Archive for October, 2009

« Older Entries

Newer Entries »

Tips to help companies gain and maintain an edge

October 28th, 2009

Things are just not what they used to be

There is reputedly an old Chinese curse that says: May you live in interesting times. We are in the middle of it! These are not only interesting times, they are riveting times. The economy is almost unrecognizable and things don’t stop changing. In order to survive in this uncharted jungle, every business owner or manager needs to prepare for the drastic changes taking place. Here are some ideas that may help:

Manage cash flow

Cash flow and financing should be addressed at every management meeting. Monitor management accounts and key ratios regularly to identify trends early, regularly update cash-flow forecasts, build in sensitivity analysis, adjust for changes to exchange rates, increases in raw material prices and shipping costs, and perform key performance indicator (KPI) analyses.

Focus on your margins

Focusing on your margins and cut costs, not prices. A price increase can be the most powerful strategy to improve the bottom line, but in such tough times as we are experiencing, you are not likely to get the benefits of a price increase easily. Instead, you are faced with having to reduce costs to improve the bottom line. Be ruthless in assessing cost structures and key cost drivers. You need to stay focused on customers and not suppliers as your margin source.

Working capital management

Wherever possible, negotiate better payment terms with suppliers. Review your debtors list and follow up on overdue accounts. Don’t be afraid to put customers who don’t pay on hold or consider entering into extended payment terms with them. Control stock levels and review inventory insurance – theft often increases in a downturn.

Don’t forget the customer

Maintain your personal touch with your most valuable asset, your customers. When pressure to stay competitive is at an all-time high, you must be absolutely certain customers get what they want and need. Don’t assume they’re happy just because they’re not complaining.

Reward performers

Look for creative ways to retain top performers on your staff. You may not be able to offer attractive salary increases, but consider offering perks that don’t cost the company a lot of money. Consider things like flexi-time and working from home. If you need to cut staff costs, get rid of poor performers, they take up a disproportionate amount of management time, aggravate customers, squash company morale and drive away high-quality performers.

PR

This is the time to go out and capture the hearts and minds of consumers – new and existing. If you cut advertising costs, you may lose customers to competition.

Watch the competition

Investigate your competition and determine whether you can take advantage. While most businesses are more concerned with focusing inward, a few brave companies will see this as an opportunity to put one over the competition.

Take a critical look at operations

Review and evaluate internal operations, strategic plans, procedures, structure and policies to see how to cut costs, increase productivity and improve fiscal oversight.

Tags: Cash flow, Cutting costs, Maintaining an edge, Margins, Operations
Posted in Uncategorized | No Comments »

America builds a new embassy in Baghdad

October 27th, 2009

The most expensive embassy in the world

In these times of hi-tech surveillance equipment, hi-tech spying games and hi-tech international politics, just about the most sensitive thing any government can do is to build a new embassy in a foreign country.

The shift in Iraq

The US presence in Iraq is slowly moving from peacekeeping activities to reconstruction and one of the focal points is the construction of a brand new embassy – not just another embassy, but the largest and most expensive embassy in the world. The grounds along the Tigris River cover 104 acres, about the size of Vatican City. The construction cost is over $700 million and took 34 months, meaning that the contractors earned something like 20 million dollars per month.

The result

According to a report issued last week by the State Department’s inspector general, the construction “is significantly deficient in multiple areas” and may not meet safety codes. It called on the State Department to seek $132 million in damages from the main construction company, First Kuwaiti General Trading and Contracting, principal contractors. Walls and walkways are cracking, sewage gas flows back into residences, wiring is substandard, fire protection systems are faulty and other safety provisions do not meet contract specifications.

To sue or not to sue?

The US Bureau for Overseas Building Operations is considering whether to seek reimbursement, although they stated that “the deficiencies are not adversely affecting embassy operations.” The scale of the embassy is massive while its aesthetic appeal is minimal. The campus comprises 27 buildings in boxy, tan concrete, including apartments for 1,100 people. The heavily guarded site has a 15 foot thick perimeter wall around it and was built by a Kuwaiti contractor who employed only foreign staff.

The faults

The report on the completed building lists problems with water, wiring, design, automation, sewage, walls, ceilings, power generators, emergency safe areas and structural reinforcement to protect the embassy from earthquakes. It says that First Kuwaiti charged for $33 million worth of design services that were either incomplete or undocumented. The report says construction was also mismanaged by the government overseers. In order to speed construction, the Bureau of Overseas Building Operations created a standalone agency to act as contractor, outside the normal review process. This agency failed to enforce contracts or to maintain quality control, the report says. The

Iraqis are disappointed

Basically the Iraqis are saying that if the US couldn’t do a proper job on the embassy project, how will they fare on the entire Iraq project?

Budget overrun

The original 2005 budget was supposed $592 million, but as in every construction project there were “extras”:

• $4.6 million in restitution from First Kuwaiti to repair safe areas for staff members, which were not built to specification;
• $14 million to install seismic bracing against earthquakes;
• $11 million to compensate for an inefficient power plant;
• $4.6 million to replace fire protection systems; and
• $1.5 million to repair faulty plumbing in 200 locations where sewage gas could escape.

Tags: Baghdad, Building contractors, Construction costs, Embassy, Extras, Quality control
Posted in Uncategorized | No Comments »

« Older Entries

Newer Entries »