Many construction businesses are built on hard work, technical ability and the determination of their owners to deliver a good job for their clients. In the early days, this approach works well. The owner knows what is happening, makes the important decisions and keeps everyone moving in the same direction.
As the business grows, however, the same approach can become a limitation. The owner becomes involved in too many decisions, communication starts to break down and people are no longer sure who is responsible for what. Systems that worked when there were only a handful of employees struggle to cope with more projects, more clients and more people.
The answer is not necessarily to employ more people, introduce expensive software or create a thick operations manual. It starts with understanding the business you want to build, identifying what is holding it back and putting the right people, responsibilities and processes in place.
Start by deciding the business you want to build
Before changing the organisation structure or introducing new processes, it is worth taking a step back. What do the owners want the business to become now it is established? Is the ambition to build a larger contracting business, create a more manageable operation that provides a good income, develop a business that can operate without the owner, or prepare for an eventual sale?
There is no single right answer. The important thing is that the owners have a clear direction and that the people working in the business understand it.
A vision for the future provides a destination. The purpose explains why the business exists, while its values establish the behaviours expected of everyone working in it. These should not simply be statements on a website or a poster in the office. They should influence how people make decisions, deal with clients, manage subcontractors and respond when something goes wrong.
This is where strategy and organisation come together. The business needs to decide not only what it wants to achieve, but also how it will organise itself to achieve it.
How to develop a business strategy for a construction SME is described in this blog : Strategy-for-sme-contracting-businesses
Outside-in, Inside-out: a practical way to examine your business
When considering how a business needs to develop, I find it useful to start with two external perspectives: Outside-in and Inside-out. Together, they help an owner understand the market, decide what the business should offer and establish what needs to change internally to deliver it.
1. Outside-in: understand how the market sees you
Start by looking beyond the business itself. Who are your ideal clients? What do they value? What do they expect from a contractor, and what would make them choose your business over a competitor?
Consider the markets you want to serve, the type of work you want to undertake and the reputation you want to establish. What are clients looking for, and how well does your business currently meet those expectations?
There is little point in developing a business around an offer that the market does not want. Equally, there may be opportunities to differentiate your business by providing something clients value but competitors struggle to deliver consistently.
2. Inside-out: decide what you will offer
Having considered the market, look at how your business can offer to meet those needs.
This could mean responding to enquiries more professionally, pricing work with greater confidence, providing more reliable project delivery or demonstrating that quality, health and safety and commercial risks are properly managed.
It might also mean developing the capacity to take on larger or more complex projects without putting the existing business under unnecessary pressure, particularly if clients are asking for this.
The important point is to align what clients want with what the business can deliver consistently and profitably.
Having considered these two external perspectives, the next question is: what needs to change within the business to deliver the offer successfully?
Inside-in: understand how the business works
The next step is to look at the business from within. How well do the people, organisation structure, communication and processes work together? Are responsibilities clear, or does everything depend on the owner knowing what is happening?
Every business operates differently. Those that work efficiently, communicate effectively and engage their people are better placed to deliver consistently and respond to the demands of their clients.
However, before deciding what to change, it helps to understand how the business actually operates today. A useful framework for doing this is the Cultural Paradigm.
The Cultural Paradigm: discover the levers for change
The Cultural Paradigm provides a way to examine the existing arrangements within a business and understand the culture they create. It considers six areas, from which a summary phrase can be derived to describe the current position.
When I work with contractors to examine how their businesses operate, I hear descriptions such as:
- “We're flying by the seat of our pants.”
- “The left hand doesn't know what the right hand is doing.”
- “Our drive for delivering quality is destroying us financially.”
These phrases provide a starting point for discussion. They help capture how people experience the business and highlight issues that may need addressing.
The six areas to examine are:
- Stories – The events and people talked about inside and outside the company.
- Rituals and routines – The daily behaviour and actions of people that signal acceptable behaviour.
- Symbols – The visual representations of the company.
- Organisational structure – Both the structure defined by the organisation chart and the unwritten lines of power as staff communicate and work together.
- Control systems – How the business is controlled, including communication, IT interfaces, financial systems, quality systems and rewards.
- Power structures – The pockets of real power in the company and how they influence decisions and behaviour.
Examining these areas and creating a phrase which is all encompassing helps establish how the business really operates, rather than how the owner believes it operates.
The organisational structure and control systems are particularly important because they can be deliberately changed to influence behaviour, improve accountability and establish more effective ways of working.
The objective is not to change everything at once, but to identify which changes will make the greatest difference to the business you want to build.
Designing an organisation structure
Having established what the business wants to achieve and examined how it currently operates, the next step is to consider how it should be organised.
Most businesses need to market and sell their services, deliver the work and manage their finances. In a contracting business, however, there is an important distinction that is often overlooked: tendering is a separate function from marketing and project operations.
A contractor needs four connected elements to work effectively. These form the starting point for the organisation chart:
- Marketing and lead generation
- Tendering
- Operations
- Overhead functions – including finance, administration, IT, human resources, health and safety, and quality assurance.
These do not necessarily need to be separate departments. In a small business, one person may be responsible for several functions. What matters is that the responsibilities are understood and that the four elements work together.
Marketing and lead generation create opportunities. Tendering assesses, prices and secures the right work. Operations delivers that work, while the overhead functions provide the resources, information and controls needed to support the business.
The structure should reflect these relationships and the needs of the business as it develops.
From individual effort to an engaged team
A clear structure is only the starting point. People also need to understand their responsibilities, have the authority to carry them out and know how their work contributes to the wider business.
This requires leadership.
As a contractor grows, the owner must increasingly move from making every decision to enabling others to make the right decisions. That means agreeing responsibilities, setting expectations, delegating authority and establishing how performance will be reviewed.
Clear job descriptions establish responsibilities and provide a basis for reviewing performance.
Delegation is not simply passing work to someone else. It involves giving people the information, resources and authority needed to succeed, while retaining appropriate oversight.
Communication is equally important. People need to know what is happening elsewhere in the business, particularly where one function's decisions affect another.
A useful model for defining responsibilities and communication channels is RACI:
- R – Responsible: Who carries out the task?
- A – Accountable: Who owns the outcome and ensures the task is completed?
- C – Consulted: Who needs to provide input before a decision or action?
- I – Informed: Who needs to be kept updated on progress or the outcome?
Used properly, RACI helps clarify who does what, who makes decisions and who needs to be involved. It can reduce confusion and prevent tasks from falling between the gaps.
Without effective communication, each individual or function may do what appears best for them, while the business as a whole suffers.
Regular meetings can help, but meetings alone will not solve the problem. Their purpose, frequency and attendees should reflect the decisions that need to be made. Actions should have clear owners and be followed through.
The aim is to create a team that can operate effectively together, rather than a group of individuals who happen to work for the same company.
Robust processes create a competitive advantage
Good processes are sometimes dismissed as bureaucracy. In practice, the right processes reduce uncertainty, make performance more consistent and allow the business to grow without relying on a few individuals to remember everything.
The processes should be proportionate to the size and complexity of the business. A small contractor may need straightforward checklists and a few well-designed spreadsheets. A larger business with multiple projects and people entering information may need integrated construction software and more formal management controls.
The starting point is to understand what information is required, who needs it, when they need it and how it will be used. Technology should support that requirement, not dictate it.
Examples of the processes required at different stages of a contracting business can be found in this blog about setting up a business:
Getting-it-right-from-the-start
Options for IT systems can be found here:
Choosing-an-it-system-for-your-contracting-business
And for managing staff, see: The-employment-cycle
Make improvement a continuing process
There is rarely a single solution to the challenges facing a growing contractor. Organisation structure, leadership, financial control, IT and project processes all influence one another.
The business also needs to review its direction regularly. What worked last year may no longer be appropriate, and new opportunities may require different capabilities or a different way of working.
An annual review can provide the opportunity to look beyond the immediate pressures of delivering projects, recognise what has been achieved and agree the next priorities. A facilitated away day can provide a more comprehensive and objective review.
Find out more here: Facilitated-awayday
Reviews of day-to-day performance should then help keep the business on course.
My approach is to work with the owner and the people involved to understand the business, develop practical solutions and help put them into effect. This may involve reviewing the organisation structure, improving management processes, establishing more useful performance information or helping the owner develop the skills needed to lead a growing team.
Every contracting business is different. I work with owners to identify the changes that will make the greatest difference, whether that means addressing one specific issue or developing a broader programme of improvement.
There is no need to undertake a major reorganisation if a few targeted changes will achieve the objective. Equally, it is important to recognise when the existing way of working is holding the business back.
The objective is a business where people understand their roles, information flows reliably, decisions are made at the right level and robust processes support both profitability and growth.
If your contracting business has reached the point where informal arrangements are no longer enough, or you want to prepare for the next stage of growth, I can help you work out what needs to change and develop a practical way forward.
You can start with one specific issue or work through a broader programme of improvement, at a pace that suits your business.
For a no-obligation discussion, contact Peter Searle at Peter.Searle@ba4cs.co.uk
