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Low Bid Acquisition
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
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
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...
Timely Corrective Action
Managing Capital Risk Recognizing the reality that there are multiple types and magnitudes of capital risk in construction is the first step in risk management. You may be familiar with the term risk prevention, but in fact, we can't prevent risks from...
People Who Live in Glass Houses Shouldn’t Throw Stone
I have been wrong in my criticism of contractors for ignoring financial statements in the day-to-day running of their businesses. Their instincts, as it turns out, have served them well. They saw something flawed in relying on interim financial statements that were...
Surprise!
Businesses fail for any number of reasons but rarely is it a surprise to management. Only construction companies seem to experience sudden collapse when they unexpectedly run out of cash. The element of surprise expressed by most of the failed contractors I worked...
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