Over and Under Billing Metric Trend

Contractors looking for key metrics to manage should be focused on Outcomes or Key Results, and Lead Measures or Leading Activities.

D. Brown Management

November 11, 2018 2 minute read

Cash Flow: Over / (Under) Billing Trend.

OUTCOMES: Or Key Results. What metric(s) will best show the final state you want to be in AND progress toward that target level of performance?
LEAD MEASURES: Or Leading Activities that will most likely lead to the Key Results or Outcomes you want. The metrics that measure the Leading Activities are typically at a more rapid cycle time than the outcome based metric.

At the cash flow level, if you want to improve your Cash Metric to 100% or better, the first activity that must be controlled is the monthly billing performance of the projects.

No amount of excellence in collections will help you get close to 100% if you are continuously under-billed on your Work-in-Progress (WIP) as a whole.

Metrics alone WILL NOT change your outcomes; they will simply let you know the score. The most important aspect of this is the regular Operating Rhythm that reinforces a rigorous PDCA cycle each period, similar to what the Last Planner System does at the project level.

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....

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