The NFL Draft
The NFL draft is the perfect template for contractors to emulate when building the team of professionals that will eventually manage their construction business.
- The NFL draft is nothing more than a collection of college players who have demonstrated a high skill level in various positions.
- NFL teams sort the players available into positions (functional experts) and make draft picks based on the position(s) their team needs to fill or improve. (Quarterback – Running Back – Tight End etc.). They do not draft a friend to fill a Quarterback position. Every player drafted is selected because they demonstrate expertise in a specific functional position. The entire draft is organized by functional positions.
The Contractor Draft
That is not necessarily how startup contractors staff their new business. When overwhelmed by the details of running a complex business many contractors scan family, friends, and associates to find someone to help them. Familiarity and loyalty are the skills valued most. The resulting team, therefore, is not assembled from experts in financial, legal, marketing, or human resources. Professional training and experience are not prioritized at this point in the team building process. Unfortunately, when the selection process begins like this, it usually continues into the next generations like this. At the same time, field operations are staffed with trade specialists who can build complex structures while the business makes very little money in the process.
Tell-tale Profit Margins
Profit margins in the US construction industry have generally trended downward from the mid-20th century to the present, often hovering in the low single digits. While booming in the 1950s–60s, margins are now historically thin, challenged by low-bid mentality resulting in a shift toward lower-margin, high-risk production.
- Post-1970 Decline: Profit margins began a long-term downward trajectory caused by fierce low-bid competition, inaccurate estimates, costly financial arrangements and market compression.
- Great Recession (2008–2010): Margins hit extreme lows, causing a severe drop in industry profitability that lasted for several years.
- Post-2010 Recovery: Margins steadily increased from recession lows through roughly 2017–2018, driven by increased demand diluting the competition.
- Recent Trends (2020–2024): After 2020, margins began to experience pressure again. While the industry initially saw high margins during the housing boom, inflation in labor and material costs not properly passed on to the buyer has since shrunk profit margins to some of their lowest levels since the pandemic.
A Majestic Built Environment for Very Little Money
I recently browsed the annual photo contest in the February 2, 2026 edition of Engineering News Record. I was awed by the complex design and imposing stature of every project under construction that the photographers chose to capture.
From a beverage manufacturing plant in Rochester, N.Y. to 2080 ft. of 54-in. pipe being lifted into the air in Lincoln, Nebraska, to the $250 million renovation and seismic retrofit of the University of California’s College of Law historic building in San Francisco, every image inspired respect for the professional expertise of America’s construction industry.
I realize that my hammering away at the lack of professional business management expertise may be misconstrued as a lack of respect for the amazing accomplishments of our industry. But nothing could be further from the truth. What I am most concerned with is the dwindling profitability of, what I consider to be, the most challenging and impactful industry in the world.
–Construction companies should not experience the second highest failure rate in American industry right behind restaurants.
–Construction companies should not have to low bid for multi-million-dollar contracts that take years to execute and assume most of the financial risk while they’re at it.
–Construction companies should not have to wait patiently to be paid while a third party decides if payment is even due.
My Mission
I am on a mission to right the business management wrongs that have seeped into the construction financial transaction. Most of the unproductive business practices that put downward pressure on margins and cause the sudden financial failure of skilled contractors who produced excellent work for many years, are not even recognized as “bad” business practices. Over the years they have been woven into the fabric of the construction business, and most practitioners believe “that’s just the way we do business“.
As I age, I have become even more committed to bringing these counterproductive and high-risk business practices to light and encouraging contractors to do things differently. I will not rest until we can restore routine double digit profit margins or until I have passed from the scene. Stick with me.
For more information on hiring the right team read more at: HIRING
For a broader view of managing your team, read more at: MANAGING
To receive the free weekly Construction Messages, ask questions, or make comments contact me at research@simplarfoundation.org.
Please circulate this widely. It will benefit your constituents. This research is continuous and includes new information weekly as it becomes available. Thank you.
