Stories / Construction
Owner-Operator: Gross margin 9% to 21%, zero loss-making jobs since
Winning plenty of work at prices that turned out to be wrong, with four of the last nine projects finishing below cost.
- Client
- Owner-Operator
- Industry
- Construction
- Size
- 27 people
- Timeframe
- 11 months
Anonymised at the client's request · figures verified · published with written permission
The situation
A strong reputation, a full order book, and a bank balance that never reflected either.
Quotes were built from memory and a spreadsheet last structurally reviewed in 2016.
Variations were done on a handshake and invoiced late or not at all.
What we did
- STEP 01
Reconciled twenty-two finished jobs, line by line
Two systematic errors: labour hours understated by an average of 18%, and unrecovered variations worth £71k across the sample.
- STEP 02
Rebuilt the estimating sheet with real historic rates
Actual hours from actual jobs, by work type, not the rates in someone's head from four years ago.
- STEP 03
Priced risk as a visible line
A named contingency, sized by job type and shown to the client. Almost nobody objected; the transparency read as competence.
- STEP 04
Made variations a written process
No work starts on a variation without a signed one-page order. This felt bureaucratic for about three weeks and then simply became how things were done.
The numbers
| Measure | Before | After |
|---|---|---|
| Gross margin | 9% | 21% |
| Loss-making jobs | 4 of last 9 | 0 of last 14 |
| Variations recovered | ~40% | 97% |
| Quote win rate | 61% | 38% |
Measured over 11 months
What didn't go to plan
Win rate fell hard, and that was the point — but it took the owner about four months to stop flinching at losing tenders they used to win.
In their words
“We were the cheapest for a reason and the reason was we were wrong. Finding out exactly how wrong was the whole job.”
Owner · Construction
The lesson
You do not have a sales problem if you are winning work you lose money on.