— 8 min read
Managing Construction Projects in Different States: A Contractor’s Guide to Working Across State Lines
Last Updated Aug 14, 2024
Last Updated Aug 14, 2024
For many general contractors, taking on work in a new state or region can offer transformative opportunities for building a thriving business and a respected reputation. But managing projects is challenging enough – even if the jobsite is down the street and all members of the project team are familiar with the area.
New markets and remote project management introduce a new set of challenges and considerations that must be navigated to realize all that potential. This article explores how to manage construction projects in different states, including common considerations, best practices and how technology can help.
Table of contents
Why expand into new states?
The decision to expand often depends on weighing the value of entering a new market against the challenges of taking on the task.
For many general contractors (GCs), reasons for expanding into a new state might be as simple as wanting to grow the reach of their business. Expansion can help increase cash flow, optimize resources, and increase diversification by becoming established in different markets. Some specialized contractors rely on working in numerous states to maintain a healthy backlog of work.
Expansion is also often about maintaining relationships with established clients. New markets can be challenging for owners as well, and those who get the opportunity to expand often prefer to continue to work with GCs that they have an established relationship with and who they trust to do high-quality work.
Common examples include energy companies building similar power plants in different states or a restaurant franchise expanding into a new market.
Working In a New Place: Common Considerations
Entering a new market requires careful and extensive planning, particularly when it comes to a few key considerations.
Local Regulations
Building codes, payment laws, environmental regulations and permitting processes all tend to vary by state. Some places adopt building codes in response to the unique challenges of building in their area.
For example, California has strict seismic design requirements in response to the state’s susceptibility for earthquakes. This might include special inspections or requirements for specific types of reinforced concrete and steel. Some states have similar regulations with key differences.
Many states, like Phoenix, Arizona, have accessibility standards that closely resemble the Americans with Disabilities Act (ADA). However, some states, like Oregon, create their own accessibility codes that align with the ADA but include modifications. GCs should ensure they have a good grasp of the laws and codes of any place they plan on doing business.
Contractor Licensing
Most states require contractors to hold a license to do business. This helps with insurance, payment rights and a municipality’s ability to protect people using completed projects. However, license requirements vary by state. Some states have license reciprocity with each other, but this still usually requires a lengthy application process.
Local Relationships
A successful project requires local partnerships, which might include vendors, subcontractors or authorities having jurisdiction (AHJ). GCs will often partner with local project managers who have experience with regional codes, permitting processes and reliable trade partners. Some GCs will hire permit expediters to help them quickly navigate unfamiliar processes. In some cases, GCs will relocate their own employees to a new area so they can build relationships and expertise.
Resource Management
Sourcing equipment and procuring materials locally often helps increase efficiency and manage risk. As opposed to getting resources from far away, local sourcing and procurement is often quicker, more cost effective and helps to build relationships. Some environmental certifications, such as LEED, give credit for sourcing materials within a certain distance from the project site.
Labor Management
Contractors should also be aware of a state’s labor laws and union rules. Consulting legal counsel and hiring local workers and knowledgeable of the laws can help bridge the information gap on local regulations, keep projects moving, and manage the amount of time a contractor may have to spend bogged down in the details.
Financial Management
Working in new places can also come with varying expenses. Because states have different tax rates and regulations that can apply to sales, use and income for companies and workers, it’s also important for contractors to work with financial managers who are familiar with this information.
Additionally, being knowledgeable of a state’s lien rights in advance can also prevent headaches down the line.
Louisiana and Georgia, for example, have lien requirements that must be fulfilled before work begins, or a contractor risks losing their lien rights. Contractors should start working with AHJs and lawyers early to ensure they are protecting their investments.
Challenges of Remote Management
In many ways, effective project management is similar whether it’s being done remotely or in-person. Construction is still ultimately an industry about relationships. Projects need communication and collaboration between stakeholders, but those things can be harder to cultivate from a distance.
GCs working in a new state should have clear systems for communicating with and building relationships with stakeholders, including subcontractors, the design team, owners and the AHJs. This usually involves having project management tools to organize and share documents and make communication easier to track.
Some GCs will host remote OAC (owners, architect and contractor) meetings. Others will rely on their local PM or employees to serve as liaisons for building company culture and managing important relationships.
Either way, project executives and other stakeholders should strive to remain on the same page when working on projects across other regions so that no critical information falls through the cracks.
Stay updated on what’s happening in construction.
Subscribe to Blueprint, Procore’s free construction newsletter, to get content from industry experts delivered straight to your inbox.
Best Practices For Managing Out-of-State Projects
There are a few things that can help make expanding into a new market more likely to lead to the best possible outcomes.
Cultivate local partnerships.
Bringing on local partners can make managing a project in a new place significantly smoother and more effective. Many GCs save immense amounts of time by hiring local permit expediters to navigate the permitting process. Before moving into a new market, some GCs host meet-and-greets to introduce themselves to local trade partners and learn who might be a good fit for future projects.
Even beyond regulations, every place has its own culture and ways of doing business. Local partners can help GCs humbly enter into a new market and establish themselves in ways that ingratiate them to people who live there and help create the opportunity for future business.
Maintain relationships with specialized trade partners.
Expanding into a new place is hard enough without having to find all new trade partners, especially when they do specialized or particularly outstanding work. GCs will commonly bring select, key trade partners along when expanding into new markets. This doesn’t lessen the importance of having local partnerships, but can help ensure quality, culture and efficiency on certain parts of the project.
Source and procure locally.
Sourcing equipment and procuring materials locally can help with sustainability, budget management and improving efficiency. Local materials are more likely to meet local building and sustainability requirements and tend to be easier to track and get delivered on time. Some environmental grants and certifications, such as LEED, provide credit for sourcing materials from within a certain distance from the project site.
Balance levels of financial management.
Financial management is one of the most challenging parts of expanding into a new market. GCs should work to have both a centralized financial tracking system and state-specific accounting. A centralized financial tracking system improves transparency and allows for cost and performance tracking by all necessary stakeholders. However, a lot of accounting and financial management should also be done locally to ensure compliance with local lien laws, contract requirements, payment processes and tax laws.
Technology makes remote management more effective.
Technology has helped innovate the way GCs do everything from track progress, communicate, conduct inspections and collect closeout documents. These innovations have also made expanding into new states more manageable than ever.
Project Management Tools
Stakeholders should be able to access important documents, ask important questions or receive real-time status updates, regardless of where they are. Project management software helps create organized, effective workflows like daily reports, change orders and closeout documents.
Webcams
Remote stakeholders like to be able to check in on a project. Webcams have made it possible to monitor progress, site security, and material deliveries in real time.
GIS
Geographic information systems (GIS) is a digital tool that uses maps to capture, store, analyze and visually share data and information related to specific locations. GIS can be used for progress updates, workflow enhancement, safety monitoring and site management, all of which can be difficult to do from afar.
Creating Bright Futures In New Markets
The extensive considerations and challenges of breaking into a new market can feel daunting. However, the process gets smoother with each project, and every step can be part of improving the future of a business. Local trade partners can become lifelong collaborators, navigating local requirements can lead to new innovations and one happy client can be the first in a stable and thriving revenue stream in a new place.
Was this article helpful?
Thank you for your submission.
100%
0%
You voted that this article was . Was this a mistake? If so, change your vote here.
Scroll less, learn more about construction.
Subscribe to The Blueprint, Procore’s construction newsletter, to get content from industry experts delivered straight to your inbox.
By clicking this button, you agree to our Privacy Notice and Terms of Service.
Categories:
Written by
Jay Langston
Jay Langston is a Project Executive with Ryan Companies. Jay leads multiple project teams through the entire building process, from conception to completion, while managing relationships with customers and stakeholders and maintaining everyone’s focus on achieving the highest levels of design quality and profitability. He brings 26 years of construction experience while overseeing estimating, budget preparation, scheduling, value design, subcontractor selection, cost control and overall project administration. Focusing on multifamily construction, Jay is responsible for strengthening the overall success of project teams and ensuring quality service and customer satisfaction. He is well known for being highly motivated, his attention to detail, and his keen ability to solve problems quickly and efficiently through crucial conversations.
View profileJames Hamilton
54 articles
James Hamilton is a writer based in Brooklyn, New York with experience in television, documentaries, journalism, comedy, and podcasts. His work has been featured on VICE TV and on The Moth. James was a writer and narrator for the show, VICE News Tonight, where he won an Emmy Award and was nominated for a Peabody Award.
View profileExplore more helpful resources
Construction Teamwork: Build a Solid Foundation With the Right Team
Construction is an industry of collaboration — no one person completes any job on their own. It could easily be argued that the most important skill for anyone in this...
8 Tips for Managing Multiple Construction Projects
By its nature, construction work is a juggling act, with project managers and general contractors (GC) constantly adapting to changing conditions, planning to make sure there are enough materials and...
Prefab Construction: The Risks and Rewards of Prefabrication
Prefabricated or “prefab” construction is similar to assembling a set of Lego blocks: Components are manufactured or assembled at a separate location and then assembled on-site. Compared with the traditional...
Construction Site Logistics: Best Practices for Building Smarter
The effective management of construction site logistics can separate a timely, on-budget and high-quality construction project from one that falls short. Construction site logistics refer to the operations that need...