Changes and Cash Flow Improvement

Construction is a cash-intensive business and change orders are often one of the root causes of poor cash flow.

D. Brown Management

March 13, 2019 2 minute read

A 30-day improvement to change management workflow can generate over $400K in additional cash flow for a $50M contractor.

Change Management: Changes, how much cash flow improvement?

Construction projects average 10% in changes.
Attention to details on pricing can significantly improve change profitability by accounting for many of the hidden impacts that changes cause.

Nearly all projects face difficult cash flow, even before adding in changes.
Getting changes onto the billings ASAP is critical. Remember that an improvement of just one billing cycle on average is worth hundreds of thousands of dollars in cash flow.

HOW? Look at every detail of the workflow.

Could we have identified this any earlier?
Could we have priced it and made a proposal any quicker?
Could we have leveraged our customer relationships to get it processed any faster?
How many of the T&M changes could we have quantified ahead of time to accelerate the process?
Could our backup information be any clearer so that processing moves faster?
Could our contractual terms have been improved to help?

Changes and Cash Flow Improvement

Change orders are a fact of life in construction. Improve profitability, cash flow and customer satisfaction by effectively managing changes. Build a foundation for success with 12 steps to improve pricing and 11 negotiating strategies for the whole project team....

Previous Next Go To Series

Related Insights Series

Related Training

Changes and Cash Flow Improvement

Previous Next Go To Series

Related Insights Series

Problem-Resolution Cost Pyramid - Earlier is Always Better

An easy way to visualize the cost of problem resolution at different stages of construction is with this pyramid. The cost of the problem is the cost of the problem (1X). Finding it ahead of time minimizes the costs and maximizes customer satisfaction.

change management field productivity project management

Project Cash Metric and Cash vs. Margin Variance

Contracting is a very capital-intensive business and it is critical to constantly be watching cash flow performance. This metric is the highest level of an “OUTCOME” for cash flow at the project level, summarizing the performance of ops and accounting.

cash flow metrics

Production Tracking - The Basics

Schedule + Production are two foundational key results the Foreman will achieve through their planning. The heart of any production measurement is simply “Earned Budget vs. Actual Cost”.

budget management labor productivity production tracking project management schedule management technology