Why do some construction firms thrive during periods of growth while others struggle to keep pace? According to our experts, leveraging financial insights will differentiate market leaders as they meet evolving demands in a soon to be booming construction market.
In the recent “From Demand to Delivery: Leveraging Technology to Scale New York City Construction Operations” webinar, Grassi’s Construction Practice Leader and Partner Carl Oliveri, CPA, CCIFP, CFE, joined ProNovos founder Bruce Orr to address this critical industry challenge. During the session, Oliveri and Orr shared key insights on the changing market and how contractors can create a stronger command over their cash flow and transform market opportunities into a launchpad for growth.
What is Happening in the New York City Construction Industry Today?
The New York construction industry is experiencing remarkable momentum, seeing 2024 closeout at $68.6 billion in spending, with an estimated $129.6 billion expected to be spent by the end of 2026, bringing the three-year total to $198.4 billion—a $14 billion increase from the previous cycle.
During the webinar, Oliveri broke down some of the key external and internal trends impacting the industry. As New Yorkers reimagine what it means to live, work, and play in the city and surrounding areas, developers are converting private offices into residential spaces and prioritizing transit-friendly developments. These private initiatives converge with large public transportation initiatives, including major transit hub renovations and subway expansions that will drive infrastructure construction across the region for years to come.
Speakers also highlighted important evolutions occurring within the industry. Significant challenges persist, such as elevated costs, supply chain delays, a tight labor market, and economic uncertainties regarding inflation and tariffs. As leadership groups approach retirement, firms are challenged to attract young talent and rethink ownership structures.
What Do Contractors Often Get Wrong During Periods of Growth?
Increased cash flow demands, upfront costs, and heightened operational complexity often accompany expansion organically, but they also tend to create a critical vulnerability period that many overlook. “Contractors are most vulnerable when they’re growing,” Oliveri emphasized.
Organizations face significant risks when scaling, especially if they operate reactively with outdated reports, lack integration between teams, and fail to track key performance indicators in real time. With payroll representing one of the largest real-time expenses, companies can quickly become over-extended, leading to growing underbillings and mounting liabilities when they lack proper financial visibility.
“One of the biggest mistakes we see is firms growing fast but not tracking financial health in real-time,” noted Orr. This lack of visibility becomes particularly dangerous during rapid expansion when firms prioritize new work over building the right infrastructure and expertise needed to tackle new project types and geographic markets.
What Should Contractors Be Doing Right Now to Scale Successfully Without Putting Their Businesses at Risk?
The webinar highlighted five critical actions that construction firms should take immediately to prepare for growth.
1. Make Financial Forecasting & Cash Flow Planning a Priority
Companies without access to financial visibility in real time will have a difficult time making decisions that align field operations with financial objectives. Successful contractors track their cash flow diligently with updated tools and leverage forecasting to anticipate cash needs before they become critical issues.
Cash flow management may even be the most critical differentiator between firms that succeed and firms that struggle to remain profitable while scaling. Cash should be a culture that permeates throughout the organization, touching all areas of project management and planning.
“It comes down to cash flow management and having a culture that understands the importance of cash flow management, pushing that mindset throughout the organization,” Oliveri emphasized.
2. Give Project Managers Access to Financial Data
While during growth periods, firms might immediately focus on securing new projects and hiring staff, successful organizations extend financial planning beyond the accounting department and embed it into project operations. By involving project managers in financial planning and insights, contractors create transparency and communication that enables better decisions at job site.
3. Eliminate Manual Processes with Automation & Technology
According to the presenters, successful scaling must include eliminating time-consuming manual processes. Financial forecasting and cash flow planning can be labor-intensive administrative burdens, or they can become streamlined through technology.
Construction-specific platforms like ProNovos offer tools that provide real-time visibility into financial health, helping contractors track cash flow, improve forecasting, and scale successfully without taking on unnecessary risks. This visibility allows teams to move from reactive problem-solving to proactive opportunity identification.
4. Get Out of Excel
Though common practice in the industry, reliance on Excel spreadsheets can create significant limitations and risks. Spreadsheets typically provide backward-looking insights and are built on complex models and formulas that limit customization. In contrast, purpose-built platforms can provide capabilities that support more informed decision-making through increased visibility and automated data updates as project conditions change.
5. Look to Neighboring Markets for Strategic Growth Acquisitions
During periods of growth, successful contractors strategically expand their reach beyond their core markets. Competing organizations have even increasingly teamed up in joint ventures to tackle increasing demand and large engagements. Rather than simply taking on more of the same work, evaluate opportunities in neighboring markets or complementary sectors. Consider strategic partnerships or forming new relationships with similar-minded organizations in new industries or geographies.
When construction firms prioritize financial visibility and strategic cash flow management, they can transform market opportunities into sustainable growth, even during periods of rapid expansion. Connect with our construction team today to discuss how we can support your growth initiatives with technology-enabled financial solutions tailored to your business.
Contact us to learn more:
Carl Oliveri, CPA, CCIFP, CFE – Construction Practice Leader and Partner, Grassi
coliveri@grassiadvisors.com
Bruce Orr – Founder, ProNovos
bruce.orr@pronovos.com
