What Will 2021 Look Like for Your Construction Firm?

It’s probably premature to look at 2021 and simply say, “Well, it certainly can’t be as bad as 2020, right?” There is no shortage of natural disasters, diseases, world-shattering events, etc. that could easily pop up like Cousin Eddie dropping in for the holidays.

However, it has been interesting to see the construction world maintain its cool in the face of a tremendous headwind. When one compares the current economic climate to that of the previous recession in 2008, there appears to be a balance of cautious optimism and ingenuity that is emboldening construction organizations across North America.

By no means are contractors taunting the karma police, screaming, “Bring it on!” like a petulant teenager, but the best-in-class firms are referring to their playbook and strategic plans, defaulting to the scenarios these plans were created for in the first place.

Consider the Great Recession—too many construction firms hunkered down in an attempt to weather a storm that seemingly had no end. Ironically, in stark contrast to those dark times, firms are currently playing a calculated offense on many fronts.

For instance, construction organizations are aggressively pursuing new markets and opportunities in the short term while understanding that their future success will be in developing their current talent pool.

Volatility, uncertainty, complex and ambiguity (VUCA), a term coined by the United States Army War College, is as relevant today as it was a decade ago. VUCA is in large supply right now. But consider this for one moment—even if the country wasn’t in a global pandemic, an election year, etc., there will always be something.

The best leaders understand that they are not defined by those externalities but, rather, a construction organization that is grounded with a solid vision, agile operations, nimble market focus and deep cultural buy-in.

Business Development, Estimating & Operations

Construction organizations have had to learn creative business and client development. COVID-19 created a unique environment where traditional client relations cannot always be conducted. Reaching customers—new and old—on a platform that both takes into consideration the client’s needs while also being efficient enough on already taxed schedules requires real strategy.

Everyone would love to reengage with traditional client dinners or sporting events to develop rapport, but in the absence of any sports, firms are having to engage with a flair that is both creative and innovative. For instance, construction firms are realizing that marketing messages must be direct and customized.

Simply blasting social media with messages of “We’re the best!” will not suffice. Rather, construction firms should target potential clients with specific messaging that speaks directly to their needs, including the following:

• Focus on schedule—Firms are communicating their ability to control the supply chain better than their competition, as well as appealing to the connective tissue 
• Focus on COVID-19 controls—Everyone is concerned about virus ramifications, as well as the appearance of control. Contractors are reinforcing a “We’ve got this.” message in their best practices.
• Focus on the client—In the end, clients want to work with firms that really listen to their needs. With so many distractions occurring simultaneously, it is imperative that contractors talk less and listen more.

Comparatively, there are many contractors that do not have a reliance on business development from a relationship standpoint. Bottom line—for many contractors it comes down to price.

Best-in-class firms understand that there should not be a race to the bottom, chasing a rabbit that only provides risk laden work that is dirt cheap with little upside. Rather, firms are focusing on controlling the right variables:

• Methods and means—Firms are developing real project strategies that are examining all of the variables that could affect a project
• Options and outs—With constrained supply chains and the ever-present risk of partner default, firms are crafting scenario plans that provide safety nets
• Productivity and efficiency—The focus is on crew blend and real productivity rates—more importantly firms are more frequently linking the estimating function back to operations to provide real-time feedback on performance

Market Shifts & Competitive Discovery

There continues to be a tectonic shift in all of the markets. Will the American mall survive? What will happen in medical world? How many more millions of square feet will distribution channels need? Will the residential market remain a darling in the new year?

No one has the magic eight ball, but the encouraging sign can be summed in one word: activity. There are opportunities in the recovery, but it’s also requiring firms discover, investigate and research new sectors.

Put another way, firms are proactively sending “exploratory missions” in the new sectors as well as new geographies. Once again, compared to previous economic downturns where firms appeared reluctant to leave their traditional body of work, today’s construction firms were quick to pivot to potential new business.

However, this migration to new markets, niches and geographies has an alternate consequence—increased competition. With all of the pageantry of a Discovery Channel documentary, locals are seeing new predators prowling the landscape, which creates an interesting dichotomy in style—playing an aggressive offensive while also defending the home market.

Contractors are not taking this for granted and they are investigating new players with the diligence of a football team scrutinizing the next week’s opponent and making sure to study the following:

• Experience—What does this new competitor bring to the market? Are they following a client and using that as their entry point?
• Talent—How will a competitor staff their new operation/project? Will this competitor make a push for our people? How secure are we in our employee loyalty?
• Vendor loyalty—What will our trade partners think of an outsider? How do we stack up in our vendors’ minds?
• Customer loyalty—How secure are we with our customers? Are we ripe for a takeover? Will our customers view this as an opportunity to keep us honest?

The keys to success will be a multifaceted strategy that balances a strong offensive push to find the next big thing while also playing an aggressive defense to protect profitable market share.

The most encouraging aspect of these tenets for 2021 is that they are both realistic, with a disciplined focus and happening in real time. VUCA may be unsettling for some, but the construction community is resilient, and the best-in-class firms are developing real, proactive strategies. 2021 may provide a renaissance, giving way to a “Year of Hope”—just no jinxes.