Strategic management is vital to ensuring an organization’s success and profitability, especially in the construction industry. This article will highlight the importance of strategic management for small construction contractors and will illustrate steps for a smooth and integrative strategic management process.

For purposes of this article, small contractors are defined as having less than $20 million in annual sales revenue.

What Is Strategic Management?

Strategic management is a broad, all-encompassing, and forward-thinking process that results in the development of a sustained business strategy.

There are many objectives involved in the process that confront strategic management and impact many years into the future. Here are some of the objectives that must be considered:

• Industry and economic forecasts
• Organization goals and the outcome of future events
• Long-term vision

Those leaders charged with the development of a formal strategic management plan within a small construction company might include owners, controllers, board members, or other senior management.

With the construction industry rapidly changing, small contractors may often compete against larger companies. In some cases, these larger companies have already developed plans that effectively employ synergy, vertical integration, or even economies of scale – giving them access to lower input costs and allowing them to offer products or services at lower prices.