Business Succession Plans Needed

Overall, many of the firms who responded to the survey reported that they did not have a business succession plan in place. The importance of succession plans -- especially in the construction industry which has followed a father-to-son/daughter business model -- cannot be underestimated says Grassi. "For many companies, second generation professionals are in place; however for many others, a new generation of leadership has not been formalized, leaving business growth on an uncertain path," he says.

Reducing Change Orders - Key to Increasing Profits

Many of the firms who responded indicated that change order disputes is still one of the largest causes of litigation and often leads to profitability losses. According to Grassi, this result is most telling and indicative of a growing trend on the part of owners and developers, both public and private, to implement better project planning procedures and more complete construction documents as ways to reduce the number of project change orders.

Technology is also playing an increasingly important role in providing more complete construction documents and drawings to ensure that clashes, conflicts and the potential for future change orders may be reduced. According to Pat DiFilippo, Executive Vice President at Turner Construction and his firm's lead professional on Building Information Modeling (BIM), "Technologies such as BIM and other integrated project delivery programs are likely to have a significant effect on reducing changes throughout a project and increasing overall profitability -- for both the owner and the contractor."

Highlights of the Survey Results

Highlights of the Survey reveal the following results:

Business Planning (Succession Plans)

60% of the respondents did not have a succession plan. In a generational-based business, succession planning is critically important. The lack of these plans in the construction industry is significant for a better understanding of this predominantly, small business industry.

Joint Ventures and Other Associations

30% of the respondents currently participate in joint ventures. Larger projects require increased bonding and financial capacity. Smaller firms may be challenged by complex mega-projects. The results of the survey point to an emerging trend for companies to consider joint ventures and other business associations as a way of expanding capacity. This is also more prevalent in a down economy, as firms can collaborate and be more competitive.