To learn and establish exactly what the differences between the Construction Industry and other industries are, we sat down with David Raffaelli (Financial Controller).
Having been in the construction Industry for 6 months now, since you started here, what would you say is the biggest difference between the way the oil industry works (where you previously worked) and the way the construction industry operates?
I would say the biggest difference is the offering of the product. This may seem an obvious answer, but in the oil industry, you only really sell one thing, which is oil products (petrol, diesel etc), and there is nothing you can do with that product to really differentiate yourself from your competitor, so price is generally always the number one factor, followed a long way back by service and relationships
In the construction industry, and particularly with what Colorminium are offering, there are several ways you can differentiate your product to gain an advantage on your competitors, and it isn’t necessarily price driven. Certainly, value for money is a key decision factor in any industry, but working with your customer to bring their designs to life, and understanding their needs can be far more valuable to them than a pure bottom line decision.
Having seen and experienced several large and small construction companies over the recent months face financial difficulties and even fall into administration, what is your advice for medium-sized businesses such as ourselves to ensure they have plans in place to remain strong financially in today’s marketplace?
It’s incredibly hard to say without being inside one of those organisations what has gone wrong for them, and I’m sure the story will differ from company to company, but I am a keen believer in the old saying that “cash is king”. I think sometimes companies can focus too much on how much profit they are reporting, without making sure that the cash is also flowing in through the doors. You are nothing without assets, so it is important that you are turning those debtors into liquid assets as soon as you can and have robust contracts and collection processes in place to make sure that you don’t ebb away your hard-earnt work with poor financial processes and practices.
Secondly, I think sustainable growth based on a carefully considered plan is key. It is very easy to take on jobs that can be too big for your organisation, or don’t suit your plans, in order to chase a pay day, but you must consider, do we have the workforce for this? What will this add to our overheads? How will we cover our overheads once this job comes to an end? Sometimes the best business decision can be to turn down work, as tough as it may be, if it doesn’t fit with your goal.
What can you tell us about your experience in working at CLL – would you recommend it to others and what do you feel makes us different from other places you have worked?
Working for Colorminium these last 6 months has been a really good experience. There is almost a perfect balance of the family company that it has grown from, and the professional corporate world which it now competes in. The key thing is that the family feel helps to create a set of values that are different from the generic ones a lot of companies set out and are brought into by the staff that work here – I’m quite proud to think that they saw these values in me during the interview stage!
Adapting to a new job and indeed a new industry can always be a daunting thing, but the team here and the management have been great, always offering insight and knowledge when I have called upon them, and also being keen to listen to ideas I have brought along from outside the industry.
My one complaint is that it took me 21 games to win a game of table tennis… it took me a while to realise that the ‘Play to Win’ value extended to the lunchtime activities too!
From being in the Finance department, why is reporting and in particular cost reporting so essential?
Cost reporting is absolutely essential, in particular where the projects are so sizable and long term, as it brings visibility and control to the projects. If we don’t report accurately on the costs, we may not be aware of them, and if we aren’t aware of them, then we can’t control the money going out of the business or make the necessary decisions on how to reduce/stop the costs occurring, especially those that didn’t need to. Bad money will follow bad money if you aren’t careful, and cost reporting is the key to identifying and controlling this.
It is something that I think is done very well here, and the Quantity Surveyors are able to report on their projects to a low materiality, which helps us to identify our costs, and make good decisions.
So, it is essential that is accurate then, because it gives you more control?
Absolutely, accuracy leads to control, leads to informed decisions. Put another way, if you are provided with poor data, by and large you’ll make poor decisions… if you are provided with good data, that puts you in a position to make good decisions.