It doesn't matter whether you are construction buildings or roads; you need to get out of the construction business. No one is suggesting that you stop building things because that's what you do, but that's not your business. The real business you are in is what you do that provides value for clients. If you attempt to compete on construction activities, you will typically end up competing on price, which doesn't work for the contractor.
For example, in 2005, in the middle of a construction boom, Ken Simonson, AGC's chief economist, reported that 40% of contractors didn't make a profit. In the same year Forbes magazine reported the average return on investment for the construction industry was 9.7% compared to 16.9% for all U.S. industries. While these stats are specific to the U.S. market, they are representative of the world construction market. Contractors need to do something different!
Daniel Pink wrote, "For business, it's no longer enough to create a product that's reasonably priced and adequately functional." Contractors must learn to differentiate their services by delivering superior value that meets the client's specific needs. His statement is true whether you participate in design-build or design-bid-build projects. In fact, one of Ted's road builder clients makes more than average fees by using the ideas discussed in this program.
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