Construction Business Management What Every Construction Contractor, Builder and Subcontractor Needs to Know

by Ganaway, Nick B.

• ISBN13: 9780876298251
• ISBN10: 0876298250
• Edition: 1st
• Format: Paperback
• Copyright: 2006-10-06
• Publisher: RSMeans

Summary

Only 43% of construction firms remain in business after four years. Help your company not only survive, but thrive-with guidance from a pro with 25 years' experience as a successful commercial general contractor. Find out what it takes to build all aspects of a business that's profitable, enjoyable, and enduring.

Author Biography

Nick B. Ganaway started and then operated his own construction business for 25 years. Prior experience includes several years as a construction manager for Shell Oil Company. He has a degree in industrial engineering from the University of Texas at Arlington. Nick lives in Atlanta, Georgia, where he currently consults with contractors and other small business owners. You may visit his Web site at:

www.constructionbusinessmanagement.com

Table of Contents

Preface: What you can learn from this book	p. xiii
Acknowledgments	p. xvii
Do you have what it takes?	p. 1
Essential traits	p. 2
Initiative	p. 2
Passion	p. 2
Stress tolerance	p. 3
Reliability (follow-through)	p. 3
Willingness to work while others play	p. 4
Unyielding positive attitude	p. 4
Mental toughness	p. 4
Attention to detail	p. 5
Sense of urgency	p. 5
Self-control	p. 5
Thirst for knowledge	p. 5
Ability to get along with others	p. 6
Your role as owner of your construction firm	p. 7
Leadership (Setting the course)	p. 7
Vision to reality: The required path	p. 9
Leaders and managers are different from each other	p. 10
Tame the ego	p. 10
Leadership in times of uncertainty	p. 11
Manager vs owner/shareholder	p. 14
The entrepreneur mindset	p. 15
Managing risk	p. 16
Establishing your corporate culture	p. 17
Striving for excellence	p. 19
Hiring the right people	p. 20
Knowing your industry	p. 21
Coordinating resources	p. 23
Keeping in touch	p. 24
Being there	p. 25
Identifying objectives	p. 25
Measuring results	p. 25
Marketing	p. 26
Little habits with big payoffs	p. 26
Getting involved	p. 28
Sales, marketing and business development	p. 29
Marketing materials	p. 30
Publicity	p. 32
Proposals and presentations	p. 32
Staying ahead of the pack	p. 33
Impressions	p. 33
New customers vs old	p. 34
Reaching out	p. 35
Data mining	p. 35
Creating customer loyalty	p. 37
Budget	p. 38
Quality	p. 40
Relationships	p. 41
Schedule	p. 43
Business considerations	p. 45
The corporation	p. 45
Capital equipment	p. 46
Purchasing	p. 47
Collection	p. 48
Dealing with the IRS	p. 49
Contractor failure	p. 51
Controlling your finances	p. 55
Working capital	p. 55
Projecting cash needs	p. 56
Understanding financial statements	p. 57
Dishonest employees	p. 57
Where is the money?	p. 58
Bidding	p. 59
Qualifying to bid	p. 60
Approach to bidding	p. 60
Pricing	p. 61
Cost databank	p. 62
Pre-bid site inspection	p. 62
Warranty considerations	p. 65
Compiling your bid proposal	p. 65
Reverse bidding/auction	p. 67
Building it	p. 69
Registration and licensing	p. 69
Environmental studies	p. 70
Subcontracting the work	p. 70
Photographs	p. 71
Pre-construction meetings	p. 71
Before you start a project	p. 72
Project overhead/general conditions expense	p. 73
Managing project overhead/general conditions cost	p. 75
Warranties	p. 76
Mechanic's liens	p. 7
Lien waivers	p. 78
Closing out the project	p. 79
Accounting and record keeping	p. 81
Certified public accountant	p. 81
Audited financial statements	p. 82
Bookkeeper	p. 82
Cash vs accrual accounting procedures	p. 83
Percentage of completion vs completed contract reporting	p. 83
Percentage of completion method	p. 83
Completed contract method	p. 83
General and administrative expense	p. 84
Fixed vs controllable G&A expense	p. 84
Cost accounting	p. 85
Financial statements	p. 86
The income statement	p. 87
The balance sheet	p. 87
Reports	p. 88
Billings	p. 90
State sales tax	p. 90
Contract terms and conditions	p. 93
Types of agreement	p. 94
Requirements for a binding agreement	p. 95
A few generalizations about contracts	p. 96
Know the project owner	p. 96
Getting paid	p. 97
Commencement/completion dates	p. 98
Owner delay	p. 99
Contractor delay	p. 99
Changes in the work	p. 100
Constructive change	p. 102
Differing conditions (Changed conditions)	p. 102
What to do upon discovering differing conditions	p. 103
Insurance	p. 105
Indemnification	p. 106
Warranty obligations	p. 106
Limitation of liability	p. 106
Governing law	p. 107
Dispute resolution	p. 107
Contract termination by the owner	p. 108
You and your employees	p. 109
Who are the "right" people?	p. 110
Hiring the "right" people	p. 111
Good hiring practices	p. 112
The interview	p. 113
New employee orientation	p. 114
Non-compete non-disclose agreement	p. 115
Managing employees for the long term	p. 116
Relationships	p. 116
Autonomy	p. 118
Recognition	p. 118
Employee's return on investment	p. 118
Employee incentive plans	p. 119
Benefits packages	p. 120
Trust	p. 120
Work/life balance	p. 121
Work fulfillment	p. 121
Training	p. 121
Job security	p. 122
Internal conflict	p. 122
Openness and communication	p. 122
Responsibility vs job description	p. 123
Evaluating employee performance	p. 124
Employee termination	p. 125
Conducting the termination meeting	p. 126
Employee handbook	p. 127
Professional employer organizations	p. 129
You and your subcontractors	p. 131
Independent contractor or employee?	p. 132
Subcontractor qualification checklist	p. 133
The contractor-subcontractor agreement: Special considerations	p. 133
Pass-through or flow-down clause	p. 134
Scope of work	p. 134
Work as directed	p. 135
Changes to the subcontract	p. 135
Conditions for payment to subcontractor	p. 135
Pay-if-paid	p. 136
Delay damages	p. 137
Retainage	p. 137
Calculation of payment amount	p. 138
Terms for final payment	p. 138
Indemnity	p. 138
Termination for convenience	p. 139
Subcontractor default	p. 139
Notice of default	p. 140
Cure	p. 140
Contractor alternatives	p. 140
Continuation of performance	p. 140
Dispute resolution	p. 141
Termination of subcontract	p. 141
Merger	p. 141
Banking and finance	p. 143
Your business plan	p. 144
Sources of financing	p. 144
Borrowing criteria	p. 146
Managing credit	p. 146
Insurance and bonds	p. 149
Insurance	p. 149
Worker's compensation insurance	p. 151
Employer's liability insurance	p. 152
All-risk builder's risk insurance	p. 152
Commercial general liability insurance	p. 153
When a loss occurs	p. 155
Insurance administration	p. 156
Certificates of insurance	p. 157
Waiver of subrogation	p. 158
Construction surety bonds	p. 158
Specializing in chain store construction	p. 161
Improved profit potential	p. 163
Continuing relationships	p. 164
Chain operators favor niche contractors	p. 165
Fewer parties in the mix	p. 165
Reliable cost database	p. 166
Reduced risk	p. 166
So why are so many contractors missing out on the chain store niche?	p. 167
A note about the construction industry as a whole	p. 167
If you're just getting started...	p. 171
Useful Web site links	p. 179
Regional cross reference of construction-related organizations	p. 181
Potential questions for interviewing job applicants	p. 183
Glossary	p. 189
References	p. 195
Index	p. 197
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