A Guide in Moving from Private to Public Construction Projects
A Guide in Moving from Private to Public Construction Projects

A Guide in Moving from Private to Public Construction Projects

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With the tighter private financing guidelines and burst housing bubble, more and more contractors are considering public work projects as their new source of revenue. It seems like a great idea on the surface. A possible federal package aimed at public works as well as infrastructure development means there can be more government projects to go around. However, making the shift and going for this drastic move requires a whole lot of preparation.

Contractors may find themselves running the risks of underbidding jobs and subsequently getting slapped with steep penalties or lose their money. If you wanted to do this drastic shift, keep in mind the many things and factors you need to consider firsthand. Shifting your company to government work is a huge decision to be made.

Read on this blog to understand more. It’ll serve as your guide.

What’s the difference between Public and Private Construction Projects?

 

First, there is a huge difference between public and private construction projects when filing construction payments. That is why it’s very important for you to know what type of construction project you are working on.

The significant difference between a private and public project is that, while the former is particularly commissioned and paid by private businesses, building owners and private institutions, a public construction job is nearly associated with several rules generally determined by the state or federal government. Everything stated is usually attributed to the Miller Act and some variations of it.

When it comes to deciding to work in the public or private sector, many construction companies have many things to consider regarding the rules and regulations, the types of contracts they are facing, and the inherent ease or difficulty of landing a good bid. 

Different times and circumstances call for drastic changes. While sticking to private properties might have been a better idea, more and more construction contractors are now looking forward to setting higher public sector goals.

Five Key Steps in Shifting to Public Construction Projects

 

By following these initial first steps and establishing on them as you continuously grow your public work portfolio, you can position your company in a place of survival, especially when there’s an economic downturn. Making use of these following steps can also help you further thrive whenever the market conditions improve.

Step 1. Get Educated

Getting more and more educated about prevailing wage law is the very first thing you need to do. Next, determine what accounting, reporting, and payroll requirements, are necessary to meet federal and state regulations. Most U.S. states today already have some information displayed on their website, which is an excellent place, to begin with. However, taking a workshop or class from your local industry association may provide you more with comprehensive how-to information.

Never hesitate to hire an excellent consultant to show you further the ropes. An up-front and fair consulting investment often delivers you a high ROI (Return in Investment) by simply saving you more money down the road and shortening the learning curve. A financial services firm that has construction experience can generously assist you in building things such as bonafide fringe benefits programs that can lower your taxable employee wages. 

Additionally, it can help you lower your bid rate, control your cash flow and increase your profit margin.

Step 2. Automate Your Accounting Process

It’s no denying that using spreadsheets or general accounting software in managing prevailing wage jobs is time-consuming and is more at-risk for human error. There are useful applications when a contractor like you has a single pay rate and has no need for labor burden. However, if you wanted to level up this area, you need a more robust accounting program and other software applications for project task management. 

When you perform any public works projects, you have to have payroll software that fully supports various capabilities and different worker’s compensation rates for various construction jobs. While your accounting is most likely you’re a priority; you shouldn’t overlook the importance of project management for construction and inventory for your business. Having it all prioritized affects the workflow of your business, the projects you’re about to manage and of course, your team!

 A construction scheduling software is all you need, packed with built-in features designed to help you supervise every important aspect of your business. Click here to get started with your 30-day FREE trial!

Step 3. Bid on Projects Bases upon Your Strengths

On handling public construction projects, the job is often awarded to the lowest qualified bidder and most likely, the competition can be harder than you could imagine. Bid too low and you may win the work but bankrupt your business. Bid too high and you are wasting your time. Nowadays, it’s not uncommon to notice twenty to thirty contractors bidding on similar public works jobs. 

And since each contractor bidding on the wage job should pay the employees the same rate of pay, the wage can’t be his competitive edge. The same thing that goes on you if you follow this line. Therefore, it makes sense to determine first your strengths even before after projects. So what type of projects do you excel in the most? Which of your crews perform the best and the fastest? 

When you begin the shift to go to government work, never fail to determine the projects that are based upon your actual strengths. Surprisingly, it will most likely place you in the lowest bidder spot while still turning a profit.

Step 4. Cultivating Relationships

And after getting educated, automating your accounting software, deploying specialized software tools for scheduling management, and modifying your bidding, you need to have a strong foundation in your decision to shift to public work projects. Hence, the next thing you must focus on is building relationships with the individuals in charge to award your jobs. 

Take note that unanswered questions are often a barrier to public work projects. Whenever you have some lingering questions about the job, you may probably not submit the bid. For instance, if you get to know the directors of facilities management, you can be advantageous. Not only will you discover what job is coming up, but you will also have a specific contact to call whenever you have lingering questions about the bidding process.

Step 5. Changing the Construction Company’s Direction 

Deciding to change your business is no easy decision, even when the facts are presented to you already. It takes courage, energy, strong leadership, willingness and toughness to try new strategies and ideas. You also need to have the ability to replace your crew if they are pretty uncooperative. You will encounter negative energy, resistance, pain and other challenges. 

In entirely changing your construction company’s direction, you have to strategically transform your business model and start investing in cutting-edge software solutions like inventory management software. And rather than competing against an increasingly huge list of competitors on some projects available to bid, stop going after projects that had slight hope for bottom-line success. Decide also on changing your target clients from private customers to government agencies and cities.

Have a complete focus on how the project delivery is done in the public sector. First, you have to know that it can be tremendously nuanced. First-time PMs can be brought undone due to the lack of experience regardless of how seasoned professionals are in the private sector. Suppose you found yourself having a hard time delivering the project. In that case, it is time to dig deeper and begin to understand the key characteristics of public work, wholly set them apart from the private job.

These five steps and all the points mentioned above aren’t exhaustive but are a great snapshot of how you can effectively shift to your desired public work projects.

In Making Your Decisions More Profitable

 

At the start of the economic crisis in 2008, several construction business owners have to make a complete U-turn on the way they managed their companies. In fact, the private sector was less reliable during that period, and working for the government was the only option they have to control loss of clients and bankruptcy at least.

After many years, today’s market is much more balanced as the industry picks up and adjusts. Many private projects are continuing to grow in number. So the only thing that may keep you away from them usually has to do with the set of rules and requirements accompanied by working for private businesses or private individuals.

In a nutshell, public contracts are still more secure and straightforward and reliable compared to private projects. If you’re starting your first construction project, public works present you with the best opportunity and advantage to grow as a business. 

Key Takeaways

 

Smart business owners and contractors must still theoretically be able to straddle both worlds, private and public sector and become successful. They also need to modify and change their work as required when moving into government projects, specifically when it’s for the first time.

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