Operational and Financial Effectiveness

Building a foundation of cost and performance management for the engineering and construction industry

For Canadian engineering and construction (E&C) companies, profitability is closely tied to operational and financial effectiveness — not only on individual projects but for the organization as a whole. In an increasingly competitive and challenging marketplace, successful E&C companies will be the ones that integrate cost management and performance improvement into the very culture of their business. These companies are constantly and vigilantly looking for ways to increase efficiencies and productivity at a same or lower level of cost.

From the financial side, a slash-and-burn, 10%-across-the-board cut may provide short-term savings during lean times, but can hamstring an E&C business over the long haul. A better approach is to ensure that cost management impacts more than just your financial department — it needs to reach all the way down to individual construction projects and into your corporate culture. Cost management should be a strategic part of your business, not simply a tactic that you implement in certain situations. It should factor in such aspects as supply chain management, operations optimization, financial reporting, compliance with occupational safety and other regulations, and the leveraging of tax credits such as Scientific Research and Experimental Development (SR&ED).

From the performance management side, strong vendor relationships play a key role in the procurement of supplies and people, which in turn impacts operational effectiveness. In a volatile economy, supplier risk management is vital to ensuring that your supply chain remains unbroken and that your organization is operating at its most efficient. Sustainability also plays a big role in the E&C industry, especially on high-profile projects: Making sure your company is leveraging eligible carbon credits, reducing its carbon footprint through increased efficiencies, and purchasing "greener" building materials can go a long way to improving your overall operational effectiveness.