Wise Up Wednesday: Construction Profit Warnings

According to Ernst and Young twice as many profit warnings were issued by FTSE construction and material companies in the first half of 2018 as in the same period of 2017.

Output figures from the Office for National Statistics showed big falls in the value of construction work during the first half of 2018, which many attributed to snow disruption in the first quarter.

However, EY’s analysis found that only one out of the six of profit warnings from FTSE construction firms attributed the under-performance to poor weather. In contrast, delays to work and general economic uncertainty were cited in four of the industry warnings.

Challenges Ahead

EY construction leader Ian Marson said: “With the outlook in question, it feels like a good time to take stock and think about how construction companies can improve resilience and meet the challenges that lie ahead.”

“None of this is easy,” Mr Marson said, “but main contractor finances in particular are under much-increased scrutiny from funders and clients. The price of a profit warning could be very high.”

Protect Your Interests

This week’s Wise Up Wednesday looks at why you need to be more savvy about not only the type and quantity of the work you tender for, but also WHO you will be working for, and will they be able to PAY?

Do not simply tender for any work that comes your way at any price!

In every day life, you wouldn’t expect a complete stranger to walk up to you in the street and say “Hello lets start a relationship” and suddenly become their new best friends, so why is business any different?

In every day life you are likely to be cautious at best, or maybe even head off in another direction as fast as you can. In business accepting a “strangers” approach is likely to lead to financial disaster for you!

Choose Who You Work For

OK, I accept that this is sometimes easier said than done. But, it must be done!

There will always be other factors to take into account when deciding on whether or not to tender or get into contract with someone.  Not least of which, will no doubt be your workload at the time.  It is much easier to be selective in times of plenty.

Being willing to place an order with you is only one small part of what you should be looking for in a relationship with a customer.  In the context of collecting your money when it is due, what you really need to know is whether they will be ready, willing and able to pay when the money falls due.

A customer who can’t, or won’t, pay is worse than no customer at all and a customer who takes too long to pay, makes unreasonable reductions or sets off money unfairly, is just as bad.

Don’t Rely On Size Alone

You cannot rely solely on the apparent size of the customer.

Think Carillion!

Not all large companies pay their debts on time or are financially sound, and some national contractors are the worst payers of all.

Think Carillion!

And don’t assume that because the Manchester office of XYZ national contractor is a good payer, the same will apply to the Bristol office.  A lot will depend upon the particular circumstances within that company and within each branch.

Do A Bit Of Digging

I would advocate making as detailed an enquiry as possible from other Specialist Sub-Contractors who have worked for this organisation.

Ask about the culture of the organisation and whether or not they are helpful or unhelpful to their sub-contractors in respect of payment etc.  Ask about individuals involved and whom you can and cannot rely upon.

Ask how easy it is to agree interim applications, variations etc and whether or not they are prone to making reductions or set-offs.  Most important of all, ask whether or not they always get paid on time.

Don’t be shy about making these enquiries or that making these enquiries might cause offence to potential customers.  In well run, objective organisations nothing should be further from the truth and reputable companies will respect your professionalism.

Research – Contact – Follow Up

It is far more cost-effective to be selective and just go after the work that you want to do, where you want to do it. And this is not as difficult to find as you may think.

With a little organisation, investment and a proactive approach to the task, you can reap the benefits.

How can this selective approach – that we know works for others – work for you?

  • Research the market for the type of work you want to do and filter out the jobs you want to work on
  • Make contact with the key decision makers on the project and don’t worry if a particular project has already been specified. The same people will be working on other projects that are not as advanced, which is your chance to get on the tender list for those projects.
  • Systemise your telephone calling and follow up, and, it may well be difficult to reach the right person immediately, which is why it is important that you make this a regular process.
  • Keep a simple spreadsheet of sales activity and then use this spreadsheet to keep a call record, adding new project information to it as you source more data.

What if this sounds all too much to do?

StreetwiseSubbie can help you to do all of this.

From sourcing the type of leads you want, to making the calls, record keeping and maintaining contact with live projects on your behalf.

Your dedicated sales consultant will be the ‘face’ of your business, introducing you as an expert Specialist Contractor and maintaining contact with the specifier, passing on tender requests to you as they are received.

We are doing this successfully for others, so it can work for you too!

Call Logs are provided after each session and call dates, conversations and required actions are clearly detailed. All you need to do is then pick up the tender information and quote accordingly.

Want to find out more?

For a free, no obligation online demonstration, using live data, where you can see in real time the quality of leads you can access, just contact us directly on 01773 712116 or e-mail us at info@streetwisesubbie.com

Thanks and best regards,



P.S. Please remember that we are here to provide solutions exclusively for Specialist Contractors. If you have a business problem, not sure what to do or just want a second opinion, then we are here for you. Please give us a call on 01773 712116, or email info@streetwisesubbie.com today.

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