In the same way a Law Firm is a team of expert attorneys handling legal affairs for clients, a construction company is a team of construction experts providing construction services to clients. The way this team of construction experts is recruited, trained, and organized is the company’s primary success factor. The team is the company.
A Bad Belief
“A common mistake in the construction industry is that many firms are structured ineffectively: they have unrecognized chains of command, they don’t have departments or divisions, and they are loosely organized. One of the reasons for this ineffective structuring of the business is that many, probably most, of these companies were begun by one person, who learned how to do the work by coming up through the trades or through technical or engineering education. These individuals lack business or management education and believe that all that matters is producing the work. Thus, because they started out small, they didn’t think a formal organizational structure was needed. Working hard and hiring similarly minded people was sufficient. And as start-up companies experience success early, the idea that a formal organizational structure is not necessary to be successful gets reinforced and becomes a belief of the contractor…
After examining a statistically significant number of failed construction companies, we determined that construction companies typically failed during the first generation… In most of the first-generation companies, an inappropriate management structure was determined to be a factor in the failure.” (The Business of Construction Contracting, Thomas C. Schleifer, Aaron B. Cohen, Wiley, 2025, p. 14)
NFL Team Functional Structure
Sports are metaphors for everyday life. As we discussed last week, building an NFL team from the ground up is the clearest example of using functional analysis to build a winning organization. A quarterback is not a tackle; a tackle is not a tight end; a tight end is not a wide receiver; each position on a football team has a different function and requires an expert in that function. Each function makes a different contribution to the collective success of the team.
A Functional Construction Company
My functional analysis of a construction company divides the company into three primary functions:
- Getting the Work (marketing/sales)
- Doing the Work (production/operations)
- Accounting for the Work (finance/administration)
The many other functions, such as estimating, personnel, equipment management, purchasing, etc., all fall under one of the three functional areas. Extensive research revealed that successful construction companies had efficient and appropriate structures, and that failed construction companies almost universally had inappropriate structures or lacked structure at all.
Don’t Wait till It’s Too Late
Almost all contractors and their teams are competent builders but too many lack the ability to organize and lead an organization as a cohesive group all working on the same objective at the same time. Contractors are uncomfortable with too many structures and procedures because (and I quote) “Everyone knows what their position is and what they are supposed to do.” Or the argument that a company is too small for an organizational chart. When asked, “What size do we need to be to have a formal organizational chart?” I respond, “From day one. The reason is that once you get going, it’s too difficult to introduce structure where there has been none.”
The Offensive Coordinator
NFL teams employ a coach they call the Offensive Coordinator. After the owner, general manager, and head coach have recruited and trained the best candidate for each individual function on the offensive side of the ball, they turn the team’s fate over to the Offensive Coordinator. He’s the guy that looks at the skill level of each player and designs plays that they can best execute against the varying skill level of each opponent’s defensive line up. He often calls the plays during the heat of battle constantly adjusting the sequence of plays to the opponent’s defensive response.
The Construction Offensive Coordinator
In a small or mid-size company the contractor is the offensive coordinator. In a larger firm it may be the VP of Operations.
- After recruiting the best players to fill each functional position, the Contractor or VP Ops evaluates each potential project to see if it’s a good fit for the team they have assembled.
- After the project is underway they evaluate the performance of each functional position to see if they’re making their unique contribution to the success of the project. Did the estimators get it right? Is the project design too complex or inaccurate to guarantee efficiency and quality? Are field personnel producing efficient day-to-day work progress? Is the cash manager providing the capital to keep the work going?
- Just like the NFL offensive coordinator calling the plays during the game, the contractor or VP Ops conducts an ongoing functional analysis of each function’s expected contribution and makes real time project plan adjustments in response to actual results.
Each member of the company’s team has a different function to perform and makes a separate contribution to the success of each project.
Their collective ability is your company.
For more information on the proper structure of a construction company, read more at: STRUCTURE
For a broader view of team building, read more at: TEAM
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.
