The actual formula for construction company growth

Quantum Contract Solutions CEO Cian Brennan was once working on a project on the North West Shelf of Australia and there were two electrical contractors working on the same project. Both were undertaking the exact same type of work but they were in two different areas of work.

I’m sure you are aware that the construction industry has the highest insolvency rate of any industry.

But then why do some companies win all the work and make all profits?

Relationships? Backhanders? Owners lobbying Governments? – Well, maybe but let’s take the foil hats off for just a sec.

Quantum Contract Solutions CEO Cian Brennan was once working on a project on the North West Shelf of Australia and there were two electrical contractors working on the same project. Both were undertaking the exact same type of work but they were in two different areas of work.

One electrical contractor was experienced & commercial in their dealings.

The other contractor, it was their first large project and their one concern was doing an amazing job on-site and letting the commercial/contractual chips fall where they may.

Can you guess who did better?

The first contractor – did OK on-site, nothing to write home about but they make a healthy profit.

The second. Did a fantastic job on-site, they got given lots of extra work, had a great reputation BUT – they almost went bankrupt.

  1. On the front end they negotiated a poor contact so their risk was very high
  2. They didn’t follow the contract on what to do if you are given extra work and they didn’t get paid for it and it looked like they were very late on their original scope (due to all the additional work) and got hit with massive LDS.

The real reason is that some construction companies last the test of time and others do not because they understand this formula: Construction Company Growth = (Reputation+Repeated Work+Referred Work)/Financial ability to do additional work Delivering on-site will give you a better reputation, repeated work, and referred work. Delivering contractually will give you the financial ability to do the additional work.

You need to deliver on-site…obviously, but you also need to deliver contractually.

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