Foundations of Construction Management for SMBs

There aren’t many industries as complicated as construction. From managing materials and labor, to keeping stakeholders happy, there’s a lot to juggle here. Without a solid plan and process in place, staying organized and on schedule is near impossible. What’s more, everything is connected - which means if one part of a job goes off the rails, more are likely to follow.
  November 7, 2023

No matter how small or large, every job requires careful planning and management to be executed successfully. In an industry with so many moving parts though, that’s not always an easy ask.

In this article, I’ll take you through how the biggest players in the construction industry approach construction management and how to apply the key principles to your business.

Key Takeaways

  • Effective project management in construction helps you and your team stay organized, navigate complex jobs, manage costs, and hit deadlines.
  • Each job moves through five project management phases: Initiation, planning, execution, handover, and the warranty period.
  • Being intentional with planning, resource allocation, and risk management is crucial to ensuring every job is successful, profitable, and completed safely.

The Iron Triangle of Construction Project Management

There aren’t many industries as complicated as construction. From managing materials and labor, to keeping stakeholders happy, there’s a lot to juggle here. Without a solid plan and process in place, staying organized and on schedule is near impossible. What’s more, everything is connected – which means if one part of a job goes off the rails, more are likely to follow.

This is what we call the iron triangle of project management in construction.
iron triangle for construction project management

The three points of the triangle represent cost, scope, and schedule. You start in equilibrium with all three, and any changes made to improve one will likely require adjustments to the others. Where I often see jobs fail is in the planning stage. Even with a great outline of how you’ll balance a job’s cost, scope, and schedule, poor planning will make that balance hard to realize.

Take change orders, for example. Oftentimes, teams fully consider cost and scope, but forget to take into account how a change order can affect schedule. Balancing all three is the goal and once you’ve achieved it, the project team should work hard to maintain it even as these change orders are incorporated.

The 5 Phases of Construction Project Management

All jobs will follow five “phases” as they progress from initial negotiations to final walkthroughs. Depending on the job, these phases might not be entirely separate from one another – there’s often no clear line between planning and execution, for example.

For simplicity’s sake, however, here’s a quick overview of these five phases:

Project Initiation – Before you can even start planning for a new job, you have to assemble the right team. Depending on who the project owner is able to bring in, you might be tasked with finding architects, engineers, or subcontractors.

Planning – Now it’s time to draft a roadmap. Here is where you’ll consider the scope as set by the owner and the design team and set expectations around cost and schedule — that iron triangle I mentioned before. Additionally, you’ll want to break down your job into smaller milestones and outline how you’ll manage communications, risk management, and resource allocation.

👉🏻 Read more about how to make the most of the preconstruction phase.

Execution & Monitoring – After a healthy amount of planning, you can finally break ground. This is where you’ll put all of your plans and project management processes into action – from assigning resources to setting up tracking systems. At the same time as you’re executing the job, it’s important to set up monitoring systems to measure progress and performance. With a good monitoring system in place, you’ll be able to proactively address and plan for potential issues — like weather-related delays or material or labor shortages — before they derail your progress.

Handover – Once construction is wrapped up, it’s time to close out the job and hand it back over to the owner. In this stage, you’ll work with the authorities who have jurisdiction, the owner and the design team to complete any final inspections and resolve any remaining issues.

The Warranty Period – After formally completing a job, you move into the warranty period, which can vary in length by state. Unless any issues pop up, you’re officially off-the-hook for any liabilities after this period ends.

Key Elements of Successful Project Management in Construction

How well each of these five phases go will largely depend on how well you’re able to nail down a few key elements. In our experience, successful project management in construction revolves around the iron triangle. As you’re planning a new job, every step you take will tie back to managing cost, scope, or schedule in some way.

Start with your project scope, then build from there. Under this umbrella, you’ll set job milestones, identify job deliverables and start building a tentative schedule. Starting with the end of the job in mind (e.g. outlining ahead of time what inspections you’ll need) will help you avoid a mad dash at the end.

👉🏼 Learn more about how to write an effective scope of work. 

Once you’ve defined your project scope, there are three areas you’ll want to tidy up and revisit throughout the job: planning and scheduling, resource management and risk management.

Project Planning and Scheduling

Let’s revisit planning and scheduling for just a minute. A thoughtful schedule is important, particularly as it relates to the sequence of work, but be sure to leave room for some setbacks or changes. While an architect’s drawing can give you an idea of where you need to go, planning and scheduling will help you chart every step you need to take to get there. Carefully outlining all aspects of the job, including scope, timeline, and communications will help you not only stay on track, but stay flexible in case of unexpected events.

For general contractors in particular, a logistics plan is essential. This is your roadmap for the temporary aspects of a job and includes things like where labor will park, where you’ll lay down materials, how you’ll set up heavy equipment, etc.

Resource Allocation and Management

In construction, your most important resource is your people. The perfect team might not exist, but choosing the right people will take you far on any job. When filling out your team (including subcontractors), I’d recommend taking these things into account:

  • Experience, or lack thereof. If a team member or project stakeholder is experienced in one area and lacks experience in another, how will you compensate for that?
  • Strengths, and how they complement the rest of your team. Some people might be great at paperwork, and less proficient on the jobsite – or vise versa. A good mix of strengths can help you fill in any gaps as needed.
  • Teamwork. Can someone collaborate and work well with a group? What can you do to better align incentives across all of the stakeholders?

Along with building the right team and scheduling them accordingly, smart resource allocation and management also means considering:

  • Contingency. If you find you’ve already used up the resources you’ve allocated, this ‘rainy day fund’ can help you bridge the gap without blowing your profit.
  • Equipment and material availability. Back in 2020, everything was in short supply, causing jobs to drag on endlessly. While things might be more stable today, it’s always a good idea to plan ahead. Keeping a long lead items list for bespoke products, equipment, and any items you expect to have to wait for will help you stay organized and schedule work accordingly. On the equipment side, proper planning here means making sure any rented equipment is available, and any owned equipment is maintained and not already scheduled for another job.

Risk Assessment and Mitigation

On the jobsite, one of the biggest risks contractors face is going off schedule. It goes back to the iron triangle. If a job’s scope isn’t well defined, for example, that can derail your schedule. Keeping everyone’s attention on action items can easily reduce this risk and ensure you can keep to deadlines.

Of course, we can’t talk about risk assessment and management without also talking about safety. Keeping your team safe on the jobsite often comes down to the habits and routines you reinforce. A culture of safety doesn’t always happen naturally – it takes intentional work on the part of everyone to build awareness and reinforce good habits down the chain.

Also, if you’re dealing with night work, check out our guide on managing a safe and effective construction site after dark.

At the end of the day, most risks in the construction industry can be mitigated by empowering your team to speak up. Remember the saying, “see something, say something”? It’s a good reminder for everyone to have in their back pocket. If something looks wrong, whether from a quality or safety perspective, it probably is. Even if nothing is actually wrong, it’s better to have spoken up than to risk not saying anything at all.

👉🏻 Keep Reading: Common Construction Management Issues and How to Navigate Them

The CrewCost Team

Written by The CrewCost Team

Recent Articles

How to Switch to a New Construction Accounting System in 5 Easy Steps
How to Switch to a New Construction Accounting System in 5 Easy Steps

While it might seem like a daunting task at first, properly prepping your data for transfer will ensure a smooth migration and help you keep the most accurate financial records possible. Ready to dig into your new accounting system? Follow these five steps to make sure your data is transferred correctly and completely.

How to Set Up and Manage an RFI Tracking Log
How to Set Up and Manage an RFI Tracking Log

The best way to manage multiple RFIs is by developing and actively maintaining a good RFI tracking log. An RFI tracking log is a list of all of the RFIs that have been generated on a project.

The Quick Guide to Cost-Plus Contracts for Construction
The Quick Guide to Cost-Plus Contracts for Construction

A cost-plus contract reimburses you directly for all costs associated with the assigned project – plus a fee which takes into account your overhead and profit. Let’s dive into how they work and the pros and cons to contractors.

Quick Guide to Time and Material (T&M) Contracts for Contractors
Quick Guide to Time and Material (T&M) Contracts for Contractors

In a Time and Material (T&M) contract the project owner will pay you for all your time (labor) and materials, plus a markup, for the project. Your fee structure is tied to the amount of time and materials spent on the project, versus a fixed fee which can be found in a lump sum project. Best for projects in which the scope of work or project duration are unknown, these contracts provide flexibility and protection to your bottom line.

A Comprehensive Guide to Fringe Benefits for Construction Companies
A Comprehensive Guide to Fringe Benefits for Construction Companies

Fringe benefits are extra benefits that employees receive from their employer in addition to their regular salary or wages. We’ll dive into everything you need to know about what they are, how they factor into your overall cost and the tax implications of these benefits.

5 Mistakes Builders Make when Bidding Big Projects.

Download this 8-page guide with the best tips for accurately and confidently bidding more profitably.
Share This