Streamlining Administrative Services Boosts Company’s Profits

PROJECT BACKGROUND

A national company providing rental equipment for highway construction projects was created through the acquisition of several independent regional companies. Due to state and local regulations, each regional business had unique operating characteristics, specific customer relationships, and differing products and services. After several years, each region was still using unique financial management and administrative practices and systems. This caused inconsistencies in reporting, procedural inefficiencies, and data integrity issues, which increased administrative costs and constrained effective business decision-making. The company was not able to maximize its potential return on sales and investment.

Integrated Project Management Company, Inc. (IPM) was engaged to develop new administrative processes that would build on the best practices already in place across individual company units, but also allow the centralization of many administrative and financial functions in a new “Back Office,” to be located at the company’s headquarters.

IPM’S SOLUTION

IPM worked with the client’s leadership team to refine the objectives of the project—the establishment of centralized functions at headquarters and the creation of uniform decentralized functions within each region. By standardizing policies and procedures, whenever possible, as well as the disciplined use of existing financial software, the company could improve consistency and reduce cost. Boosting efficiency would shorten month-end closing cycles, improve collections and cash management, and streamline purchasing activities.

IPM was careful to allay concerns about a “one-size-fits-all” solution, especially since governmental regulation differed from region to region, and ensured that all stakeholders would have a voice each and every step of the way.

IPM organized the principle business functions into categories (accounts payable, financial reporting, fixed asset accounting, general ledger administration, job estimating, project management, and collections) and documented them in a process map. IPM interviewed key staff in each region about the procedures their team employed, and used this information to develop draft processes and procedures for each category included in the project. A cross-functional Core Team, which consisted of the company leadership team plus primary regional resources, reviewed and edited the drafts until a consensus was obtained for each process. The procedures were then implemented in all of the regions sequentially.

PROJECT RESULTS

The company immediately achieved more than $1,000,000 in annual cost savings by centralizing and standardizing their key administrative functions. The integrity and consistency of financial data also improved dramatically, enabling the firm to better plan and execute its sales and operations.

Forty-four “best practice” processes were implemented nationally; half are executed by the “Back Office,” the other half by the regions

IPM’s professional project management services were a key factor in achieving these results. As an outside resource, IPM was able to objectively represent the views of all of the stakeholders in the project, capturing the best ideas from all sources, and facilitating the team’s efforts to incorporate them into the entire organization.