specific experience. Generalists will use overall business models and concepts that may guide you to an inefficient and ineffective plan. Our construction contracting business is unique.
b. Not a recent ex-contractor. He or she may be too close to and have to much experience in the construction industry to be objective.
2) Make certain past efforts are considered in the process. A contractor's failures as well as successes show where a company should concentrate their efforts.
3) Give the potential directions time to air out in between meetings. Enthusiasm is great in the implementation of the plan but, can lead to errors in the creation of the plan.
4) All strategic directions have to be vetted against potential financial performance. Be conservative in your projections as money is the only barrier here between you and bankruptcy.
5) Always consider what reactions your competitors will have. Competitive moves against you have to be planned for as your peers will react against your preliminary directions. As a side note, the most fun you can have in strategic planning is watching your competitors react, squirm and generally blink at your moves.
6) Your people's skills have to drive the plan. As an example, if they aren't capable at promoting and selling the services of a new business unit, don't ask them. Additionally, be very careful in hiring a new manager to lead that effort. Statistically, the odds are that the new employee will not work out.
7) Acquiring another business can be very efficient in construction contracting. There are always construction companies who are excellent in their technical skills, but are mediocre in their business processes. Sometimes, this company is open to merge with your firm. In the end, everyone is happy as the office headaches are taken over by you while your firm acquires a new higher margin skill set.
8) Big Hairy Ideas (BHI) are exciting but, very long term in nature. To think of a great idea is more fun (entrepreneurial) but, to execute is less fun (process). These kinds of new directions can take between 18 months as in computer software and new service offerings and 5 years as in people.
Strategic planning is a key planning process for an established, mature firm. If yours is a young firm, it will be something to consider in the years ahead. Keeping this process from collapsing due to missteps (of which there are hundreds) is controllable. Not performing strategic planning will certainly eliminate this possibility but, then you will be stuck with a company driven by markets, customers, suppliers and other outside forces rather than by you and your knowledgeable staff. We firmly believe strategic planning must be done by any firm who wants a long and certain future.
For more information on this critical subject, purchase a copy of my McGraw-Hill book, Managing a Construction Firm on Just 24 Hours a Day. We offer a bundle with Excel templates that are featured in the book and 5 on-line courses to help teach construction business concepts. Go to www.stevensci.com and click on the book link
Our workbook companion with 10 case studies is titled, The Business Management Workbook for Construction with Case Studies is now available.This text is focused as an assist for Colleges, Associations and Contractor Training Programs that teach the business of construction.
My next book, The New Business Model of Construction Contracting is planned for December 2007. Its focus concerns the changing construction environment and what processes address those changes.
Matt Stevens is President of Stevens Construction Institute, Inc. A management consulting firm which works only with construction contractors. Learn more at www.stevensci.com. Take a free course at www.constructioncbt.com and sign in as a new student.
