Sector: Oil and Gas
An Oil & Gas service company had experienced rapid growth over a short period however the support/back-office functions were not able to keep up and soon became unfit for purpose. The company results would swing wildly from one reporting month to the next and the management team did not understand what the drivers behind the results and why they were making ‘losses; in some months. The management team had no faith in the management information they were being provided and the 3rd parties were getting increasingly frustrated.
• Identify what was causing the company results to swing so violently from one month to the next when there was little infrastructure in the finance department;
• Providing a process to prevent such events going forward;
• Providing the necessary tools to challenge and understand performance that exceeds or falls short of expectation;
• Finite resources were available to manage and maintain any new process that was implemented so it needed to be slick and flexible.
With the use of trending data we were able to identify that all the issues were at a gross margin level and more specifically a timing issue with direct costs. We quickly:
• Created a costing model that gave the client expected margins at a product level which set expectation
• We changed the processes of the accounts payable department to code costs to a project accounting module which gave us granularity on year to date performance by project/product
• We introduced a review session with the project managers who would give us a cost to complete or a forecast on the project
• We were able to identify and normalise past performance
• We could easily identify what project or product was the one causing the inconsistent results and adjust before any financial data was reported to the board or 3rd party
• The forecasting tool removed the false margins created by timing issues
• Gave management and 3rd parties confidence over the underlying company performance
• Improved processes allowed the company growth without increasing the non-chargeable headcount
Case Study: Adair Simpson (Please Click here to see Adair Profile)