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Building BetterRelationships Obtaining More Education. Building Your Business.
by subcusa.com
With recent findings highlighting that some of the nation’s largest construction firms are in the state of Texas, this tells us there is business. In order for contractors and subcontractors to be and remain competitive, it’s vital to have a firm business foundation. Building better relationships and obtaining more education are some keys to successfully help you build your business. We have a stronger Texas when our contractors and subcontractors are solid.
—Keith “MR. D-MARS” Davis, Sr.
By Subcontractors USA News Provider
According to the US Census Bureau, the nation’s construction industry was worth $1.3 trillion in 2019. As of 2020, the construction industry has 680,000+ employers and 7 million employees (The Associated General Contractors of America) — this is a decrease from 2018, where there were 11.2 million construction employees (Statista). The Associated Builders and Contractors reported that as of early 2020, over 50% of U.S. contractors expected profit increases within a six-month timeframe. Over the tumultuous course of 2020, confidence reached “historic lows” in April of 2020, but as of October 2020, there continues to be a rebound.
Focusing on our nation, specifically Texas, let’s look at some of the economic impacts of construction:
• In Texas, construction contributed $100.9 billion (5.3%) of the state’s GDP of $1.9 trillion. There were 706,000 construction firms in the U.S. in 2017, including 43,859 in Texas. • Private nonresidential spending in Texas totaled $45.4 billion in 2019. State and local spending totaled $36.5 billion. • Construction jobs pay well. In Texas, 4 out of the 5 most numerous construction occupations had higher median pay than the median for all employees in the state in 2019.
Source: Ken Simonson, Chief Economist, AGC of America, ken.simonson@agc.org, from Bureau of Economic Analysis (GDP); Census Bureau (spending); Bureau of Labor Statistics (national and state employment, median wages); AGC (workforce survey).
Statista’s latest findings reveal several of the nation’s largest construction firms were from the State of Texas in 2020, with Fluor in Irving being the most profitable of them and ranked second in the top 50 largest construction firms for the United
States as a whole, due to its revenue of over 11.6 billion U.S. dollars that year. Ferrovial US Construction Corp. ranked second in Texas with a revenue of over 2.3 billion U.S. dollars in 2020.
As the State of Texas boasts some of the most substantial construction firms in the U.S. and with the bidding process already competitive, combined with the reported turnaround, are you as a contractor or subcontractor prepared for success in 2022?
Are your pre qualifications in order? More general contractors are requesting subcontractors show their competency and efficiency
by having them fill out prequalification forms. Essentially, prequalification is like a background check. If your reputation is solid, and you have all your documents in order, prequalification is nothing to be concerned about, but organization is key. General contractors may have specific requirements for prequalification, and generally they create branded forms for subcontractors to fill out. Across the board, prequal statements tend to include requests for financial records, safety information, proof of insurance, and contractor certifications. A helpful tip is to search for examples on the web and use them as personal checklists.
Learn how to negotiate and analyze a Master Subcontractor Agreement, or MSA. This is an official document highlighting all expectations for a subcontractor, orchestrated between the general contractor and the subcontractor. In order for the sub to receive total compensation, they are to follow all requirements that are outlined in an MSA. This document determines your guidelines for an entire project, and any mishaps could ruin chances of winning repeat business. The goal of MSA is to make it clear from the beginning what is expected of your team on a project, so there are no misunderstandings down the line. One of the best ways to get ahead of the competition and prove yourself is to show that you are proficient with current digital tools. Competency in the tech area is still considered rare among subcontractors, which is fair, considering most general contractors have not been requiring their subs to use digital technology on projects until very recently. Now that there are more tech solutions catering to the needs of those in the field, nearly all large general contractors are implementing software on their projects. Wearable tech devices are also becoming more common on jobsites, used for safety, tracking, and more. And in fact, some companies include mandatory software usage in their MSAs. By being able to show a contractor that you are skilled with software programs and digital tools, you automatically get a leg up on the competition who still write everything down with pen and paper.
As a general contractor, one of the most critical keys to success is maintaining collaborative, fruitful working relationships with subcontractors. These days, tasked with managing projects that are larger, more complex and data-driven than ever before, it’s even more important to build solid subcontractor relationships. It can be a balancing act. On one hand, you need to effectively track their progress — holding them accountable for quality, safety and timelines. On the other, respecting their expertise and seeking their input and innovation while also providing them with the resources, timely communications, and information they need to highly perform. Set guidelines, rules, and expectations from the start. Keep subs in the loop and communicate often. It’s important to have a fluid system of record keeping in place. Continue to track progress, and reward good performance. With a healthy mix of industry best practices and modern technologies, today’s leading general contractors are able to not just maintain healthy working relationships with their subs, but consistently improve them.
Now is the time for business people, whether you are a contractor or subcontractor, to start taking action to build your business. Building better relationships and obtaining more education are just some of the things you can do to strengthen your business. When our contractors and subcontractors are solid, that makes for a stronger Texas.
Sources: US Census Bureau The Associated General Contractors of America Statista Associated Builders and Contractors Levelset Raken
