Construction companies pitch to new clients and evaluate project proposals every day. The challenge for growing businesses is to find time, focus and a standardized process to select which projects and clients to take on. Many experienced contractors use a process called “Go-No-Go” to streamline this process.
Go-No-Go gives leaders and staff a customized framework to identify and document potential risks before any project is greenlighted, explains Benjamin Holicky, the managing director of construction west territory at The Hartford.
“A Go-No-Go process lets construction leaders pre-evaluate potential challenges and opportunities against their existing business plan before they commit to any project. It’s meant to reflect a company’s business scope and realistic tolerance levels for capacity, capital, risk and return,” says Holicky. “Most importantly, a Go-No-Go system is meant to be reevaluated over time so project successes or failures are recorded, improving the overall process.”
Though firms may choose to build different goals and metrics for their Go-No-Go plan, here’s how Holicky’s four major considerations can help leaders design their process.
Capacity: Can You Safely and Efficiently Staff This Job?
With labor as the top expense faced by most companies, and tight hiring conditions continuing throughout the construction industry as of late 2024, staff capacity becomes the natural place for Go-No-Go planning to start. Construction companies should consider these initial key questions:
- Does this potential job align with our business plan?
- Can we staff this project entirely with our own team, or will we have to hire or work with partners to complete this job as contracted?
- Will any member of the team require training to do this job?
- If the job is delayed, how will that affect any managers, employees, independent contractors or business partners assigned to it?
“I had a discussion with a utility contractor about why he wanted to pursue a job that seemed outside their business plan that would require hiring an entirely new team to run the job,” says Holicky. “His response was that he could build a rocket ship to Mars if he hired the right people. That gave me pause.”
That’s why human assets are the first consideration in any Go-No-Go plan, Holicky adds. “It needs to be a realistic assessment of employee strengths and weaknesses that could either grow a firm or endanger the client relationship at any point.”
Capital: Will the Company’s Finances Survive Unexpected Problems if You Take This Job?
Project choices shouldn’t exist in a vacuum. Companies need to evaluate whether payroll, raw material and other overhead costs could threaten their existing work backlog and future project pipeline if a prospective project runs into trouble.
A Go-No-Go process should pressure-test a potential contract to make sure the job can be properly funded amid challenges. “Funding a job boils down to whether a company has the ability, the talent, the tools and the financial strength to weather all potential challenges in a future job without impacting the broader operation,” says Holicky. “If one job falters during construction or in its aftermath, is the company financially strong enough to withstand that possibility?”
Evaluating the cash and capital requirements needed to support a prospective job shouldn’t endanger existing commitments, explains Holicky. “If you sense that could happen given what you’re seeing in your evaluation, that may be cause for a no-go decision on that particular project.”
Risk: Are There Other Considerations Posing Delays or Concerns?
Since the 2020 pandemic shutdowns, construction leaders have received a master class in the unexpected. Industrywide project slowdowns, talent shortages and supply interruptions became major factors in companies’ ability to successfully complete projects. Now there are many more factors besides staff and cash flow that define a prospective project’s risk profile. Some jobs with complex factors could potentially add significant research and consideration time to any Go-No-Go project evaluation.
In addition, no matter how big the size or financial strength of any construction company, Holicky points out that “most bad jobs share one similar aspect and that is a challenging owner.”
While any owner can be challenging or demanding in their own way, changing priorities are increasingly driving disputes that can potentially land in court and result in nuclear verdicts. In 2024, “change in scope” was the number one cause of engineering and construction claims or disputes during the past year.1
That’s why Holicky suggests companies fully evaluate important characteristics of both owners and partners before they accept a job. Questions to consider include:
- Does the owner have the funds?
- Are they frequently involved in disputes?
- Do they understand the nuances of construction?
“It seems very basic, but Go-No-Go forces leaders and key members of a team to discuss all factual details about a potential client. A company’s research on that front can often make the difference between a troubled job with potentially years of conflict or a profitable, long-term client relationship that grows your firm,” says Holicky.
Return: What Does the Profitability Picture Look Like for This Particular Assignment?
Evaluating capacity, capital and risk factors can shed new light on whether a new project has real potential to make money. When a company designs its Go-No-Go process, it is important to consider the potential profitability of the specific project. Construction leaders should quantify the maximum risk on a job and whether that downside negates the job. Viewing each job through the lens of a worst-case scenario can offer a realistic risk-return calculation that either continues the client discussion or ends it.
A lower-margin, higher-risk job can still be worth pursuing based on a company’s long-term business plan and ability to withstand potential turbulence amid other ongoing or backlogged projects. Companies take on risk every day, explains Holicky. The question is how much risk they should take on after their leaders have thoroughly researched the opportunity.
“It’s not uncommon to hear construction leaders say that their best project was the one that got away,” says Holicky. “However, companies with an institutionalized and process-based Go-No-Go procedure can better identify and limit bad jobs. They can focus instead on the specific work that keeps them successful and profitable.”