Cash Flow Metrics and The Continuous Improvement Process

Contractors can focus on 3 major metrics to continuously improve cash flow, truly making a “game” out of it.

D. Brown Management

November 9, 2018 2 minute read

Cash Flow: Cash Flow Metrics and the Continuous Improvement Process.

Contractors can focus on 3 major metrics to continuously improve cash flow, truly making a “game” out of it.

Cash Metric Trend: This is the ultimate outcome-based cash metric at the company level that operations has control over. It looks at your open Work-in-Progress (WIP) projects and compares the net cash against the earned gross margin. Below 100% and you are financing the construction of the project.
Over / (Under) Billing Trend: A great leading measure and 100% within the control of the project management team utilizing the 18 tips.
Collections & Retention Trend: Another leading measure that is a joint responsibility of the project management and finance team.
Identifying the TOP 3 jobs that are the biggest drivers of these lead measures over the last month and then drilling down into them using Root Cause Analysis (RCA) tools to help you see potential improvements.
Prioritize and execute improvements in the short and long term. Get better during the next cycle just like you do with Field Productivity.
Utilize A3 Thinking / Reporting techniques for the best results.

Contact us about using a template and process like this for your business.

Cash Flow

Great cash flow is a key driver of valuation and successful successions. Running out of cash is is the #1 reason contractors fail. Improving cash flow improves your Return on Equity. Protect yourself and never let cash flow be the limitation to your profitable growth....

Previous Next Go To Series

Related Insights Series

Cash Flow

Previous Next Go To Series

Related Insights Series

The Productivity-Talent Bonus

Contractors will receive a major talent bonus when they put a relentless focus on field productivity. They will become “Talent Magnets” for the best in the industry making them unstoppable even in the face of major talent shortages.

A Typical Project - Understanding Cash Flow at the Company Level

As contractors face many opportunities in the market it is important to keep cash flow management top-of-mind. Growth eats cash and just a few hiccups in execution can put just about any contractor in a very bad position.

Bill Walsh - Planning the First 25 Plays

Construction success depends on both the ability to rigorously plan as well as the ability to quickly react to changing field conditions. This is similar to sports and a lot can be learned from the disciplines of great coaches.