In my experience, construction firms do not operate under firm budget disciplines like most other industrial concerns. Contractors usually craft project budgets in advance but rarely use them as a management tool. Because of the complexity and variability of each...

Act Like Lenders

Dec 18, 2025 | Financial Management and Risk, Financial Management and Risk, Financial Management and Risk, Financial Management and Risk, Managing Subcontractors, Weekly Construction Message

One of the things that frustrates me about the relationship between contractors and owners is that owners act like they're doing us a favor by letting us take all the risk in the financial transaction. It's as if contractors are not trustworthy and owners and their...

Retained Earnings

Dec 11, 2025 | Built Environment, Business of Construction, Financial Management and Risk, Financial Management and Risk, Financial Management and Risk, Financial Management and Risk, Organization Transformation, Partnering, Planning, PM, Project Delivery, Weekly Construction Message

"The ultimate measure of performance is not what is earned, but how the earnings are used to increase a construction company's value." (The Business of Construction Contracting, Thomas C. Schleifer, Aaron B. Cohen, Wiley, 2025 The only way for small or start-up...

Low Bid Acquisition

Dec 4, 2025 | Built Environment, Business of Construction, Project Selection, Proposal Writing, Weekly Construction Message

Low bid acquisition has been standard operating procedure in the construction industry, and just about all small start-up contractors are forced to participate or forgo getting any work at all. However, low bid acquisition destroys any reasonable chance of making a...

Proper Prior Preparation Prevents Poor Performance

Nov 28, 2025 | Financial Management and Risk, Financial Management and Risk, Risk Management, Risk Management, Weekly Construction Message

Dennis Birch, a well-respected construction accountant, argued that "many US contractors are watchers instead of managers of their financial affairs." He claimed that “they do a lot of responding to things that happen to them but don't have much control over what's...

Never Enough Working Capital

Nov 20, 2025 | Built Environment, Business Failure, Business Failure, Business of Construction, Business, Strategic & Project Planning, Business, Strategic and Project Planning, Cash Flow (Getting Paid), Financial Management and Risk, Financial Management and Risk, Weekly Construction Message

Construction companies have few investible assets. Contractors are service providers. Over the years they will have acquired some depreciating assets like vehicles and equipment, but vehicles and equipment are only used to generate income and retain limited value...