How to Manage a Construction Company

by Michael Johnson; Updated September 26, 2017

Managing a construction company requires a diverse skill set. You must be able to understand the various business logistics of a company, the specific technical aspects of the construction your company conducts, and also the financial outlook of a contract-based business. Managing a construction company requires the ability to wear multiple hats; you are a human resource manager, an engineer and an accountant.

Step 1

Set up the appropriate legal entity for your business. Construction projects involve a lot of liability and risk. Your construction company must be protected against such exposure by means of a legal barrier, which includes establishing your company as a corporation, limited liability company or partnership. This also involves ensuring your construction company has the adequate insurance, licenses and bonding to conduct work. Consult an attorney to confirm your company is set up correctly.

Step 2

Gain new business and clients. In order to do so, you must market and promote your company. Place local ads, contact industry groups for leads or recommendations, and check with your municipality for any public work jobs available.

Step 3

Staff appropriately for the amount of work in your pipeline. Hire individuals who have construction experience in the project types your company builds. A seasoned project manager should be devoted to each project. Additionally, you will need support staff depending on the size of the projects. Ensure you hire a competent accountant--billing is the key to success.

Step 4

Oversee the construction of each project from a high-level perspective. Require your project managers to provide a weekly update on budget and schedule status. Be sure to set up regular meetings with your project managers to identify any potential risks to projects under management. Be responsible for personally conveying any material deviations from the original scope of the work directly to the client before proceeding with any changes.

Step 5

Ensure you are billing clients accurately and timely. Work with your accounting department and project managers to create a monthly bill cycle for each project. Follow up on unpaid invoices regularly, and inform clients that work will cease if unpaid invoices are not resolved.

Warnings

  • Managers are responsible for ensuring their company is acting in full accordance with the law. If a situation arises where the legal repercussions are unclear, seek professional advice.

About the Author

Mr. Michael Johnson has over seven years of experience in the construction and real estate industries. Michael has a Masters of Construction Management from the University of Southern California and has work experience with the world's largest real estate management firms. Many of his clients include Fortune 500 Companies and he has worked on a wide array of projects.