#3 The Fast Whip the Big

Do you ever watch Ultimate Fighting Competitions? The super strong slow guys get hammered by the fast guys with great technique. Most industries favor the big, strong slow firms. Telecommunications, power production, manufacturing, financial services all get some great scale advantages from just being huge.

Construction, on the other hand, gets done on a project by project basis. Any firm is only as good and as strong as their current projects. A lean, small firm that thrills their customers and makes a decent profit on a project usually gets rewarded with more projects to build.

I’ve seen several waves of consolidation move through the construction industry, with large firms buying up small firms and looking for economy of scale. Mostly I’ve seen the small firms then become inefficient, lose market share and often get sold back to the original owners (at a big loss to the large firm). I can’t think of any consolidations that I’ve seen that have improved the gobbled up firm.

The talented individual in construction often gets to make decsions far above their pay grade. By allowing Construction Supervisors and Project Managers to really run projects, the opportunities for efficiency and great results goes way up. Small firms tend to understand this concept and live with the attendent risk. That’s why the fast whip the big.