A major variable in the startup costs listed in your construction company business plan is the cash needed for equipment and tools. As you think through these needs, consider these choices.Choosing ServicesYou cannot begin to estimate equipment requirements before knowing what type of construction you engage in and what services you will or will not offer. This decision should be driven by the experience of the team and the opportunity in the market, although the overall cost of equipment may enter into the decision as well. If it becomes apparent that you will not be able to recover the cost of equipment in a reasonable period of time, you may have to rethink offering services which require that equipment.Buy, Lease, Rent, or SubcontractSecondly, it is important to remember that purchasing outright the equipment required for a service you must offer may not be necessary. Leasing equipment can reduce the cost of launching and the needs for raising capital, although the total cost of acquiring the items will be higher in the end. If the equipment will be needed for tasks which won’t be necessary on every project, or will only be needed sporadically or at one stage, renting the equipment for those periods of time may be a better option, assuming a quality renter is available in your locale.Finally, it may make sense to simply outsource the work that requires certain specialized equipment to companies which already own the needed tools and have staff trained specifically. Subcontractors specializing in roofing or framing, for example, have the needed tools of the trade and the expertise to do the work less expensively than your company. However, keep in mind that the more work your company subcontracts, the greater the burden on your managers to check quality, to manage vendor schedule, and to develop other skills of vendor communication and negotiation.
When starting any business, all related activities are risky to the entity’s balance of assets and liabilities, especially in early set up. Choosing to go into this industry for demolition, renovation, or building, is an important investment in real estate with the future of a client’s business. But before a business or investor moves forward with a commercial construction company, or before one can start their own building business, there are plenty of transactional considerations to check before getting started and for every step along the way.One of the most significant decisions that a real estate investor can make is with the commercial construction company they choose. Whether they intend to rent out the individual suites or sell the building at some point, each step of the process from planning to completion, from initial budget to bottom line, as well as safety for all workers and future occupants has to be considered as influences before they begin their first day of work. Whether the resulting structure will be one story or a high rise, financing the job is the biggest logical step after having the idea. Some investors and building interests within a commercial construction company are a bit leery of what they may come up against, especially starting out in this unsteady economy.A commercial construction company has to work within, around, and through any fluctuations in the real estate market. Regardless of the state of the larger economy, or whether it is a buyers or sellers advantage, there is still money to be made serving the building needs of structural production. Therefore, the government agency or private entity investing in the work of these companies has to be reassured that the business will offer safe, cost-effective, and time efficient site management throughout the process of erecting the building structure. A building entity organizes the structural plans with the investor but their team professionals will prepare and assemble the infrastructure of their own skill in a timely manner.The individuals participating in this work usually specialize in some area of site development, environmental engineering, structural or geotechnical engineering in order to contribute to a high-quality standard for their business. These building professionals work in all areas of large-scale project equipment. They work with the land and project from site development and foundations to building commercial or residential sites to get them up and running from the inside out as well. They can even perform all of the tasks that keep them operational such as pipe work, work on conveyors, welding, and spouting as requested. So, whether a commercial construction company is just starting out or has been around for years, as long as they give high-quality performance from their team, they will be able to succeed on any job site and in any economy.
When writing your construction company’s business plan, describe what systems you will have in place to potentially manage multiple projects at the same time. Certainly, you don’t want a situation where you have a great number of employees and pieces of equipment sitting idle between projects. However, you would like to not lose business as it comes along. You should have the capacity to at least start the planning for a new project while another one is already underway.Sharing ResourcesWith only one project being worked on, the issue of sharing resources doesn’t exist. But once a second project begins, you will need a system to track how your resources are being shared between both projects in order to reduce your overall costs, and continue to work to the time constraints of the projects. A software project management or resources scheduling system is highly recommended, as it is easiest to share information between multiple managers and your staff.These resources include your managers, your crew’s labor, equipment and tools, and even subcontractors. If multiple projects start to move forward, it may be necessary to devote a full-time project manager to each. This person can look out for the interests of their project and give it the attention that the client will demand. This demands that you have staff with the management skill needed in the first place.Your crew must be assigned to work in a way that keeps them busy, but not too busy (avoiding overtime and the extra costs and diminished returns it creates as much as possible). If planned well, crew will move between a segment of work on one project to a segment of work on another just as subcontractors start a piece of work on the first.Equipment which you own in limited quantities, which should be true of most significant tools and machines, must be moved between projects and your storage and scheduled carefully to avoid holding up any of them. Key subcontractors who are needed on multiple projects must also be scheduled as if they were your crew, although you lack very much direct control over the schedules they keep.