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April 08, 2005
Risk versus Reward in Construction Contracting
We know that the general business environment is governed by a specific risk / reward equation. Otherwise known as a "curve". This line is generally 1 to 1 and is a straightline. For every increased risk factor there is an increased reward. The normal risk vs. reward curve is linear. It states that for every risk factors taken there should be a reward. High risk propositions successfully overcome should pay a handsome sum.
Strangely, the construction industry is different. For high risk situations, there is less reward. For lower risk situations, there is more reward. The curve is perpendicular to the general business one.
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This and other management information are part of our 300+ page book - published by McGraw-Hill this fall "Managing a Construction Firm on Just 24 Hours a Day”. It includes 130 Best Practices Used in Construction Contracting with over 100 illustrations and examples. We include a Free CD of 60 Excel Templates when you buy 2 books from our website. We also include our library of forms.
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Matt Stevens is a management consultant who works only with construction contractors. He has performed training and business consultation for the contracting community since 1994. Matt can be reached at mstevens@stevensci.com.
Posted by Matt Stevens at April 8, 2005 12:55 PM
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