Four Paths to Profit: A Contractor's Guide to Project Delivery
Let's be real: Most of us aren't building airports.
You're running crews, managing schedules, and trying to make payroll. The last thing you need is to chase the wrong kind of work for the wrong kind of client.
I watched a solid $2 million residential contractor nearly go under trying to be something they weren't.
They jumped into a design-build commercial project without a full understanding of what they were getting into—and with whom.
Big mistake. Heeyoooge! And now it’s costing them: Big Time.
Design-Bid-Build (DBB): Basic Bidding
This is how most of us started:
Someone has plans
We price the work
They pick a contractor
Simple. Straightforward. But you’re competing on price, so you'd better know your numbers.
And when changes come up (because we know they will), you'd better have a bulletproof change order system.
Best suited for:
Small to mid-size custom residential builders
Light commercial contractors
Remodeling contractors
Companies with solid trade relationships
Teams that know how to spot red flags in drawings
Why it works (when it works):
You know exactly what you're bidding
Your subs know what they're pricing
Less upfront cost to chase work
Easier to compare bids with competitors
Watch out for:
Incomplete drawings
Unrealistic schedules
Unclear allowances
Missing specifications
Owners who only care about the lowest bid
Design-Build (DB): The Full Package
You're handling both design and construction.
This typically means you have an in-house architect. Not always. But if you don’t, you'd better have one close or know a few you can choose from.
Think kitchen remodels, where you help with layout, or small commercial build-outs, where you bring in a designer you trust.
Best suited for:
Remodeling contractors with an eye for design
Builders with in-house architects
Teams with a strong pre-construction game
Companies with solid project management
Contractors ready for more control (and risk)
Why it works:
Higher margins (with solid pre-construction)
More control over the project
Fewer surprises
Better client relationships (when done right)
Positions you a cut above the common
Watch out for:
Scope creep
Design liability
Unclear expectations
Clients who can't make decisions
Taking on more than you can handle
Construction Manager at Risk (CMAR): The Trusted Advisor
You're brought in early to help with budgets and planning, then transition to building once the price is set.
This isn't for everyone.
You need to know your costs cold and be ready to defend your numbers. And you also need crews with solid follow-through and flawless execution.
Best suited for:
Experienced contractors ($3MM+ annual revenue)
Companies with detailed cost tracking
Teams that understand preconstruction
Builders with deep business relationships with loyal architects
Organizations with good documentation systems
Why it works:
Better project understanding
Fewer surprises during construction
More collaborative atmosphere
Higher likelihood of repeat work
Chance to prevent problems early
Watch out for:
Setting budgets too early
Unclear fee structures
Design teams that don't cooperate
Owners who don't value your input
Taking on too much liability
Integrated Project Delivery (IPD): The White Glove Approach
Most people think IPD is just for big commercial jobs.
But here's what they're missing:
The core principles of IPD:
Shared risk/reward
Deep collaboration
Aligned values
These principles are exactly what discerning clients look for.
Think about it:
Your high-end residential clients aren't looking for the lowest bid. They want someone who shares their vision, values quality over speed, and can orchestrate the entire process on their behalf.
Best suited for:
High-end residential builders
Boutique commercial contractors
Teams with deep design understanding
Companies with spotless reputations
Contractors ready for true partnerships
Why it works:
Aligned client-contractor values
True design collaboration
Better project outcomes
Higher margins
Long-term relationships
Premium positioning in the market
Watch out for:
Clients shopping for the highest quality, but the lowest bids
Trade partners who aren’t team players
Unclear decision-making processes
Scope creep without compensation
Teams that won't embrace collaboration
I know a contractor in Colorado who completely transformed his business by applying IPD principles to high-end mountain homes.
He went from fighting for $1MM projects to being the go-to builder for $5MM+ custom homes.
How?
He stopped selling construction and started selling partnerships.
His clients get transparency, collaboration, and shared success.
He gets higher margins and a steady stream of referrals.
Which One's Right for You?
Look at your last five successful projects. What made them work?
Ask yourself:
What kind of clients would you take on repeat?
What size jobs offer the best margins?
How good is your estimating system?
Do you have relationships with good designers?
The Bottom Line
The most profitable contractors I know stick to what they do best:
The $800K remodeler who only does design-build kitchens and baths
The $3MM commercial contractor who specializes in medical office DBB
The $15MM builder who made IDP their sweet spot with discerning mountain dwellers
They didn't try to be everything to everyone. They found their lane and owned it.
What are you building next?
—Paul
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