Case Study - Mechanical Contractor

Case Study # LAL04

CLIENT:    
$7,000,000 Mechanical Contractor – Mid Atlantic

SITUATION: 
Several years of significant fluctuations in revenue and the death of the President left the company with a void in leadership and out of cash. The company did not have the financial management tools or operating procedures in place and consequently suffered significant losses; the following years of decreased revenue made it increasingly harder for the company to control its cash flow.

ACTIONS TAKEN: 
The immediate need was to stabilize cash. The major source of cash was over billing new projects which only increased the pressure to low ball quotes. A cash management plan was implemented which addressed increasing vendor debt and the lack of confidence of their bank. To improve the profitability of the business procedures were developed to address crew mobilization, inventory control and purchasing, labor scheduling and reporting, field reporting, and weekly flash reports to communicate results to senior management. To reward employees for helping improve the profits of the business and provide for future successes a Pay for Performance Plan and performance based wage management program were implemented.

RESULTS:     
As a result of the team effort between company employees and Paradigm Management annual cost savings in excess of $500,000 per year were implemented. The company was able to renegotiate its line of credit and as a result of the process improvements gross margins improved 5% the following year.