Construction Sub-trade​

Company Background:

Operating in one of the construction sub-trades, with commercial and residential clients, this company had experienced fluctuating sales and profitability. Because of this they assumed that having a spread of areas to work in would insulate them from the ups and downs in the market.

Challenge: Exchange

The problem was they were spread too thin: they did not have the resources to be really good at what they did. Symptoms included gaps in performance of the team, mistakes and poor productivity, stress, and management constantly ‘fighting fires’. Unknowingly, because they were not focused, they had built complexity into the business and that complexity was costing them dearly. The work they were winning was on average, at a gross profit margin of 35%, however when complete and back costed they were only achieving on average, 21%. They had margin erosion of 14% and on a turnover of $2.9m that was costing them over $400,000 per year. That had to stop.

Solution:

Bowman Associates’ solution to this all too common problem, was to clarify where the leakage was occurring, map the complexity and determine the value created by each action in each part of the business. We then considered the aims of the business, the resources available, then helped our client construct a strategy and aligned commitments that brought focus and concentration to what the business does.

Results:

The client became very clear on the value it provides to a specific set of customers. So much so, they restructured the business: jettisoning the non-core, underperforming parts so that they could deliver superior value with the resources they have. The business is simpler and this has freed up management time for more work ‘on the business’. They now have a more predictable sales funnel and cashflow. Turnover has remained at similar levels, overheads have gone down (less staff) and margin erosion has reduced to 5%.