Everyone is a Niche Contractor

Everyone is a Niche Contractor
Photo by Valentin Jorel / Unsplash

Most industries with similar scale to the construction industry have 800 pound gorillas who anchor their industries.  These companies set the tone by developing or adopting industry standards, best practices, and training a disproportionate share of people.  Think of the FAANG companies in tech (Facebook, Apple, Amazon, Netflix, and Google), or Coca-Cola and Pepsi, or the small handful of automakers who are household names...

Construction, on the other hand, is a highly fragmented industry - there are general contractors, trade contractors, speciality contractors, architects, engineers, inspectors... the list goes on.  As a result, the construction industry doesn't have any 800 pound gorillas.  At about $14B in revenue, Turner Construction is the largest construction company in the USA and they represent only 0.6% of the $2.1T construction market (numbers as of 2020).  In construction, even the biggest fish are in such a huge ocean that they can't make major impact to industry behaviour singlehandedly.

Construction doesn't have any 800 pound gorillas

Construction Companies Are All Niche Builders

What's more - every company in construction operates in a niche... think about your business for a minute.  I wager that there are some types of projects of similar scale that you tend to do more than others (or maybe exclusively!).  Maybe your projects fall into a small number of distinct buckets, but the buckets are pretty well defined aren't they?  

I'd also wager that when you're bidding on a project in one of those buckets, you're bidding against the same group of usual suspects that are always on these types of jobs.  Furthermore, the trades who bid these jobs are also probably from a small group that show up again and again.  That's because you and your competitors are operating in the same niche.

Every once in a while someone new dips their toes in, and either submits a price that is embarrassingly high, or dangerously low (both are indications that they are our of their element), and after a disastrous showing they disappear and you're back to the usual suspects again.

Think about a spectrum of projects ranging from a single family home up to a multibillion dollar hospital.  All of the projects along this line have foundations, structure, envelope, finishes, specialties, and MEP - every one of these projects exists in the same overarching construction industry; yet the best practices of the most sought after home builder would lead to an unmitigated disaster if applied to the hospital, meanwhile the hospital contractor's SOPs would be so bureaucratic that if applied to a house they would be cost prohibitive.

Your Niche Is An Advantage

It's worth keeping this in mind when you are thinking about process inside your organization... the best practices from the most revered names in the industry might work for their niche, but might also be completely impractical for the type of work you do.

Instead of borrowing from others, look closely at the systems at work in your company and figure out how to streamline them: apply accounting controls where they will materially reduce risk, cut red tape where there is no value-add, and introduce new steps where things aren't working smoothly.  

Staying focused on your niche and building internal systems well suited to the type of work that you do best will simultaneously improve: margins,  staff morale, and client satisfaction.

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