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?

Change Orders

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....

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Change Orders

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Change Tracking Log & Management

Great change management starts with a good tracking system. The far more important part of change management is the rigorous review process at least 2X monthly with your PMs that will limit your risk, increase your opportunities, and train your team.

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Changes - Early Identification is Key

Early identification of changes and conflicts is the first key to success. The capability to identify changes and conflicts early in the process is a combination of organizational structure, systems, management, training, and coaching.

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Change Order Profit Improvement

A 10% improvement in change order pricing for a $50M per year contractor will add $500K to their bottom line. This is not about simply marking up the change more, but rather, including the many costs that are typically missed or undervalued.

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