As part of our research into the recent downturn, my Arizona State University colleagues and I surveyed U.S. construction companies to discover what overhead they chose to cut and when.

What overhead did construction companies cut during the recent downturn? My colleagues and I at Arizona State University wanted to know, so we surveyed companies around the country.

Related Links: A Success Formula for Contractors Managing the Profitable Construction Business, the new book by Thomas Schleifer Too many construction organizations become slaves to their overhead, their general and administrative expenses. Increased overhead usually equates to increased capacity and is common and appropriate during growth periods.Unfortunately, these expenses are much easier to put in place than to get rid of, and in a cyclical market they become a burden and create losses. This is especially true now that we have such a weak and slowly developing business upswing.A common reaction in a declining construction market is to search for

Related Links: Managing a Profitable Construction Business Beware the Economic Recovery The end of a recession is the perfect time for contractors to rebuild their organizations using new and sustainable models because growth as a business model doesn't work in a cyclical market. The successful contractor of the future will be organized to go up and down in annual sales to cope with market conditions and avoid chasing inappropriate work just to maintain volume for its own sake. The secret to this strategy is a concept that I call flexible overhead.Since World War II, there have been more growth years

Related Links: Beware the Recover: What History Teaches Prospering in Cyclical Markets In 2000, I wrote that the number of existing general contracting enterprises would be reduced by 20% by 2020. Recently, I started to update my research for the years 2003 to 2012. At first, it looked like I was wrong because, leading up to 2008, mergers and acquisitions slowed. However, the recession brought changes.From 2008 to 2012, the entire construction industry shrank by 19.6%. During the slowdown, larger general contractors held on to more market share than smaller ones. ENR's top 100 contractors declined only 14.5%, and the

Related Links: Beware the Recovery: What History Teaches More Room for Gloom on Recovery The unprecedented market downturn from which we are emerging has weakened some construction organizations to the extent that they may have difficulty financing the growth that will come with even a slow market recovery. That, in turn, may increase the potential for defaults. But some of the common ways of dealing with the risks may be self-defeating. Here's what I mean: General contractors and subcontractors have the same exposure—if either type of contractor fails, the entire project is disrupted, and all involved are exposed to disruption

Related Links: Beware the Recovery: What History Teaches Contractors and Sureties At the beginning of the year, I wrote that while no one liked the recession, some contractors and sureties were going to hate the recovery, too. As I said then, a new set of risks will arise as contractors price their work aggressively, profit margins lag and some companies take on too much and burn through their capital.That was pretty gloomy, but I didn't give the complete picture about what can go wrong during the unfolding recovery. Because contractors will price their work aggressively and be hungry for the