CONSTRUCTION

BUSINESS MANAGEMENT
PhD. NGUYEN ANH THU
 CONTENTS

LIFE-CYCLE OF BUSINESS

The end
Starting a business

Pre-startup
 NATURE OF CONSTRUCTION BUSINESS
Involves materials, people, and equipment
Wide range projects: individual, infrastructure,
transportation projects.

Revenue exceeds the cost

Company has adequate demand for its services
Has adequate financial resources until reimbursed
Has a skilled, motivated workforce to meet
requirements
Overhead cost is affordable based on the projected
workload.
 NATURE OF CONSTRUCTION BUSINESS
Competitive industry
Size vary
Distinct segments of the market

Each segment has unique set of technical challenges

Acquisition of work
Performance of work
Management of the financial , capital, and human
resource
 NATURE OF CONSTRUCTION BUSINESS

RISKY BUSINESS
Half of construction business fail in US, after only
Internet companies and food service are
bankrupted
Not require large capital investments to establish a
business BUT require cash to meet financial obligations
 PRIMARY CAUSES OF BUSINESS
FAILURE
1. Pursuit of volume
2. Lack of comprehensive
EXTERNAL INFLUENCES INTERNAL PROBLEMS
business
1. plan
Increase in project size
3. 2. Prolonged
Diversifying intoeconomic
unfamiliar
Unplanned loss of key personal Strategic Planning Issues
recession
types
3. of estimating
Poor projects, geo areas
skills
Loss of major customer Strategic
4. 4.
Lack of managerial maturity
Lack equipment control Implementation/Control
5. Poor internal communications Issues
New competition

1. Poor use of accounting system Financial Management

Shortage of skilled labor
Issues
2. Excessive dept
 BUSINESS STRATEGIES TO MINIMIZE THE
RISK OF BUSINESS FAILURE

INTERNAL PROBLEMS

1. Develop comprehensive BP; communicate

Strategic Planning Issues
goals and objectives to all employees.
2. Test a new geo area with a small project or
repeat customer.
Strategic
Implementation/Control Issuesplan if not successful.
3. Withdrawal
4. Carefully monitor during periods of growth.
5. Learn
Financial Management to recognize signs of inadequate
Issues
management and delegate.
 BUSINESS STRATEGIES TO MINIMIZE THE
RISK OF BUSINESS FAILURE

INTERNAL PROBLEMS

1. Development internal management

Strategic Planning Issues
systems: monitor, early warning problems.
2. Form long-term relationships: bankers,
bonding agent, insurance agents,
Strategic
Implementation/Control Issues and construction attorneys.
accountants,
3. Increase project size step by step.
4. Select
Financial Management project size = size of company.
Issues
Not more than 30% resources in a project.
 BUSINESS STRATEGIES TO MINIMIZE THE
RISK OF BUSINESS FAILURE

INTERNAL PROBLEMS

1. Understand the cost = price appropriately

Strategic Planning Issues month-to-month cash flow each year
2. Prepare
3. Carefully manage company overhead
4. Finance equipment purchases with dept to
Strategic
Implementation/Control
preserveIssues
capital to finance cash flow
requirement
5. Purchase
Financial Management a line of credit as a contingency to
Issues
cover unexpected negative cash flows.
 Pre-Startup Stage
1. Identify business Mission and values that the
opportunities business wants to pursue?
  The goals and the intents?
  Development strategy?
  People and other resources?
2. Clarify the
  Which organizational structure
opportunity
is appropriate?
  Financial strategy: capital and
when?
3. Mobilizing   The concept of success: the
resources final destination?

(Global Entrepreneurship Institute)

 Pre-Startup Stage
 Mission and values that the
business wants to pursue?
   The goals and the intents?
 Which organizational
structure is appropriate?
   The concept of success:
the final destination?
C1 Construction business
organizations and legal
issues (week 1)
• Introduce the legal forms of
business organization
• Characteristics, pros and
cons
• Functions, goals, visions,
development strategies
• Organizational structure of
construction enterprises
 Pre-Startup Stage
Individual exercise 1 (homework
& class discussion):
Find out at a construction
company working on the
following:
 Type of business
 Model of organizational
structure
 Personal comments on that
organizational model
 Functions and goals of the
enterprise (vision & mission)
 Special point.
C1 Construction business
organizations and legal
issues (week 1)
• Introduce the legal forms of
business organization
• Characteristics, pros and
cons
• Functions, goals, visions,
development strategies
• Organizational structure of
construction enterprises
 Pre-Startup Stage
 Business development strategy?
C2 + 3 Business plan and development strategy for
construction enterprises (weeks 2 + 3)
– Introduce
– Target
– Basic content
– Business development strategy
– Process and strategic analysis
 Pre-Startup Stage
 Construction business management skills

C4 Soft skills needed for business managers

(week 4)
– Introduce the general concepts
– Model and leadership skills
– Decision-making skills
– Team-Work skill
– Negotiating techniques
– Technical coordination of human resources
– Corporate culture.
 Pre-Startup Stage
Term Project:
 Content: Write a business project for any business in the
field of construction (prioritizing unique and novel
business ideas ...).
 The reports are prepared on a ppt basis, with a full list of
group members, printed and submitted by week 9.
 Selected groups will be updated and presented in week 10.
At the end of the file submission to the class rep (1CD).
 The group consists of 03 students.
 Assessment: 20% of the subject score.
 Presenter: +1; Absent TB (spell): -2; Absent (without
permission): 0
 BUSINESS STAGE

1. Infiltrate

C5. Cost control system

2. Growth C6. Competitive strategy for
business development
C7. Risk
3. Expand
 BUSINESS STAGE
Exercise 2:
 Content: Learn and present about the business
strategy, business philosophy of a famous figure at
home and abroad, especially in the field of
construction.
 Submit an A1 poster report to highlight your ideas
and present them by week 04
 Rating: 5% of the subject score.
 Assessments are based on content, poster
presentation, and class presentation skills.
 BUSINESS STAGE
Exercise 3:
• Content: Marketing for a product of construction
industry.
• Submit an A1 poster report to highlight the ideas and
present them by the 6th week.
• Rating: 5% of the subject score.
Assessments are based on content, poster presentation,
and class presentation skills.
 BUSINESS STAGE
Exercise 4:
• Content: Choose a topic in the subject area. Review
01 article of a specialized journal.
• Submit an A1 poster report to highlight your ideas
and present them by week 08
• Rating: 5% of the subject score.
• Assessments are based on content, poster
presentation, and class presentation skills.
 ENDING STAGE

DISCUSS IN WEEK 10 (IF POSSIBLE)

EVALUATE
Class work: 10%
Personal exercises: 20%
Term Project: 20%
Final exam: 50%
Week Contents
1 C1 Construction business organizations and legal issues
2
LỊCH TRÌNH MÔN HỌC
C2 Business plan and development strategy for construction enterprises
STRATEGIC PLANNING
Submit HW1
3 C2 Business plan and development strategy for construction enterprises
STRATEGIC PLANNING
4 Present HW2
Submit HW2
5 C3 Business plan and development strategy for construction enterprises
STRATEGIC PLANNING
MARKETING FOR CONSTRUCTION
6 C3 Business plan and development strategy for construction enterprises
STRATEGIC PLANNING
MARKETING FOR CONSTRUCTION
Submit HW3
7 C6. Competitive strategy for business development
(Estimating – Tendering – Contracting – Bidding)
8 C5. RISK
Submit HW4
9 C7. Construction economic
Submit TERM PROJECT
10 Present TERM PROJECT
 Resources
[1] Construction Business Management, NICK GANAWAY, Elsevier
publish, First Edition, 2006.
[2] Construction Business, John Schaufelburger, Prentice Hall, First
Edition, 2008.
[3] Mordern Construction Management, Frank Harris and Ronald
Mccaffer, Blackwell Science publish, Fifth Edition, 2001.
[4] Construction Management Principles and Practice, Alan Griffith
and Paul Watson, Palgrave MacMilan publish, First Edition, 2004.
[5] Managerial Economics Foundations of Business Analysis and
Strategy, Christopher R. Thomas and S. Charles Maurice, McGraw-
Hill International publish, Tenth Edition, 2011.