Commercial construction practices and industry overview

COMMERCIAL CONSTRUCTION is defined as "building projects exclusive of residential [single- or two-family home] construction." It is one of the biggest segments of the entire construction industry which is believed to have strengthened the industry in recent years due to rapid and steady growth. The commercial sector has been growing steady for some time now as it evident from market researches and reports. Back in 2000, Sinderman wrote: "...the state of the commercial real estate market is strong. The demand for office, industrial and retail buildings remains high, and, as Internet-based companies continue to grow, specialized facilities have become more popular than ever." Now in 2005, a construction report by McGraw-Hill also supports that claim: "The commercial and infrastructure construction segments are providing a lift to the overall construction industry, marking a role reversal from most of the past two or three years. According to October 2004 figures for future construction contracts calculated by McGraw-Hill Construction, Lexington, Mass., overall new construction starts increased 4% in October vs. September (on a seasonally adjusted basis), with nonresidential and infrastructure construction gaining while the residential sector fell slightly." ("Late Rebound")

Commercial construction is a roaring business these days because of the fact that construction industry does not have to endure fluctuations as frequent as some other industries. For some one who wants to enter this field, it is important to understand that a lot depends on the person himself. If I want to enter this vast field, I will need to focus on my strengths and avoid the basic pitfalls to make it work for me. Commercial builders are in the field for major gains while understanding the normally the margin is low. They have to make it big on volume. Challenges are numerous though. Commercial builders with more major projects under their belt need wider services, bigger staff and more inventories. Payments may not always be made in full and thus one needs to wait for monetary rewards. But despite all these problems, there are many advantages of being in commercial construction business. And now with this industry joining the Internet bandwagon, there are even greater chances of reaching a wider market and succeeding. As Sinderman writes: "Despite problems with materials, labor and zoning, the commercial real estate market has remained strong in all facets, from retail to industrial"

There are two basic forms of commercial construction. They are called light and heavy construction. Light construction refers to restoration or renovation work at multi-family buildings, retails stories, shopping malls, offices, motels, smaller hotels and schools and restaurants. Heavy on the other hand refers to everything bigger and heavier including skyscrapers, high rise hotels, airports etc.

Even if construction industry is suffering slightly, it is the commercial construction sector that provides the much needed stability. Commercial real estate in 2002 accounted for the biggest share of the construction industry.

Those who are thinking of entering the market and succeeding need to consistently come up with new and better projects that meet the requirements of the community. It is widely believed that the more a dealer or builder pays closer attention to smaller details of community's needs and requirements, the better are his chances of coming up with just the product that community would respond to.

Knowledge is critical for success and therefore a person entering the market must build on solid market information. He must come into the industry fully equipped with the right arsenal. he/she should know exactly what is needed and how much investment in terms of labor and capital is required. Staff requirements must be kept in mind and the people hired to work with the builders should be knowledgeable people with considerable years in the field.

Knowing and recognizing the niche is usually the first step but without the support of knowledgably staff. For example you may have an excellent idea to build on but in commercial construction, you will need the help of experienced general manager, an estimator and a project manager without whose knowledge, you idea might never take off. It is naive to assume that you as a builder could learn all the skills possessed by these people. You have to believe in the concept of specialization and division of labor and allow others to do their work while you focus on other important aspect such as organizing and coordination of various tasks.