Selecting the projects that protect margin

Construction company

The engagement covered a group of projects worth two million dollars, whose contribution before overhead stood at 8%.

Approach

1. 01

   Frame

   The task was to choose how to improve this group of projects, with an initial investment of $48,000 CAD. Development of a new territory was put on hold during the analysis.

2. 02

   Investigate

   The review of 20 projects turned up poorly defined exclusions, unbilled extra work and low visibility on certain access constraints.

3. 03

   Explain

   Excessive pressure on prices and insufficient control of scope were examined. The gaps between the bid and the final cost mainly supported the second explanation.

4. 04

   Build

   We compared a uniform price increase, geographic expansion, and a selection of projects backed by a bid review, with existing practices as the benchmark.

5. 05

   Test

   The review was applied to eight bids, and four completed projects were tracked. The thresholds set in advance were a complete scope and at least 11% of realized contribution. The four projects reached 11.5%, with less unbilled work.

6. 06

   Decide

   Management rolled out the review across this group of projects and kept the expansion postponed. The other groups will be reviewed before the rules are extended to them.

7. 07

   Steer

   At six months, contribution held at 11.2%. The 12% target has not yet been reached; the volume of rejected projects is also tracked so that teams are not left without work.