Case Study Project Problem
A large sub contractor had the largest market share in their region. They won lots of jobs, were the first pick of many general contractors and were often voted the best place to work amongst journeymen and project managers. Yet, inside the company, the owners were tap dancing as fast as they could. With a shortage of trained people and more and more opportunities coming their way, the management team was working over time, getting increasingly frustrated at their people’s inability to take responsibility to lead and manage. Crises management created a powder keg of issues and tempers were short.
The good news was that revenue growth was through the roof. But were the owners getting any more out of the bottom line besides mental, physical and emotional stress? Was it worth it?
The first step that we took is to analyze their financial situation. They were unable to get the kind of reports from their financial software that would reveal where they were losing money so we pieced together a trail of documentation to be able to track the variances from year to year. What we discovered was that the gross margin variance was getting larger each year: what they estimated they would earn on each job differed from the actual accounting at the close of the job.
This financial fact pointed to a problem in the systems and processes that their people followed. We found that each person had a somewhat different understanding of reporting and some used software and some didn’t. The fact that the systems were not followed magnified problems and people often blamed one another for not following or using different systems. This created a culture where people would not be motivated to take responsibility for their actions.
By identifying the root of the problem on both the operational and cultural fronts, we worked with the owners and managers on both issues, instituting key performance indicators, performance bonuses tied to producing the indicator information and focused on helping get all systems onto a single software platform. Senior managers and owners all were coached on running effective meetings, their attitudes, methods of dealing with problems, managing clients, holding others accountable, delegation, leadership, decision making, having productive discussions and working with each other’s strengths rather than pointing out their weaknesses.
With a variance reduction goal motivating the owners and the opportunity to clear up many of the systemic problems that have frustrated everyone, the future seems brighter. The company is able to hold more productive meetings resolving issues face to face that would in the past, have resulted in project problems that cause the variances.