"Construction companies have to be fleet footed to take up new opportunities, while at the same time ensuring the company can work through the lean times."
The construction industry can rapidly change, with work becoming scarce, and work opportunities in some areas expanding while they shrink elsewhere. Construction companies have to be fleet footed to take up new opportunities, while at the same time ensuring the company can work through the lean times.
One construction company I worked for had different divisions specialising in building, roads and concrete and operated across all regions in the country as well as in other countries. These divisions and operations willingly shared resources, and when one area or construction division was booming they used resources from other divisions that were languishing. This cooperation and sharing of construction resources enabled the company to almost continually have enough work for all of it's resources and to operate profitably.
"It's essential to have good knowledge of your market so you anticipate changes before they happen."
The key though, is to anticipate downturns in the region or construction sectors in which you operate. This means you need to have good market knowledge. In anticipation of a downturn you can avoid taking on additional staff, don't buy new construction equipment, build up cash reserves, look at diversifying to markets that won't be as negatively affected by the downturn and most importantly adjust margins on tenders in anticipation of a more competitive market and look to securing long duration projects that will get you part way through the downturn.
"Downturns in the construction industry often offer a chance to get rid of some deadwood."
Operating in a downturn may present opportunities to dispose of old, less efficient equipment. It's also often an opportunity to get rid of poor performing staff. The company needs to look at reducing costs, improving productivity and negotiating with subcontractors and suppliers for better deals and discounts.
Paul Netscher has written several easy to read books for owners, contractors, construction managers, construction supervisors and foremen. They cover all aspects of construction management and are filled with tips and insights.
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The opinions expressed in the attached articles are those of the writer. It should be noted that projects are varied and different laws and restrictions apply which depend on the location of the contractor and the project. It's important that the reader uses the supplied information taking cognisance of their particular circumstances. The writer assumes no responsibility or liability for any loss of any kind arising from the reader using the information or advice contained herein.
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