By the team at Buildr, November 16, 2021
Today we continue our multi-part series on business development for general contractors (here's Part 1, which houses our first two steps, if you missed it). We'll take a look at some incremental strategies—and the fundamental industry causes that provoked those strategies—that are meant to streamline the success of sales departments for forward-thinking general contractors.
Never before in history have general contractors been more incentivized to grow their project pipeline and improve existing client relationships—the dual core of construction business development. This incentive is true for three reasons:
1) Bond, Client Bond. The pandemic caused a tightening of construction volume that is projected to loosen its belt a bit over the next two years. This pull and eventual push will reveal which GCs were the best at managing their current clients—keeping rapport high even during a dry season—and poaching new clients away from their competitors with more lax client management.
2) Desperate times call for... a bidding mania. With a then-unpredictable drought featuring cancelled-or-stalled-projects galore and thus less opportunities overall, many GCs bid on projects outside of their normal scope of work to fill gaps in their pipeline. This momentary desperation resulting in increased competition implies many GCs gained new clients and expanded their project repertoire—great for them, terrible for their competitors that had a slice of their bread and butter taken right out from under their noses. We'll just have to keep an eye on the lagging results of the resulting portfolio expansion of 2020.
3) A cloudy future and the reign of forecasters. "Reign" and "rain" seemed like an apt homonym to play here, but we digress. If there's one thing the pandemic taught it's that tomorrow isn't promised. How solidified is your project pipeline if a new Covid strain rears its head next year? Forecasting is a technical skill that is integral to the success of a general contractor (we'll go more into depth on forecasting next time).
With GCs newly incentivized to pour energy into solidifying business development, the obvious answer is streamlining processes through technology. McKinsey and Co. posits that the pandemic accelerated tech adoption across all industries by as much as 6 years, and construction's notoriously lagging adoption rate implies this rate is likely much more pronounced.
Opportunity tracking, revenue forecasting, client management, and workforce management (sometimes referred to as resource allocation) are business development responsibilities that can be aided by increasingly popular apps that general contractors have plenty of solid options for. Building a functional tech stack can be like playing Jenga, depending on company growth goals and priorities (we'll touch on optimizing this game of Jenga in a future blog).
Adoption rates for CRM and resource allocation apps have especially ballooned in the last decade based on JBKnowledge's yearly tech adoption reports. The suddenly vast sea of options for CRM in the construction space also point toward an answer to the construction industry's call (though the CRM options with Procore integrations, for the moment, is on the modest side).
With construction volume shrinking, a smaller pool of current new business means that general contractors ought to take any competitive advantage they can. With repeat business so invaluable, the client bond is the most precious asset general contractors have, which directly correlates to why CRM adoption in construction has exponentially grown.
Business development and sales roles are the most rapidly snowballing job title at general contractors on LinkedIn in the last 3-4 years. As of the publishing of this article, GCs have over 7,000 open hires for business development positions. This points toward a clear shift from the traditional seller-doer model of business development in the construction world, at least for the GCs that can financially and organizationally swing it.
Seller-doers are VPs and executives that solely maintain the spinning plates of building both buildings and client relationships. The shifting word here, of course, will be “solely,” as the folks closest to projects will still inevitably contribute to BD due to sheer proximity to (and time spent with) clients; the implied sea change of all the new BD hires in construction is that general contractors won’t have to rely solely on those multitasking executive elite.
If your company is still part of the old organizational regime (we don't age shame here), there's a silver lining. Some general contractors are rapidly advancing the way they think about business development, but it’s still far from the norm. Depending on what market you’re in, odds are pretty decent that the majority of your competition is still lagging behind too. Complications from Covid-19, even now, have diverted many companies’ priorities from the future to right this second. It’s a big ask to think about plans for dinner tonight when your head is currently underwater.
Smaller GCs have a bit of a competitive advantage in that they’re more technically agile while bigger GCs tend to be stuck in their ways, a symptom of “what’s always worked” and a traditional executive team whose bread and butter are the relationships they’ve maintained for 20-30 years. One multi-billion dollar GC we spoke with compared their organizational machinations to a massive, slow-moving destroyer built in 1885 (Destroyers were originally developed by the Spanish Navy in 1885 if you ever happen to be on Jeopardy). For the big dogs, shifting priorities and/or adopting new tech is a much more complicated venture.
Stay tuned next time for an in-depth look at pipeline forecasting.
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