The construction management business plan covers a lot of high level information due to the complexity of the industry. Construction administration principles coordinate activities on commercial and residential projects, civil projects, industrial structures, and utilities projects. Many of the companies manage the projects from concept to occupancy by working as part of team with architects, engineers, green building professionals, and subcontractors. This type of company is usually started by engineers or architects, or people with degrees in a related field.
Managing large projects from initial discussion to final project closeout requires the ability to work with a variety of people, including engineers, architects, supervisors, subcontractors, clients, government representatives, and the general public. It is not an easy operation to start up, but it can be lucrative when the right skills and expertise are offered.
The difficulty is mostly related to the need to bid on and win contracts in a competitive field. Operations that are new to the industry are dealing with long-term competitors. However, there are enormous opportunities because the architectural, engineering, and building industries are rapidly changing due to technology and changing public expectations.
Specialized and Complex
This is a highly specialized business requiring expert staff who have knowledge of federal, state, and local building and environmental codes; permitting requirements, project phases; RFPs and bidding processes; project scheduling; risk minimization; safety procedures; project estimating and accounting; and much more. The Associated General Contractors of America also promotes knowledge of lean building practices, green building, and building modeling and project control software. The business can offer specialized services like claims analysis, expert witness, and value engineering.
Create a Strong Brand
Business success depends on creating a strong brand for project quality, timeliness, expense control, and experience in the type of projects the company will oversee. The construction management business plan demonstrates how that brand will be successfully developed and answers questions like the following:
- What type and size of projects are targeted, i.e. residential developments, major commercial projects, water and waste facilities, roads and bridges, property development, etc.?
- What is the educational level of the company owners? Are they certified by any recognized associations, like the CMAA as a Certified Construction Manager? What type and size of industry experience can the business owners claim?
- What are the staff qualifications and experience that are directly related to the type of quality projects targeted, i.e. commercial engineering, bridge installation, architectural projects, etc.? What positions are required to staff the business, i.e. secretary, administrative assistant, field supervisors, etc.? What specific proven experience does the staff have in successfully responding to RFPs, job estimating, and project administration?
- Will there be rented, leased, or purchased office space, or will the manager work from home as a consultant? The anticipated expenses should include insurance and bonding, office expenses, marketing and advertising, space rent or mortgage payment, travel, fees and dues, salaries and benefits, and hardware and software.
- Is the business a member of industry associations, and is it certified by one or more recognized professional organizations like the American Society of Professional Estimators? Is the business certified as a Women’s Business Enterprise (WBE) or Minority and Women’s Business Enterprise (MWBE)? This type of certification may offer additional project opportunities, such as federal, state, city, or county government contracts.
- How will the business market itself to the private or public sectors? This is a very specialized enterprise that is attractive to a very specific market. How will the owner reach the target market? Will the firm use traditional marketing avenues and online marketing?
- When does the business expect to become profitable? Will it be within one or two years? What are the primary sources of revenue, and how are they expected to flow over the course of the year?
- Which estimating, modeling, and project administration software was selected? There are many options, so the one selected should be suitable for the type of projects the business expects to work on.
- Are their established relationships with local contractors who can meet most project needs? Will the firm work on projects outside the local area? If so, how will it find the right subcontractors?
Know the Industry
It is critical to analyze the industry and thoroughly understand the competition. Most entrepreneurs do not feel comfortable doing their own industry analysis and will hire a qualified consulting company. The in-depth analysis is often required by investors of all types because it demonstrates the owner understands how the startup fits within context of the industry.
What is the current status of the industry? Is it expanding or contracting? Is it globalizing? Are there industry trends such as retrofitting buildings with environmentally sound systems? These are the types of questions an industry analysis can answer.
Learn the Competition
Understanding the competition is just as important and is the only way to know for a fact the startup can develop a unique competitive advantage. Any business can compete on cost, niche, product, expertise, or a combination of these factors. What is the competitive advantages claimed by competitors? How do they consistently land projects? What is their pricing schedule? How are they viewed by the community? Being able to answer these questions and many others in the plan is critical to future success.
Manage the Details
It may take significant capital to start this type of operation, depending on the cost of the liability insurance, the bonding, the rent in the location selected, staffing costs, licensing fees, and computer equipment and software. These are just the minimum startup expenses. The business plan can be specifically written to garner the interest of investors or lenders. Typical investors for this kind of operation include bank lenders, venture capitalists, and equity funders.
Developing accurate pro-forma financial statements is critical because there is a delay between doing work and collecting payment. Successful companies in this industry are recognized for their ability to deliver state-of-the-art services to clients and to collaboratively design and manage projects within budget and on time.
Get Professional Help
Whether starting or expanding a company, OGS Capital can help all entrepreneurs develop a quality construction management business plan, raise financing, and develop critical, detailed marketing strategies based on in-depth industry and target market research. Fill in the short online contact form and get answers to questions concerning the process.
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