Levers to Increase Your Construction Company’s Revenue

If you’re a construction executive looking to grow your company’s revenue, you ultimately have three metrics that impact your top-line revenue:

• Lead Generation
• Hit Rate
• Average Project Size 

Improving each of these metrics requires different approaches, which we’ll explore below. First, let’s use an example to examine the metric(s) we want to focus on. 

Here’s the math on how to grow a $100 million construction company to $250 million in three years. Their current metrics are:

To grow their company 2.5 times, they either need to increase any of these metrics by 2.5, which would require 125 leads (aka proposals), a 50% hit rate, or an average project size of $25,000,000. 

However, tackling just one of these metrics alone is problematic and unrealistic. 

If you’re going to more than double your average project size from $10 million to $25 million, you’ll probably lower your hit rate because you’re chasing work at a new level with less credibility and newer relationships. This move increases the number of leads you need to achieve your goal. 

Also, while it’s possible to double your hit rate, it usually means getting more selective in what you bid, so the number of potential qualified leads will probably go down, which keeps you from hitting your revenue targets. Keep in mind that you can’t control how many projects are available each year.

Additionally, you can’t expect your proposal team, which may consist of just a single proposal/marketing coordinator and an estimator, to more than double its workload. You’ll need to scale that team appropriately, which takes time to train.

With the numbers in front of you, it probably became obvious that you’ll want to attack each metric and hitting $250 million may look more like:

Increasing your leads from 50 to 67, upping your hit rate just 5%, and going after large projects seems more realistic. Now, let’s explore the multi-pronged plan for increasing these numbers.

Increasing Lead Generation

• Deepen Client Relationships – create a client tracking system in your CRM for client outreach and relationship building, train your Business Development team including your Project Executives and Project Managers to create a multi-layered relationship known as “zipper”.
• Subscribe Bid Platforms – you can’t compete on projects you don’t know about and tools like Dodge Data & Analytics, BidClerk, IMS, or ConstructConnect can help you find new opportunities, especially if you work in the public sector.
• Enter New Market Sectors – diversify your project portfolio by looking at different market sectors where your experience crosses over and is valuable.
• Expand Geographic Footprint – grow past your current city/region by asking current clients about their projects in other areas, target more regionally-focused clients, or acquire a company with a similar culture in a different region.
• Scale Proposal Team – grow your proposal person into a team to handle the increased workload, to prevent burnout, and for redundancy so your team can maintain work/life balance.
• Advertise & Sponsorships – build brand awareness by strategically getting more visible by putting your brand where your clients are such as associations, conferences, or local youth playgrounds and fairs. 
• Digital Marketing & Social Media – stop living in the 1900s and ignoring the fact that your clients are online. Target advertising, social media posts, and basic SEO can provide a strong ROI for a small investment and allow you to expand your reach outside your current social circles. 
• Marketing Tech – utilize tools to get “lean and mean” such as a contact search tool, website visitor identification, and social media scheduling software.

Increasing Your Hit Rate

• Get More Selective on Projects – build or refine your Go/No Go scorecard to only bid on work your company can actually win. Track your scores along with results and you should see the correlation between having a good project fit and winning new work. 
• Build on Relationships & Do More Repeat Work – stay on communication with your past and current clients because they’re the most likely people to give you more work or refer you to their peers.
• Showcase Credibility & Expertise – on your website, in your proposals, and day-to-day you need to position yourself as the expert. People will seek out industry experts across the world and pay them more than triple the cost of a commoditized contractor. 
• Enhance Proposal Quality – turn your proposals into something prospective clients want to read instead of making it a chore. Up your game in it’s appearance and content.
• Storytelling – capture the true story behind your work and how you “saved the day” on projects instead of sticking with just the specifications and being ‘on time and on budget’ like everyone else.
• Get More Precise & Consultative – you’ll stand out from the pack of contractors just proposing a scope and price if you get more precise and show specific concerns the client should know.
• Differentiate – highlight what makes your company unique, spotlight your culture, showcase specific experience or equipment, or focus on your quality by extend your warranty.
• Improve Safety to Improve Pricing – often the only difference in price between several GCs is their profit margin and safety rating. Tighten up operational efficiencies and your safety so you can make more with less.

Increasing Your Average Project Size

This requires working with operations, and may require recruiting talent with experience working on large projects.

• Stop Taking Smaller Projects – it sounds simple, but you can quickly increase your average project size by stop bidding on the little projects you’ve outgrown – they’re holding you back.
• Target Larger Projects – go after those large projects that are 15-30% your typical size, especially when they’re in your wheelhouse. Don’t forget to re-educate your current clients that you’re doing larger projects because they’ll often pigeonhole you as a smaller contractor. 
• Enhance Brand Reputation – your brand may be holding you back because you don’t look like a contractor that can handle larger projects or you have a bad reputation that you need to rectify. 
• Stop Being an Order Taker – client pay the absolute minimum amount they can to commodities. Using a consultative approach in your business development efforts and in your proposals as well as start educating prospects with content marketing.
• Enter New Market Sectors – some market sectors are cheap while others pay better for performance. Healthcare and data centers pay more for quality while retail may be more for speed. 
• Joint Venture & Strategic Partnerships – team up with a larger contractor, potentially one out of town, to go after bigger projects.  
• Expand Service Offerings – you may limit yourself to smaller projects because you’re not willing to take on the entire scope of a project. Take a page from trade contractors who grow their offerings such as a siding contractor installing windows and doors.

We’ve been focused on top-line revenue growth, which may actually make you less money. That may be the short-term sacrifice or investment needed to scale the company. Luckily, many of these initiatives also improve your bottom line, including deepening client relationships, getting more selective on project pursuits, positioning yourself as the expert, and targeting larger projects.