Top Reasons Construction Companies Fail

Location

CSU Ballroom

Start Date

21-4-2014 2:00 PM

End Date

21-4-2014 3:30 PM

Student's Major

Construction Management

Student's College

Science, Engineering and Technology

Mentor's Name

Matthew Durand

Mentor's Department

Construction Management

Description

The construction industry has one of the highest rates of new business start-ups than any other occupation in the United States. This trend is important because it not only creates more jobs, but it makes the industry more competitive. The problem we are facing is that people are starting businesses with no background and is leading to a higher rate of failure. The failure of construction companies is not an uncommon thing in this industry with its relatively low entry barrier, excessive competition, and high uncertainty and risk involved. These three things cause almost 80% of new construction companies to fail within the first 2 years in business. The interesting fact is that not only are new businesses failing, but established companies are failing as well. This is why the research we are conducting can help construction companies identify areas to avoid and what important things their management team needs to focus on. Our research for this topic was attained on the web and by searching journals and articles through the MSU library website. As a result of our research, we found that there were a lot of similar causes for failure and that most of them could be easily solved and avoided with an experienced management team. Some of the top reasons were poor estimating, weak cash flow management, and companies expanding too fast. Looking into the main causes of failure can be important for entrepreneurs trying to gain insight on how to manage a new construction business.

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Apr 21st, 2:00 PM Apr 21st, 3:30 PM

Top Reasons Construction Companies Fail

CSU Ballroom

The construction industry has one of the highest rates of new business start-ups than any other occupation in the United States. This trend is important because it not only creates more jobs, but it makes the industry more competitive. The problem we are facing is that people are starting businesses with no background and is leading to a higher rate of failure. The failure of construction companies is not an uncommon thing in this industry with its relatively low entry barrier, excessive competition, and high uncertainty and risk involved. These three things cause almost 80% of new construction companies to fail within the first 2 years in business. The interesting fact is that not only are new businesses failing, but established companies are failing as well. This is why the research we are conducting can help construction companies identify areas to avoid and what important things their management team needs to focus on. Our research for this topic was attained on the web and by searching journals and articles through the MSU library website. As a result of our research, we found that there were a lot of similar causes for failure and that most of them could be easily solved and avoided with an experienced management team. Some of the top reasons were poor estimating, weak cash flow management, and companies expanding too fast. Looking into the main causes of failure can be important for entrepreneurs trying to gain insight on how to manage a new construction business.

Recommended Citation

Roemhildt, Reid and Derek Grams. "Top Reasons Construction Companies Fail." Undergraduate Research Symposium, Mankato, MN, April 21, 2014.
https://cornerstone.lib.mnsu.edu/urs/2014/poster_session_B/18