CONSTRUCTION / ILLUSTRATIVE PROJECT
Making the contract-to-cash cycle visible
A fictional contractor is preparing to accept a larger project while existing work continues. Materials and labor must be paid before several billing milestones are collected.
THE DECISION
Start with what
needs to be understood.
Connect project delivery, deposits, progress invoices and retention to a weekly company cash forecast.
START WITH THE DRIVERS
Connected assumptions. A clear view of your business.
THE PROPOSED APPROACH
Connect the drivers
to the decision.
This example describes how the scope could be shaped for the fictional brief.
Workload & delivery
Connect the pipeline to project starts, completion schedules, labor and subcontractor capacity. Make the limits on simultaneous work explicit.
Contract margins
Separate materials, direct labor, subcontractors and overhead. Reflect project-specific cost assumptions and changes in the work mix.
The cash cycle
Model deposits, progress billing, payment delays and retention. Show how a profitable project can still require working capital during delivery.
THE DELIVERABLES
A connected set
of business materials.
The forecast would show when the business needs cash to deliver the work and which payment assumptions require attention.
- A project and company forecast with contract margins, resource needs, billing, collections and cash flow.
- A business plan covering the service focus, target contracts, delivery organization and capacity for growth.
WHAT WOULD INFORM THE WORK
- Pipeline and signed contracts
- Project budgets and delivery schedules
- Team and subcontractor capacity
- Billing milestones, deposits and retention
- Equipment investment and overhead
EXPLORE RELATED DECISIONS
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