LO2 Explain different types of construction companies in the market and their relationships within the tendering process.
P4 Identify the different types of
construction companies in the market.
P5 Explain the relationship between different construction organisations.
The construction companies are divided into different types depending upon the type of job the companies perform. The role in the construction such as acquisition of land, design, financial planning, execution, operating, maintaining and paper works denotes the construction company type.
Depending upon the job they perform, construction companies are classified into following types:
1. Small Renovation Contractors
Small renovation contractors generally work on jobs requiring small amounts of capital and the type of work that does not require much estimating or a large construction organisation.
They usually perform home alterations or small commercial and office work. Many small renovation contractors have their offices in their homes and perform the ‘‘paper work’’ at night.
2. General Contractors
These companies often are experts in either new buildings or alteration work. Many building contractors subcontract a major portion of their work, while alteration contractors generally perform many of the trades with their own forces. Some general contractors specialise in public works.
3. Owner-Builder
The company that acts as an owner-builder is not a contractor in the strict sense of the word. Such a company builds buildings only for its own ownership, either to sell on completion, or to rent and operate.
Many owner-builders, on occasion, act in the capacity of general contractor or as construction manager as a sideline to their main business of building for their own account.
4. Real State Developer
This is a type of owner-builder who, in addition to building for personal ownership, may also build to sell before or after completion of the project. One- and two-family home builders are included in this category.
5. Professional Construction Manager
A professional construction manager may be defined as a company, an individual, or a group of individuals who perform the functions required in building a project as the agent of an owner, but do so as if the job was being performed with the owner’s own employees.
The construction management organisation usually supplies all the personnel required. Such personnel include construction superintendents, expediters, project managers, and accounting personnel.The manager sublets the various portions of the construction work in the name of the owner and does all the necessary office administration, field supervision, requisitioning, paying of subcontractors, payroll reports, and other work on the owner’s behalf, for a fee.
6. Program Manager
A general contractor or construction manager may expand services by undertaking program management. Such services will include, demolition of existing buildings on the site, devising and providing financial analyses of new buildings. The acquisition of a new site, hiring an architect and other design professionals on behalf of the owner.
Supervising their services, performing pre construction services during the planning stage, advertising for and receiving bids from contractors for the new work, consulting on financing and methods of payment for the work, supervising the contractor, obtaining tenants, whether commercial, residential, or industrial for the completed project, helping to administer and manage the complete project.
Obviously, the comprehensive services outlined above will require that the general contractor or construction manager augment his staff with trained architects, accountants, real estate professionals, and management and leasing experts.
7. Package Builders
Such companies take on a contract for both design and construction of a building. Often these services, in addition, include acquisition of land and financing of the project.
Firms that engage in package building usually are able to show prospective clients prototypes of similar buildings completed by them for previous owners.
Package builders often employ their own staff of architects and engineers, as well as construction personnel. Some package builders subcontract the design portion to independent architects or engineers.
It is important to note that, when a package builder undertakes design as part of the order for a design-construction contract, the builder must possess the necessary professional license for engineering or architecture, which is required in most states for those performing that function.
8. Sponsor-Builder
In the field of government-aided or subsidised building, particularly in the field of housing, a sponsor-builder may be given the responsibility for planning design, construction, rental, management, and maintenance.
A sponsor guides a project through the government processing and design stages. The sponsor employs attorneys to deal with the various government agencies, financial institutions, and real estate consultants, to provide the know-how in land acquisition and appraisal.
On signing the contract for construction of the building, the sponsor assumes the builder’s role and in this sense functions very much as an owner-builder would in building for its own account.
Relationship within the tendering process:
In its simplest terms, tendering is a formalised process for buying and selling. Everyone knows how much a good business relationship can help improve your chances of success when selling. But due to the formality of tenders, it can be difficult to even talk to someone – let alone build any decent relationships.
Pre Tender Meetings (Tender Briefing Meetings) can be used to develop relationships during the tendering process. However, it should be your aim to start building relationships with your prospect well in advance of the tendering process.
Pre Tendering Relationships: Genellay when selling higher value or more complex goods or services, you start trying to develop a relationship as part of the sales process; ideally you will have built a relationship before you try to make the sale. The reasons for this include:
Tenders are generally used for higher value contracts and so the same benefits apply to tendering. Your relationship may also be able to influence the tendering process i.e. help the prospect in deciding what specification to tender for.
It has been said that if you can build a good business relationship prior to tender, in whatever way, it will increase your chance of winning the tender by up to 50% – if you have a good relationship you are already way ahead of the competition.
This relationship should be targeted to commence no less than 6 months prior to the bid coming out. This then gives the opportunity to start a dialogue. You can maintain this by communicating the odd news snippet or explaining any new company initiatives; getting the tendering organisation involved in your business leading up to the tender date.
If you leave it until the bid is about to come out, many will avoid meetings and phone calls as they mustn’t be seen to be compromising their impartiality.So, once you have identified your list of prospects and understood their tendering timescales, try and develop a good business relation before the tendering process starts.
Relationship management in construction
In construction, the rise of joint
venture and partnering contracts, as well as supply chain
collaboration, has increased the focus on collaborative elements of
project team management. Although many construction companies still
overlook the importance of maintaining stakeholder relationships
effectively.
Relationship management is the process and strategy of continuing a
level of engagement between an organisation and its target market,
client base, stakeholders, business competitors, and so on. Strong
commitment and continuous multi-level understanding is required for
relationship management to be successfully implemented.
It is important to effectively manage relations between project parties as time delays, cost overruns and quality defects can be the result of relationship deterioration. By improving some aspects of the relationship, the chances and implications of poor performance can be reduced.
Business relationship management
It is important to cultivate and maintain a positive relationships with vendors, suppliers, distributors, subcontractors, and all other business stakeholders on a project. A vital part of this is ensuring all contractual agreements, including payment terms etc., conform to the parties’ expectations.
Networking is a central part of building solid and lasting business relationships. The ability to ask good questions and listen well is an essential networking skill. Strong bonds often form out of mutual interests and common ground happened upon through conversation.
Internally and externally, business relationship management relies on interest being shown towards people, in a business and well as a personal sense. If the layers of formality can be reduced, with personal information forming part of business interaction, then the relationship is more likely to result in mutually beneficial results. Developing a healthy and friendly project ‘culture’, in which everyone feels like their work and point-of-view is valued, can often be key to the success of a project. Not only this, but such culture can be a major attraction in terms of new employees and clients.
Good business relationship management can lead to loyalty, which is important in terms of finding suppliers and subcontractors that can be trusted, with regard to tender bids as well as project delivery. Professionalism should be demonstrated at all times, as well as open and honest communication, efficiency and consideration when dealing with their needs and requirements.
Customer relationship management
Customer relationship management is the process of establishing and maintaining a strong rapport between the organisation and its customer base as a means of building support or loyalty. This includes data and sales analysis, as well as brand management, to maintain customer interest in the organisation.
The aim of relationship management is to create a partnership between the organisation and its audience rather than considering the relationship merely transactional. By feeling that an organisation responds to their needs, customers are more likely to continue using their products and services. Additionally, by maintaining a level of communication with customers, the business is able to identify potential sources of costly problems before they come to a head.
While an organisation may choose to hire a relationship manager to take on this responsibility, it may also integrate these duties with other positions, such as marketing or human resources. Marketing departments are highly involved in maintaining customer relationships, with targeted campaigns aimed at increasing new and long-term interest.
Get Answers For Free
Most questions answered within 1 hours.