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Managing a Construction Business

Knowing how to manage a construction business is the key to being a successful contractor.  There are many ways to enter the construction field with extensive opportunities for a rewarding career in the industry.

The US Bureau of Statistics provides an Occupational Outlook Handbook where you can find entrance requirements, salary, job descriptions, job outlook, and more for the construction industry.

A construction company can be just an owner, an owner using subcontractors, or an owner with employees, with more variations depending on the number of people involved.

There’s more information about running your own construction company in the article called The Lifecycle of a Construction Business.

Getting Started

Carpenters can enter the construction business with a desire to learn and the agility to perform physical work. Hands-on learning in the industry is the best way to prepare for owning and managing a construction business. Score, community colleges, and libraries are good places to learn more about managing a construction business.

Preparing to Own a Construction Business

Learning construction may take 2 to 5 years or longer to have enough knowledge to manage a construction business.  Plus, a business or construction certificate or degree will improve your success.

Electricians, plumbers, HVAC, and specialty contractors have additional education and licensing requirements.

Contractor Licensing requirements vary from state to state. Levelset, a cloud-based platform that offers payment facilitation for construction companies, has compiled a Guide for Licensing in each state.

Skills Needed to Manage a Construction Business

As an owner, a large part of the day is talking on the phone and coordinating projects.  Sales, customer service, and planning get juggled throughout the day. The day’s filled with interruptions, so the ability to move from one task to another under pressure is essential.

Necessary skills:

  • Being organized
  • Construction know-how
  • Understanding finances
  • Problem-solving ability
  • Good time-management
  • Great communication skills

Financial Investment

Putting time into learning and understanding how to manage a construction business is a great start. Establishing a construction business also takes a financial investment.

The basic setup for a startup construction business:

  • Vehicle
  • Tools
  • Storage
  • Office space
  • Insurance
  • Licensing

Managing a Construction Business Office

The office is where the behind-the-scenes work happens and where the project begins. It’s where the paperwork for the construction business gets handled.

Basic office setup:

  • Cell phone
  • Desk
  • Filing boxes/cabinet
  • Computer
  • Printer
  • Office supplies
  • Internet
  • Accounting software

Administrative functions

All the activities of the office are called administrative functions. In a construction business, administrative activities facilitate work on the projects, help the company comply with laws, and support the company’s growth.

 Administrative tasks:

  • Handling correspondence
  • Drafting contract paperwork
  • Ordering office supplies, materials
  • Product research
  • Maintaining technology
  • Filing paperwork

Sales Functions

Sales functions keep the company operating. Selling for a construction business involves:

  • Relationship building
  • Understanding the requirements of the project
  • Being able to present and finalize contracts

Sales tasks:

  • Prospecting
  • Meeting with potential customers
  • Calculating and writing up an estimate
  • Presenting the estimate
  • Closing the deal and entering into a contract

Learn more about Establishing Hourly Rates and The Terms Estimate, Quote, Bid, Proposal, Explained.

Accounting Functions

In a construction business, accounting tracks the company’s finances and the profitability of each project.

Accounting tasks:

  • Invoicing
  • Paying bills
  • Paying taxes
  • Paying employees
  • Preparing financial statements

Learn more about What Accountants Do for Construction Companies and how to Audit-Proof Your Business.

Human Resource Functions

The laws around employees are extensive, and the paperwork is immense for a construction business. Look to Score and your state Department of Labor and Industry, state Department of Economic Security, and IRS for guidance.  

Human Resource Tasks:

  • Onboarding
  • Payroll & Benefits

Here’s some helpful information on Hiring Employees for your Construction Business.

Managing a Construction Business In the Field

The contract outlines the work to be performed. The goal is to complete the project on time and within the budget defined by the agreement.

There are job site interactions with clients, material suppliers, subcontractors, and inspectors. Communication between all people involved is a regular part of keeping the project moving forward to completion.

Scheduling

Scheduling is an integral part of managing a construction business. A forecasted schedule is prepared and coordinated with the homeowners and everyone involved with the project. The anticipated schedule can and often does change; however, the contract can involve penalties for not meeting completion dates.

There is scheduling for:

  • Appointments with potential clients
  • Meetings with homeowners, designers, architects
  • Walk-throughs with subcontractors
  • Inspections with city Inspectors
  • Labor work schedules
  • Material deliveries

Project Management

Project management is the oversite of all the project’s details; it’s the budget and the labor and materials from beginning to completion.

The budget for the project was determined during the estimating process with a contract agreeing to provide the labor and materials for a specified cost. Project management keeps the project in line with the project’s budget.

Labor

Managing a construction business means managing people, budgets, and unplanned obstacles. Many factors play into whether the labor hours will stay within the budget; weather, equipment failures, site conditions, code issues, and a host of other situations.

Labor tasks:

  • Showing up on-time
  • Setting up tools and workspace
  • Performing work according to the contract
  • Cleaning up and packing up

Following safety guidelines is priority one on the job site. For guidance, read Job Safety and OSHA.

Materials

  • Purchasing materials
  • Picking up or receiving delivery
  • Making returns

Tools and Equipment

  • Purchasing
  • Maintaining
  • Inventory

Learn about Cargo Trailer Theft and how you can protect your assets.

Finalizing Projects

Following through is vital to the success of the construction business. Before collecting the final payment, there are a few things to wrap up.

  • Final inspections
  • Closing-out permits
  • Paying subcontractors
  • Completing lien waivers
  • Thank everyone!
  • Ask for referrals

Learn more about managing at the Start of the Year and Year-end for your Construction Business.

Because history is fun, enjoy these articles, History of Systems for Measuring Length and

History of the Tape Measure.

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