SWOT Analysis for a Construction Company: Differences between success and failure

PESTLEanalysis Team
PESTLEanalysis Team
Table of Contents
Table of Contents

It only takes a few poor decisions to destroy a flourishing construction company. This SWOT analysis addresses what these decisions can be.

Where would our cities be without construction companies?

They build our homes. Smooth our streets. Fix our cracked sidewalks. In most major cities, you can’t turn the block without seeing a construction crew working. Clearly, the construction industry is in need right now. But the need doesn’t guarantee financial growth.

For any business, it only takes a few poor decisions to destroy a flourishing construction company. This SWOT analysis addresses what these poor decisions can be, as well as the major benefits the construction industry may ignore.

After reading this, you’ll understand the key differences between a successful construction industry and a failed one.

Construction company strengths

Every construction company builds. This is the foundation: to construct what the client wants. This includes a new apartment complex, segment of road, or school. But no construction company is exactly the same. Although the strengths vary, there are a few every company should share.

Efficiency is number one.

Efficiency reduces expenses. It improves profits. It can mean the difference between a three-year project versus a one year project. Missing even one deadline is all it takes for a company to lose its good standing with a customer.

Clients are more likely to hire a company that’s mindful of deadlines and aims to complete their projects in a suitable time frame. Of course, without sacrificing the quality and safety of their employees.

Meeting deadlines depends on strong project management skills. Successful construction companies rely heavily on project managers to oversee their projects. Without an expert’s eyes and ears on the project, most will fail.

Many companies outside the construction industry need to focus on a particular niche. Construction companies are lucky because they’re the opposite; they thrive by working with multiple industries simultaneously.

Why do they do this? Because if one industry is hit, the company won’t go down with it. Instead, they’ll have an abundance of clients who are still in need of projects. It’s easier for a company to bounce back if they lose 25 percent of their profits, rather than 75 percent and more.

Construction company weaknesses

Expanding on the point above, relying on one industry for clients will be financial ruin for construction businesses. If they decide to work with only one type of client, and the client’s business dies out, the construction company is left with nothing. Because when client work dries up, so does construction work.

For example, let’s say a company specializes in building new homes. Initially, the area was booming. Families were moving in left and right for months. But now, suddenly, no one new has come to town. Now the company’s services become obsolete.

The company can sit, wait, and hope work picks up. They’ll be left twiddling their thumbs while funds drain from the company account. No business can survive while waiting for clients. Especially if their target market’s industry is on the decline.

What can the construction company do? Diversify their workload (as mentioned in the strengths section above).

Another weakness these companies face is poor decisions regarding project management.

Some companies only promote their managers based on on-the-job experience. Meaning, if they don’t have that specific experience, they’ll never move up. Although hands-on expertise helps when overseeing projects, it’s not the only thing necessary in a manager. Ignoring the “management” part for the position may lead to faults in the planning and execution of tasks.

Construction company opportunities

Construction companies should always be on the lookout for more clients. They shouldn’t leave this up to fate. Instead, they should create the opportunities themselves. Like by adding new divisions in the company. Or expanding current divisions to allow for the increased workload.

Keep an eye out for developing trends. This is one of the easiest ways to create more sustainable work. If you’re noticing public transportation options are expanding in a region, it may mean more people are moving. And where are those people going to move? In the homes built by construction companies, of course.

Successful companies keep an eye on the news in the locations they offer services. Not only to take advantage of growth. But also to see when things are beginning to decline. This gives them the opportunity to shift their business before financial ruin.

Construction company threats

Threats aren’t always controllable. That remains the same in every business, including construction. For example, a company can’t prevent a recession. And they can’t stop a decline caused by a decreasing economy. Both of these examples are known as external factors. The only thing anyone can do is react accordingly to these factors.

This is the situation when the economy declines. Or when people aren’t able to make the same purchases they once did. Changes in buying behaviors can happen quickly, especially if the economy or politics are involved. A budding industry can be made obsolete in only a few years time. Without proper differentiation of clients and services, construction companies can be made just as dead.

Photo by Verstappen Photography on Unsplash

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