The challenge
A contractor faced a cash-flow problem 3 months into a project to convert a West London commercial building into 24 flats.
Our solution
We reviewed the build costs and discovered there was no detailed data for the pricing structure. We prepared a detailed cost estimate, which revealed that the project could not be delivered profitably.
The result
Based on our findings the client was able to renegotiate the cost to enable profitable delivery.
A closer look at our approach
Upon reviewing the contracted build costs, we became concerned about the sums agreed for the work. Further investigation revealed that it had not been priced by a professional but rather by a friend who did estimating in their spare time, resulting in a lack of detailed data for the pricing structure.
To get a clear view of the project and help it move forward, we prepared a detailed cost estimate, which enabled us to better understand the financial standing of the project.
Our estimate included all of the required resources, as well as a cash-flow analysis, which highlighted that the project had not been accurately priced. Following a discussion with the contractor, it was decided that the project could not be delivered profitably.
As the risk of substantial financial loss was too high, the contractor opted to try renegotiation with the client. After numerous meetings between the client, the contractor and ourselves, the project sum and specification were renegotiated to allow a profitable delivery.
