Why Contractors Fail

construction craneThere has been significant research performed to determine why construction companies struggle financially, why they are dysfunctional and why some ultimately fail. The top 10 reasons (in no specific order) are basically business fundamentals and grouped as follows:

  1. Lack of a Clear Vision Casting and Defining Corporate Values / Goals and a Solid Market Value Proposition. (Basic Management & Marketing 101)
  2. Significant Increase in Project Size.
  3. Change in Geographic Area served and Unfamiliarity with New Market Dynamics / Players.
  4. Moving into New Types of Construction or Industry Segments and or Moving Between Private and Public Sectors.
  5. Replacement of Key Personnel, Loss of Key Personnel, Poor Hiring Practices.
  6. Lack of Managerial Maturity in Expanding Organizations or Transition from Managers to Leaders. Dysfunctional Executive and Project Teams due to Trust and Communication issues.
  7. Poor Use of or Inadequate Accounting Systems and Practices including Running Software that does NOT Support TRUE Job Cost Accounting Practices.
  8. Failure to or Inability to Evaluate Project Profitability in Real Time and Improper use of your Work In Progress (WIP Report) and Incorrect Burdened Labor Rates.
  9. Poor Billing / Collection Procedures including Poorly Structured Contracts and the lack of Rigid Field and Owner Change Order Procedures.
  10. Improper use of Technology and Software Including Transitions into New Software Solutions and Hardware / Cloud Platforms.

When evaluating the policies, procedures and dynamics of a construction operation it is imperative to specifically scrutinize all activities and business practices as they relate to this list of identifiable criteria.

By recognizing items that represent possible threats to the overall success of a company, business owners and managers can appraise their fundamental operating practices to develop a plan of action and create a blueprint for success.

For this process to be successful it is imperative seasoned Construction Professionals and Trusted Advisors like The FlatRock Group with experience in leading organizations through change be engaged to facilitate the program.

Call us today and start growing your business.

Kent Leighton      kent@flatrockgroup.com       830-201-0678 


  © 2016 The FlatRock Group   All Rights Reserved

Spread the word. Share this post!

About the author

Kent Leighton, Founder of The Flat Rock Group, has more than 40 years of experience in the Construction and Development Industry. Having owned a successful midsize General Contracting firm he understands the opportunities and trials of running a successful business enterprise. His passion is sharing his victories and his scars with leaders and managers to help them grow and prosper.