Contract documents

May 29, 2024

Success doesn’t just happen; there’s a plan around it. There’s a plan that says even when things don’t go as calculated, there are checks, balances, and contingencies in place to keep the plan moving forward. Planning leads to success in life and business, where often, anything and everything can go awry. In business, things happen; the kind of things that can derail the path toward success, and how the person leading the charge recovers determines whether or not their vision will survive.

All businesses have challenges, but the argument can easily be made that none are as challenging as working in construction, more specifically, being a contractor. For those looking to be successful, there are several critical factors including the following.

1. Understanding the importance of sound financial management: Accounts receivable, accounts payable, budgeting, forecasting, and anything else found under this heading, a contractor must have a firm handle on each. Accounts receivable ensure enough cash flow to finance opportunities and keep the business afloat. Payables keep relationships solid, relationships that provide lines of credit, loans, and factoring solutions. Attention to detail is essential in every financial silo as they’re often intermingled and play a tremendous role in the success of a construction contractor.
2. Infusing technology into the workplace: Technology finally found its way into construction and it’s not going anywhere anytime soon. In fact, the construction industry has only scratched the proverbial surface when it comes to the myriad of ways technology can be infused into the business model. Some organizations are stuck on paradigms, opting for the tried-and-true methodologies that have long defined the industry. With each passing year, those methods become less and less prevalent, replaced by state-of-the-art construction software solutions simplify the life of a contractor, while making the road to success easier to navigate.
3. Embracing customer service: Customer service is a never-ending commitment to satisfying the needs of the most critical piece of any business model: the customer. Customers are why businesses exist, which means making their welfare a priority should be top of mind for every construction contractor. Customer service is a mindset, an investment, and an essential part of any construction contractor’s long-term strategy for success.
4. Building a diverse portfolio: Diversity is one way a construction contractor can ensure they’ll always be busy. If that diverse portfolio is managed correctly, it’ll also ensure their success. Construction contractors who can work on different types of projects are well-positioned for success. Even in the lean times when the industry is unstable, versatile contractors are always busy. A key point for contractors to remember is even though diversity is a great trait, they should make sure the projects meet deadlines without straining the financial model or interfering with other opportunities.
5. Sweating the small stuff: In business, especially if you’re a construction contractor, details matter. Making sure the books are balanced, staff are in the right place, suppliers are being paid, and several other often overlooked things are the difference between contractors survive, and the ones who thrive.
6. Keeping the brand in mind: Construction contractors should be aware that not only are they building commercial offices, homes, schools, and other structures; they’re also building brands. They’re also building brands and how they treat their customers, the efficiency of their operations, how they build relationships, all of these things and more factor into building a reliable construction brand.

A lot goes into being a successful construction contractor, and it’s not a one-size-fits-all dynamic. It’s incumbent upon each party to find the recipe that works for them, revisit when necessary, and be diligent in their pursuit of success. If a contractor uses technology, it’s crucial to keep embracing it and infusing that philosophy into their staff. Details and numbers matter, regardless of how large or small an operation they’re in charge of leading. Leaders should preach diversity in their portfolio makeup, always being mindful of how their decisions shape the corporate brand. Success doesn’t just happen; with proper planning, any construction contractor can reach that space.

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AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.