The Great Misconception: Construction Contracting's Cost Structure By Matt Stevens PhD

Every type of business can be classified into one of two informal cost categories: Fixed or Variable. Each of these have dramatically different characteristics. Consequently, those who want to successfully manage either type of business have to act in certain ways. Construction contracting is a variable cost business. This characteristic is very important to understand in situations such as planning for growth, project selection or negotiating with a client. Not to realize this may lead to some poor operational and financial decisions. Our observation has been this is a critical strategic and business understanding one must have about construction contracting.