Why Cash Flow Matters?
Survival | Stability | Growth
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Kaizen – Improving Cash Flow 1 Detail At A Time

1. Relationships Are EVERYTHING!
People In Your Cash Flow Process
4/16
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1. Relationships Are EVERYTHING!
Relationship Management Ideas
WHO? WHAT CAN YOU DO?
Project Engineer Get contact info for everyone
and start the relationships
Inspector
Introductory letter to all parties
Owner’s Representative
Help your subs / vendors with
A/P Person
their certified payroll
Compliance Officer
Make your formats match your
Subcontractor Payroll / customer’s as closely as
Contracts & A/R possible
Directory feature in Project Management module
Memo’s & Transmittals for rapid communications
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2. Flowchart Project Cash Flow Processes
Look For Ways To Improve Them…
6/16
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3. Billing Format / Schedule of Values
Loading | Format | Integration
DESCRIPTION VALUE BUDGET CASH
01 Mobilization 10,000 3,000 7,000 70%
02 Submittals & Shop Drawings 7,500 2,200 5,300 71%
03 Materials - Underground 12,500 9,000 3,500 28%
04 Materials - Power Distribution 46,000 35,000 11,000 24%
05 Materials - Conduit & Wire 28,000 21,000 7,000 25%
06 Materials - Light Fixtures 56,000 42,500 13,500 24%
07 Sitework & Utilities 25,000 18,000 7,000 28%
08 Underslab 15,000 9,500 5,500 37%
09 Branch Rough-In (Conduit & Wire) 35,000 22,000 13,000 37%
10 Feeders & Switchgear 50,000 45,000 5,000 10%
11 Lighting Installation 45,000 51,000 (6,000) -13%
12 Fire-Alarm System 20,000 24,000 (4,000) -20%
13 Security System 15,000 19,000 (4,000) -27%
14 Devices & Trim 5,000 7,100 (2,100) -42%
TOTALS 370,000 308,300 61,700 17%
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4. Subcontractor / Vendor Pay Schedules
Carrots & Hammers = Cash Flow
8/16
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5. Managing The Schedule
Watch Your Manpower Requirements
9/16
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6. Submittals & The Close-Out Process
The Power Of The Submittal Log
Build submittals into billing format & hurry up!
Build major buyout into billing format – order as soon as possible
Set framework for and do most of the close-out process as early as
possible
10/16
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7. Improve Change Order Processing Time
Custom Issues | Logs | COR’s
1. Use project pre-planning to identify changes before you start
2. Get to know everyone involved in approving your change requests
3. Find out exactly what the specified change processing time is
4. If a time isn’t specified in the contract try to insert your own clause
5. Setup a change request as soon as you THINK there may be an issue
6. Make pricing change orders a top priority in the company
7. Manage all your documents electronically
8. Attach all supporting documents to your change request in one PDF
9. Make sure your backup format meets the contract requirements
10. Build your change request format to match the customer’s
11. Get change requests on billing format as soon as they are submitted
11/16
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8. Compliance Documents
Don’t Let Them Stop Payments
Insurance certificates
Certified payroll
Fringe benefit statements
Lien releases
Daily reports
Safety meetings
Incident reports
Custom issues
Tasks
Document tracking
12/16
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9. Punch Early – Punch Often
Don’t Let It Hold Your Retention
Don’t wait until the end
Make your own punch list
Make a list every few
hundred man hours
Note areas where others
are impacting your work
Resolve punch list items
fast
Custom issues
Tasks
Meeting Action Items
13/16
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10. The Close-Out Process
Don’t Let The Last 5% Cost You 20%
O&M manuals
Spare parts
As-built drawings
Test reports
System training
Submittal Log
Custom issues
Memo’s & Transmittals
Tasks
Meeting Action Items
14/16
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11. The Cash Flow Game
Involving Your Team For Success
Recognize that almost everyone has an effect on cash flow
Train them on the financial basics and how they can improve cash flow
Brainstorm ways to improve cash flow on a regular basis
Discuss over / under billings candidly at regular meetings
Hold PM’s accountable for A/R problems
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