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Well Built
Book

Well Built

How the Top 2% of Construction Contractors Create Superior Value, Profits, and Excellence

Advantage Media Group, 2024
First Edition: 2024 more...

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8

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Recommendation

The construction industry faces challenges from forces beyond its control – interest rates, supply chain logjams, and tariff policies among them. And even without those wildcards, running a contracting firm is a maddeningly difficult enterprise with low margins and constant stress, writes consultant Chad Prinkey. The average margin for general contractors is a paltry 1.5%. However, Prinkey asserts, executives who invest in building an excellent construction operation can do much better than that. Here, he provides a road map for contractors who want to take their company to the next level.

Summary

A small percentage of construction companies outperforms their peers.

Construction is a difficult business that operates at the mercy of boom-and-bust cycles. As a result, many contractors are reluctant to invest too heavily – they know lean periods could force cutbacks almost any time. Even in the best of times, construction companies operate on thin margins. A bidding process that pits contractors against one another amplifies this reality.

Labor shortages pose an additional challenge. Young workers aren’t entering the trades, and US construction employers often turn to undocumented labor to fill their workforce needs. The challenges don’t stop there. Contractors often struggle to market themselves in sophisticated ways, and the industry lags in harnessing technology to develop innovative ways of working.

These challenges mean that most construction companies don’t post high profits. The typical general contractor has a profit margin of only 1.5%, while the average specialty contractor can expect around 6%. The good news is that the top 2% of construction companies produce profit margins that are four times the industry average. While some economic sectors...

About the Author

Chad Prinkey, the founder of Well Built Construction Consulting, hosts the podcast The Morning Huddle Construction Show.


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