In modern conditions the firm's innovation policy is a major factor in its sustainable development. Since its creation the theory of the company's dynamic capabilities is associated with the development of innovation as a prerequisite for realizing competitive advantages and corporate goals. Dynamic capabilities are seen as a factor for change, reconfiguration of existing resources and building new resources and competencies within the company that allow the development of new products and the development of new processes. Therefore, the purpose of the study is to reveal the role of the dynamic capabilities and the impact of the dynamic environment for the development of innovations and the realization of the company goals by developing a conceptual model: "Dynamic capabilities - Innovation in product/ process – Competitive advantage" to be applied and tested in the activities of the construction firm.

Keywords : Competitive Advantages, Construction Market, Construction Firm, Dynamic Capabilities, Functional Competencies, Innovation, Performance.