I was just thinking the other day about.... hmm..How to set up a construction company? My Dad who is an experienced civil engineer is thinking of setting up a construction company together with a couple of his friends. He wants me to prepare a feasibility study report to that effect. what are the specific issues i need to look at?
This is a pretty complicated question but I will give it a shot. Contracting is about getting the work, doing the work and accounting for the work. If any of these things fail, the enterprise will not succeed.My business plan needs to address sources of income. What particular skill or values does allow us to look different than the competition. How is that skill going to be utilized to drive income? How much income is needed? What geographic area is to be covered? Who is going to sell the work? Who are potential customers? What is the competitive profile of the other people currently contracting for this work? Is the work going to be residential or commercial? Is the economy in the region robust? As far as doing the work, I need to have people that can estimate the cost of the work accurately, develop and execute the appropriate contracts, expedite the materials, schedule the work, hire the field crews, supervise the work, read, detail and understand the drawings, install the work, close out the work and do warrantee work when issues come up. As far as accounting and finance; The business plan needs to model income, cost of doing the work, gross margin, overhead expenses, and net income. And there is this thing about tax payment. The construction business has low barriers to entry so competition is rampant and drives margins down. At the end of the day it would be considered well to make 5%. In addition to modeling expenses and income, I may need to address banking, bonding, licensing and other needs that are required in the business before obtaining my first project. Hmm.. someone recommended a book by Thomas Schliefer called a Contractors Survival Guide.
This is a pretty complicated question but I will give it a shot. Contracting is about getting the work, doing the work and accounting for the work. If any of these things fail, the enterprise will not succeed.My business plan needs to address sources of income. What particular skill or values does allow us to look different than the competition. How is that skill going to be utilized to drive income? How much income is needed? What geographic area is to be covered? Who is going to sell the work? Who are potential customers? What is the competitive profile of the other people currently contracting for this work? Is the work going to be residential or commercial? Is the economy in the region robust? As far as doing the work, I need to have people that can estimate the cost of the work accurately, develop and execute the appropriate contracts, expedite the materials, schedule the work, hire the field crews, supervise the work, read, detail and understand the drawings, install the work, close out the work and do warrantee work when issues come up. As far as accounting and finance; The business plan needs to model income, cost of doing the work, gross margin, overhead expenses, and net income. And there is this thing about tax payment. The construction business has low barriers to entry so competition is rampant and drives margins down. At the end of the day it would be considered well to make 5%. In addition to modeling expenses and income, I may need to address banking, bonding, licensing and other needs that are required in the business before obtaining my first project. Hmm.. someone recommended a book by Thomas Schliefer called a Contractors Survival Guide.
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