Construction management business plan for starting your own company

As long as humans continue to live in houses, the construction industry cannot go out of business. This business plan for construction company sample is being made to make it possible to start a construction management business that can be beneficial. Continue to read this document if you want to know how to open a construction company that can make you serious money.

Strategic management is one of the key factors that are needed to make any construction business a success. If you lack this, the company will not survive for long, let alone being profitable. This construction company business plan will focus on all areas that are important in making a construction company a success.

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Executive Summary

2.1 The Business

Tyler Constructors will be a registered and bonded company based in and operating from Atlanta, Georgia. The funds needed for starting up a construction company will be provided by Tyler Corleone, an Italian Engineer who has been in the construction business for some 25 years now.

2.2 Management of Construction Management Company

If you want to know how to start a construction management business, the most important thing for you to learn is the management of the company. Construction is a complicated field and if the management is not handled the right way, it can never be profitable.

Tyler Constructors will be headed by Tyler Corleone. He will hire 3 managers for operations, liaison, and contracts. 2 Engineers will also be hired to run the actual construction work. All the managers and the engineers will be answerable to Tyler and will be required to bring any important matter to his notice as soon as possible. Now, let’s see how to write a business plan for investors to get funds for a construction management business,

2.3 Customers of Construction Management Company

The customers of this business will also pretty much the same as those of an interior design business plan. The main customers will include:

  • Private clients.
  • Corporate clients.
  • Government agencies.
  • Non-profit bodies.

2.4 Business Target

The answer to the question: how to set up construction company cannot be complete without setting the business targets. The targets of Tyler Constructors are:

  • Starting to make a profit of $36,000 a month after three years.
  • Becoming the leading construction management company in Georgia in 5 years.
  • Expanding to at least two more states by the end of year 10.
Construction Management Business Plan Sample - 3 Years Profit Forecast
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Company Summary

3.1 Company Owner

The owner is one of the most important aspects of any construction project management plan example. The owner of this company will be Tyler Corleone. He is an engineer with extensive knowledge and experience in the field of construction project management. He is also the one arranging funds for this venture.

3.2 Why the Construction Management Business is being started?

Tyler is starting a commercial construction company because he has seen a lot of potential in the field. He has been associated with the field for a long time and knows is inside out. The current boom in the economy and the shift of people towards this sector has made this business a lucrative one.

Another reason for starting this business is the passion Tyler has for this field. He wants to live through his work for ages to come and to do this he is planning to write his name quite literally in stone all over the US.

3.3 How the Construction Management Business will be started?

Step1: Planning Phase

The next thing we need to talk about in this construction management business plan sample is the planning of the business. In this stage, Tyler will run the competitive analysis and will make a feasibility of the business. The target market segments will also be selected at this stage.

Setting up a construction company is not an easy thing and planning needs to be done on an extensive scale for the business to be successful.

Step2: Establishing a Brand Name

Making a brand that people can trust is the next step in any business plan for architecture firm. Tyler plans to make a brand that people can depend on and that has a worth in the market.

Step3: Establishing An Office

Once the planning and branding bits are out of the way, the next step will be to establish an office. This will be the point of contact with the world for the business.

Step4: Going Online

Having an online presence is very important for any business to succeed these days. Tyler Constructors will make a website where people can come to know about them or place any order for any construction contract.

Step5: Promotion and Marketing

The last step is to make the brand known to the people so much that people start linking the name Tyler with construction.

Construction Management Business Plan Sample - Startup Cost
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    Start-up Expenses 
    Research and Development$32,000
    Expensed Equipment$60,000
    Start-up Assets$340,000
    Cash Required$390,000
    Start-up Inventory$60,000
    Other Current Assets$290,000
    Long-term Assets$310,000
    TOTAL ASSETS$1,390,000
    Total Requirements$1,801,000
    Start-up Expenses to Fund$411,000
    Start-up Assets to Fund$1,390,000
    Non-cash Assets from Start-up$1,790,000
    Cash Requirements from Start-up$370,000
    Additional Cash Raised$71,000
    Cash Balance on Starting Date$48,000
    TOTAL ASSETS$2,279,000
    Liabilities and Capital 
    Current Borrowing$0
    Long-term Liabilities$0
    Accounts Payable (Outstanding Bills)$45,000
    Other Current Liabilities (interest-free)$0
    Planned Investment$1,801,000
    Investor 1$0
    Investor 2$0
    Additional Investment Requirement$0
    Loss at Start-up (Start-up Expenses)$404,000
    TOTAL CAPITAL$2,205,000
    Total Funding$1,801,000


    The services Tyler Construction will be providing are the next thing that need to be discussed. Unlike a real estate flipping business plan, owning a construction company means you have to provide a number of different services. The main services we will be focusing on in this construction project management template will be the following.

    • House Renovation

    Home renovation is one of the most lucrative of all construction projects. Finishing touches in any building are the most expensive and always have a large profit margin. We will be providing these services all over the state of Georgia and will make a name in this market segment.

    • Home Building

    As there is a lack of reputable home builders in the area, we will provide this service. This will not be a very lucrative one, but the number of projects will be higher than other services and will earn us quite a bit of profit.

    • Commercial Construction

    We will also provide all sorts of commercial construction services from shopping malls to hotels. This will be one of the bulk income services that we will be providing.

    • Government and Public Sector Construction

    This will be the most important service provided by Tyler Constructors. As government projects are generally large, this will make up the bulk of steady revenue for the firm.

    Marketing Analysis of Construction Management Business

    Business plan for investors

    A detailed marketing analysis of the target market is one of the most important things for starting a successful business. If you need to know how to write a business plan for a construction company, you need to know the industry. The US construction industry is worth just under $1 trillion and is expected to grow to $1.25 trillion by the next year. This expected boom in this industry means that now is the perfect time for starting a construction management business in the US.

    If you want to learn how to open a construction company, the most important thing to consider is the market you are planning to penetrate. Even though the industry is huge, your construction company business plan needs to have something distinct that sets it apart from the rest.

    5.1 Market Trends

    The next thing a construction business proposal template needs to shed light on are the trends of the market. The construction industry in the US has always been growing, less the great depression and the recession of 2008.

    All the construction business plans need to have a close look on the market before setting foot in the business. This is just like making business plan for engineering consulting.

    5.2 Marketing Segmentation

    The Market segments Tyler Constructors will be providing the services will include:

    Construction Management Business Plan Sample - marketing Segmentation

    5.2.1 Government Agencies

    These are unarguably the largest customers of any construction company. Tyler Constructors will focus on establishing as a reputable government contractor. This is a profitable segment of the market.

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    5.2.2 Corporate Clients

    These are one some of the most profitable of all segments of the market. Tyler Constructors will provide all type of construction services to this segment of the market.

    5.2.3 Home Building Market

    This is a large segment of the market but the worth of individual projects is not very much. This market will be sort of a side business for Tyler and will be used to cover the overheads of other projects.

    5.2.4 Non-Profit Bodies

    The services provided to this segment of the market will be not for profit but as a civic duty of Tyler Constructors to play their role in improving the society.

    Market Analysis       
    Potential CustomersGrowthYear 1Year 2Year 3Year 4Year 5CAGR
    Government Agencies35%34,00036,00038,00040,00042,00010.00%
    Corporate Clients28%26,00028,00029,00031,00033,00010.00%
    Home Building Market24%21,00022,00024,00026,00028,00010.00%
    Non-Profit Bodies13%11,00012,00013,00014,00015,00011.00%

    5.3 Business Target

    • To provide impeccable construction management service in the state of Georgia.
    • To become one of the leading government construction contractors.
    • To expand to national market and make a name.
    • To start making $500,000 in profits by the end of 5 years.

    5.4 Product Pricing

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    Our products and services will be priced slightly below the average price on the market. This will be used as a tactic to attract customers. After we make a credible name in the industry, we will increase the prices.

    Marketing Strategy

    You need to have a strong construction management marketing strategy if you want to be successful in this field. The most important aspect of any marketing strategy for construction company pdf is finding out what the competitors lack and building your strategy around it.

    The construction firms in the area do not have established brands and do not offer flexibility in the services. This means that these are the aspects on which Tyler Constructors will be basing their marketing strategy.

    6.1 Competitive Analysis

    1. We have a very experienced team, made up of managers and engineers who can complete the projects on a tighter budget.
    2. We will involve the client in all stages of the project, and use the materials and practices they want, something no other constructor in the area does.
    3. We will offer the flexibility of completing any stage of the project, if someone wants just a grey structure or just the finishing we will do that.

    6.2 Sales Strategy

    • We will use print, electronic, and social media to advertise the business.
    • We will have a separate wing dedicated to finding advertisements for construction projects and biding on them.
    • We will keep the prices low for the first year to attract more customers.

    6.3 Sales Monthly

    Construction Management Business Plan Sample - Sales Monthly

    6.4 Sales Yearly

    Construction Management Business Plan Sample - Sales Yearly

    6.5 Sales Forecast

    Construction Management Business Plan Sample - Unit Sales
    Sales Forecast   
    Unit SalesYear 1Year 2Year 3
    House Renovation40,00042,40044,944
    Home Building45,00047,70050,562
    Commercial Construction46,00048,76051,686
    Government & Public Sector Construction48,00050,88053,933
    TOTAL UNIT SALES179,000189,740201,124
    Unit PricesYear 1Year 2Year 3
    House Renovation$50.00$58.00$67.28
    Home Building$75.00$87.00$100.92
    Commercial Construction$80.00$92.80$107.65
    Government & Public Sector Construction$70.00$81.20$94.19
    House Renovation$2,000,000.00 $2,459,200.00 $3,023,832.32
    Home Building $3,375,000.00 $4,149,900.00 $5,102,717.04
    Commercial Construction$3,680,000.00 $4,524,928.00 $5,563,851.47
    Government & Public Sector Construction$3,360,000.00 $4,131,456.00 $5,080,038.30
    TOTAL SALES$12,415,000.00 $15,265,484.00 $18,770,439.13
    Direct Unit CostsYear 1Year 2Year 3
    House Renovation$48.00$55.00$63.00
    Home Building$73.00$84.00$96.00
    Commercial Construction$78.00$89.00$103.00
    Government & Public Sector Construction$68.00$78.00$90.00
    Direct Cost of Sales   
    House Renovation$1,920,000.00 $2,332,000.00 $2,831,472.00
    Home Building $3,285,000.00 $4,006,800.00 $4,853,952.00
    Commercial Construction$3,588,000.00 $4,339,640.00 $5,323,616.80
    Government & Public Sector Construction$3,264,000.00 $3,968,640.00 $4,853,952.00
    Subtotal Direct Cost of Sales$12,057,000.00 $14,647,080.00 $17,862,992.80

    Personnel plan

    Construction is a labor-intensive business. The need for skilled and unskilled labor in this field is more than any other one. We will hire some people on a permanent basis and others on project-to-project basis. This is because if you hire all the staff on a permanent basis, the overheads will be too much to make the business profitable in the days when there is no ongoing project. Let us see what the minimum staff is needed to make this construction management business plan possible.

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      7.1 Company Staff

      • The CEO of the company will be Tyler Corleone.
      • 3 Managers for Liaison, Operations, and Contracts.
      • 1 Accountant to manage the finances of the company
      • 2 Engineers to manage the construction sites.
      • 4 Overseers to run the construction activity.
      • 3 Drivers for the office and staff.
      • 2 Office boys.

      7.2 Average Salary of Employees

      Personnel Plan   
       Year 1Year 2Year 3
      Liaison Manager$13,500$14,850$16,335
      Operations Manager$14,000$15,400$16,940
      Contracts Manager$13,500$14,850$16,335
      Office Boys$16,000$17,600$19,360
      Total Salaries$163,000 $179,300 $197,230

      Financial Plan

      The cost to start a construction company is obviously more than a remodeling business plan. The actual costs can only be determined with reasonable accuracy when the business is started. However, here are some of the costs that you need to have arranged before the company is started:

      • The cost for setting up the business.
      • The cost of basic construction machinery.
      • The money needed for staff salaries.
      • The cost of setting up the website.
      • The online and media marketing cost.
      • The cost of overheads before the company starts making money.

      8.1 Important Assumptions

      General Assumptions   
       Year 1Year 2Year 3
      Plan Month123
      Current Interest Rate8.17%8.22%8.26%
      Long-term Interest Rate8.35%8.39%8.42%
      Tax Rate23.22%24.36%25.00%

      8.2 Break-even Analysis

      Construction Management Business Plan Sample - Break-even Analysis
      Break-Even Analysis 
      Monthly Units Break-even5342
      Monthly Revenue Break-even$132,500
      Average Per-Unit Revenue$235.00
      Average Per-Unit Variable Cost$0.66
      Estimated Monthly Fixed Cost$162,530

      8.3 Projected Profit and Loss

      Pro Forma Profit And Loss   
       Year 1Year 2Year 3
      Sales$12,415,000 $15,265,484 $18,770,439
      Direct Cost of Sales$12,057,000 $14,647,080 $17,862,993
      TOTAL COST OF SALES$12,057,000 $14,647,080 $17,862,993
      Gross Margin$358,000 $618,404 $907,446
      Gross Margin %2.88%4.05%4.83%
      Sales and Marketing and Other Expenses$140,000$126,000$127,000
      Leased Equipment$0$0$0
      Payroll Taxes$30,000$31,000$32,000
      Total Operating Expenses$343,330 $347,040 $367,570
      Profit Before Interest and Taxes$14,670$271,364$539,876
      Interest Expense$0$0$0
      Taxes Incurred$2,934$54,273$107,975
      Net Profit$11,736$217,091$431,901
      Net Profit/Sales0.09%1.42%2.30%

      8.3.1 Profit Monthly

      Construction Management Business Plan Sample - Profit Monthly
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        8.3.2 Profit Yearly

        Construction Management Business Plan Sample - Profit Yearly

        8.3.3 Gross Margin Monthly

        Construction Management Business Plan Sample - Gross Margin Monthly

        8.3.4 Gross Margin Yearly

        Construction Management Business Plan Sample - Gross Margin Yearly

        8.4 Projected Cash Flow

        Construction Management Business Plan Sample - Projected Cash Flow
        Pro Forma Cash Flow   
        Cash ReceivedYear 1Year 2Year 3
        Cash from Operations   
        Cash Sales$68,000$73,440$79,315
        Cash from Receivables$18,000$19,440$20,995
        SUBTOTAL CASH FROM OPERATIONS$86,000 $93,740 $101,239
        Additional Cash Received   
        Sales Tax, VAT, HST/GST Received$0$0$0
        New Current Borrowing$0$0$0
        New Other Liabilities (interest-free)$0$0$0
        New Long-term Liabilities$0$0$0
        Sales of Other Current Assets$0$0$0
        Sales of Long-term Assets$0$0$0
        New Investment Received$0$0$0
        SUBTOTAL CASH RECEIVED$87,000 $94,000 $102,000
        ExpendituresYear 1Year 2Year 3
        Expenditures from Operations   
        Cash Spending$40,000$42,000$44,000
        Bill Payments$30,000$32,000$34,000
        SUBTOTAL SPENT ON OPERATIONS$70,000 $74,000 $78,000
        Additional Cash Spent   
        Sales Tax, VAT, HST/GST Paid Out$0$0$0
        Principal Repayment of Current Borrowing$0$0$0
        Other Liabilities Principal Repayment$0$0$0
        Long-term Liabilities Principal Repayment$0$0$0
        Purchase Other Current Assets$0$0$0
        Purchase Long-term Assets$0$0$0
        SUBTOTAL CASH SPENT$70,000 $75,600 $81,648
        Net Cash Flow$18,000$19,000$21,000
        Cash Balance$23,000$25,000$27,000

        8.5 Projected Balance Sheet

        Pro Forma Balance Sheet   
        AssetsYear 1Year 2Year 3
        Current Assets   
        Accounts Receivable$26,000$29,120$32,731
        Other Current Assets$1,000$1,000$1,000
        TOTAL CURRENT ASSETS$301,000 $337,120 $378,923
        Long-term Assets   
        Long-term Assets$10,000$10,000$10,000
        Accumulated Depreciation$19,000$21,280$23,940
        TOTAL LONG-TERM ASSETS$60,000 $67,200 $75,600
        TOTAL ASSETS$295,000 $330,400 $371,700
        Liabilities and CapitalYear 4Year 5Year 6
        Current Liabilities   
        Accounts Payable$18,500$20,720$23,289
        Current Borrowing$0$0$0
        Other Current Liabilities$0$0$0
        SUBTOTAL CURRENT LIABILITIES$14,900 $16,688 $18,757
        Long-term Liabilities$0$0$0
        TOTAL LIABILITIES$16,000 $17,920 $20,142
        Paid-in Capital$29,000$30,000$30,950
        Retained Earnings$60,000$65,400$71,940
        TOTAL CAPITAL$277,000 $301,930 $332,123
        TOTAL LIABILITIES AND CAPITAL$293,000 $330,400 $371,700
        Net Worth$310,000$337,900$371,690

        8.6 Business Ratios

        Ratio Analysis    
         Year 1Year 2Year 3INDUSTRY PROFILE
        Sales Growth7.23%8.01%8.88%3.00%
        Percent of Total Assets    
        Accounts Receivable9.18%10.17%11.27%9.80%
        Other Current Assets2.12%2.35%2.60%2.40%
        Total Current Assets150.01%150.50%152.00%158.00%
        Long-term Assets11.41%11.44%11.52%12.00%
        TOTAL ASSETS100.00%100.00%100.00%100.00%
        Current Liabilities4.95%4.99%5.04%4.34%
        Long-term Liabilities0.00%0.00%0.00%0.00%
        Total Liabilities7.60%7.66%7.73%7.38%
        NET WORTH100.85%101.66%102.59%110.00%
        Percent of Sales    
        Gross Margin94.22%96.76%99.47%99.00%
        Selling, General & Administrative Expenses94.36%96.91%99.62%97.80%
        Advertising Expenses1.55%1.59%1.64%1.40%
        Profit Before Interest and Taxes42.00%43.13%44.34%33.90%
        Main Ratios    
        Total Debt to Total Assets0.18%0.17%0.17%0.40%
        Pre-tax Return on Net Worth72.80%73.00%75.59%75.00%
        Pre-tax Return on Assets94.66%99.39%104.36%111.30%
        Additional RatiosYear 1Year 2Year 3 
        Net Profit Margin33.05%34.07%35.13%N.A.
        Return on Equity55.33%57.05%58.81%N.A.
        Activity Ratios    
        Accounts Receivable Turnover7.77.87.8N.A.
        Collection Days100100100N.A.
        Inventory Turnover31.2232.78133N.A.
        Accounts Payable Turnover15.415.916.23N.A.
        Payment Days272727N.A.
        Total Asset Turnover2.42.52.6N.A.
        Debt Ratios    
        Debt to Net Worth-0.04-0.03-0.04N.A.
        Current Liab. to Liab.111N.A.
        Liquidity Ratios    
        Net Working Capital$233,400$246,470$260,273N.A.
        Interest Coverage000N.A.
        Additional Ratios    
        Assets to Sales0.860.870.87N.A.
        Current Debt/Total Assets1%0%0%N.A.
        Acid Test2929.0429.09N.A.
        Sales/Net Worth2.22.32.3N.A.
        Dividend Payout000N.A.

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