aUSTRALIA
Property Developer
The backstory
The company was trading successful for some years, however started losing control given tight deadlines to meet property development projects. Whenever there is pressure to complete projects within milestones and deadlines, costs can blow out the window. Engaged to conduct a business review to identify areas to stop the bleeding and control creditors and the overall cashflow of the business.
01
The challenge
- Cash flow required better management, allocation and control.
- High creditor demands of overdue accounts with little communication and few payment plan discussions.
- Project production meetings (ATL) were long, unproductive and repetitive with a number of employees adding little contribution. Supplier quotes were approved without formal review or questioning.
- Operational inefficiencies due to lack of control over time management, quality of work assessment and cost control.
- Although Policies and procedures existed, they were not followed, monitored or reported.
- Preliminary plans and drawings were not distributed to Site Managers for feedback and changes, resulting in changes after the fact.
- Architecture designs were over the top and later scaled back during production to save costs.
- Client requests for changes were not always recharged through a variation to the contract.
- One quote obtained for sub contractor works was not efficient to obtain comparisons and best pricing. Quotation requests were also requested last minute resulting in delays in commencement and higher costs.
- Scope of sub contractor works were not communicated with the Site Manager, therefore unable to determine what is included / excluded while Managing the sub contractors onsite.
- Little control over variations from sub contractors.
- Sub contractor monthly claims not reviewed thorough to knock back over estimation of work completion.
- A lacks of ownership and follow up of sub contractor back charges. Notations made on day dockets from Site Managers was not taken into account when reviewing monthly claims. Some day dockets related to non completion of works from the sub contractor.
- Overtime was not preapproved or questioned.
02
Our Solution
03
Results
+$2M
IN 3 MONTHS
- Creditor control through communication and agreed payment plans.
- Greater cost control with the enforcement of pre-approval cost spending and timely raising of the contract.
- Greater control over sub-contractor costs comparing supplier quotations against charges and raising disputes if overcharged with no approved variations.
- Greater control of sub contractor monthly claims resulting in less over payments to sub contractors for works over stated.
- Control over back charges (rework) against sub contractor monthly claims through better reviews of workmanship throughout jobs. This also assisted with cash outflow than necessary. As well as better review of Day docket notes from Site Managers.
- Best sub contractor pricing obtained through comparison quotations and comparing like for like.
- Greater accountability achieved on cost control – savings of $2M from the team in 3 months.
- Better communication and information shared with the Site Managers to enable them to track sub contractor work against contract.
- Greater productivity due to clearly defined roles, responsibilities and accountabilities monitored through KPI reporting.
- Clearer leadership approach for the Management team and improved culture.
- Reduction in costs from less amendments to drawings and plans after approvals as they were reviewed by Site Management with necessary changes done prior. Overtime pre-approved controlling excessive high rate costs.
- Increased income through on-charging client amendments through variations to the contracts.
