For many mechanical contractors, growth is an interesting topic; it offers both opportunity and risk. Expanding into larger projects and markets can create more long-term stability, but it can also strain operations and your workforce, if not handled carefully. 

That tension is especially strong in today’s construction environment – marred by labor shortages, tighter margins and increasing project complexity means that contractors are performing a balancing act between ambition and operational discipline. 

According to Jason Richards, CEO of Foundral, the key is focusing on responsible growth. That, he says, is a strategy that prioritizes operation readiness, financial stability, and workforce sustainability in tandem with revenue expansion. 

Growth requires disciple

One of the biggest challenges that contractors who are pursuing growth are facing today? Maintaining discipline. 

It’s tempting to chase new work without fully evaluating whether the project aligns with operation capacity or financial structure. We’ve all heard, “bigger is better,” after all. However, Richards believes that contractors need to establish clear criteria before pursuing additional work. That includes evaluating a few key factors.

“Many contractors may be lacking the discipline on what they’re looking to bid and what they’re looking to take on as far as contracts,” According to Richards. “Discipline is important as it relates to cash flow needs of the project, minimum gross margins and a realistic approach to manpower and productivity expectations."

An important part of that discipline is choosing the right work. 

One of the most common growth challenges that contractors face is deciding which opportunities to pursue. While a strong project pipeline may seem to signal growth potential, not every opportunity aligns with the company's capabilities or resources. 

Responsible growth, Richards said, begins with carefully evaluating which projects fit a contractor’s strengths and operational capacity.

“It’s really evaluating proactively all opportunities that are in the marketplace,” he said. “How are they seeking opportunities that really fit well with who they are? The right job, the right fit for what they’re good at.”

That evaluation goes beyond technical capability. Contractors must also consider whether their financial resources and project schedules can support the additional work. Construction schedules that overlap with already demanding workloads can quickly create operational strain if not carefully planned.

“If the work they already have is very taxing and then you layer on yet another project that taxes the workforce even more, it can be very challenging,” Richards said.

The role of working capital

Financial planning plays a central role in sustainable growth. Contractors often must fund project costs long before receiving payment from clients, creating a lag between outgoing expenses and incoming revenue.

This need for working capital becomes even more pronounced as companies pursue larger or more complex projects.

“You have to invest in a project before payment comes from the customer,” Richards said. “That lag in time is very, very important that it’s planned for. You can’t have too much money going out before money comes in.”

For some contractors, partnerships, acquisitions or outside capital can help support expansion. These arrangements can provide not only financial resources but also operational support.

Beyond capital, larger platforms may provide centralized services such as human resources, accounting, information technology, bonding and insurance. That support can allow contractors to focus on what they do best.

That allows the contractor to thrive on what they do best—bidding, installing and servicing work—versus having to handle all of the other business functions. 

Workforce planning is critical

However, even with strong financial backing, growth strategies can falter if they fail to account for the workforce. Mechanical contracting remains a labor-intensive industry where productivity and project success rely heavily on skilled tradespeople.

“There’s no question in the contracting industry that people are critical to what we do,” Richards said.

Contractors must realistically evaluate manpower requirements when pursuing new projects and balance those needs against existing commitments. Misjudging labor availability or productivity expectations can very quickly – and seriously – derail a project.

“You have to be very careful that you don’t stress the team,” Richards said. “You have to know and understand the productivity expectations and how that compares to the workforce you have.”

Companies that prioritize workforce development often see stronger results when scaling operations. Investments in training, safety programs and human capital management can help employees feel supported while also improving productivity.

“People want to feel valued,” Richards said. “They want to know they’re with a company that can create opportunities for them.”

Maintaining stability during expansion

Growth — especially through acquisition or partnership — can also introduce cultural and organizational changes that impact both employees and customers. For that reason, preserving leadership continuity is often critical during expansion.

Employees typically rely on familiar management structures and leadership teams that have established trust over time. Sudden changes can create uncertainty and disrupt productivity.

“The workforce looks up to middle management, senior management and executive management in a way that they’ve historically been comfortable with,” Richards said. Similarly, maintaining consistent leadership can also help protect customer relationships.

“Stability with customers is equally as important,” Richards said. “Having a thoughtful approach to the future is absolutely critical.”

Clear communication throughout periods of change can further reduce anxiety and maintain confidence among employees and clients.

As companies scale, leaders must ensure that core operational priorities—productivity, safety and quality—remain intact. Establishing clear expectations and measuring performance regularly can help contractors maintain consistency across growing operations.

Safety programs play a particularly important role. Dedicated safety managers, strong communication and a culture built around safety awareness can help protect workers and support long-term productivity.

“Making sure everybody goes home safe to their family is critical,” Richards said. “Having a zero-accident mindset and communicating that regularly allows you to scale more confidently.”

A safe workforce, he noted, is also a more stable and productive workforce.

Understanding union workforce considerations

For union contractors, workforce planning can include additional considerations tied to labor agreements and compliance requirements. Richards noted that unions often provide significant advantages, including consistent training standards, strong safety practices and a reliable pool of skilled workers.

“Unions are very beneficial to the work that we do,” he said. “They provide a standard of training and a reliable workforce.”

That structure can help contractors scale more confidently when pursuing larger projects, since union labor pools often allow firms to increase manpower more quickly than non-union operations. However, union contractors must also navigate collective bargaining agreements and jurisdictional rules that can impact how projects are staffed and managed.

Contractors must carefully account for factors such as benefit reporting obligations, payroll requirements and fringe costs when estimating projects. Understanding apprenticeship timelines and workforce development pipelines is also critical when planning long-term growth.

“It’s very important that you understand those aspects when you’re estimating work and planning manpower,” Richards said. Maintaining open communication with union leadership can also help contractors anticipate workforce needs and avoid surprises when taking on new projects.

“If you can be proactive in where your business is going and communicate with the business agents of the local unions, it can work very effectively,” he said.

Avoiding growth extremes

Contractors often make one of two mistakes when approaching growth: expanding too aggressively, or avoiding growth altogether.

Taking on unfamiliar or significantly larger projects without the necessary management structure can create serious operational challenges. “You have to be careful that you don’t just look at growth as a step function,” Richards said. “Going from one project size to something dramatically larger can be disastrous if you’re not prepared.”

At the same time, some contractors hesitate to pursue opportunities that require additional capital or bonding capacity. Finding the right balance requires a clear understanding of organizational readiness. Strong management structures, financial discipline and the ability to track project performance are all key indicators that a contractor may be ready to expand.

“People need to be managed, and companies growing from $20 million to $40 million have to take that very seriously,” Richards said.

Looking ahead

For contractors planning growth over the next decade, strategic awareness of market conditions will also be essential. Leaders should monitor regional economic activity, construction indicators and competitive dynamics to understand where opportunities are emerging.

“Executive management needs to focus on the geography where the contractor is playing and where the customers are going,” Richards said.

Industry consolidation may also shape the competitive landscape as larger companies gain access to greater capital resources.

In that environment, contractors that combine financial discipline, workforce investment and thoughtful leadership may be best positioned to grow without sacrificing stability. Ultimately, Richards said, sustainable growth comes down to balancing ambition with operational reality.

“It’s really about understanding the business, the workforce and the market,” he said. “If you approach growth thoughtfully, you can scale while protecting the culture and the people that make the company successful.”