Diversified Site Works Develops Focused Business Plan To Work Smarter, NOT Harder.

Solutions & Results

Callahan stated that 2020 was their heaviest year of estimating. They bid on just over 420 projects that year, which is an astonishing number (approximately 2 per business day) with a total value of over $150MM. However, their success rate was only 6% of that total bid value, closing only 15% of the total projects. And they worked HARD for that number. “It was a shotgun approach. We basically bid on anything that came our way and hoped for the best. There was no strategy or business plan involved,” Callahan said.

GST helped us start looking at ways to improve the overall business and culture at Diversified. While the goal was to build their client base, they were actually wasting resources throwing out random bids, which wasn’t very productive. By 2021, they were looking more closely at the bids they were doing and trying to throw out ones that didn’t make sense.

However, the year-end results didn’t prove what they’d hoped. Yes, they successfully reduced the number of bids they did that year, but their sales numbers went down too. They made nearly 360 bids, but their close rate dropped from 15% to 11%, and their total volume of bids decreased to $140MM with only 4% closing. Again, Callahan scratched his head thinking, “we are still putting in a crazy amount of work and bidding on projects, but now our numbers are going down?” Then Callahan and GST decided to hone in and divert all efforts on becoming a leaner, more vital, focused organization.

So in 2022, their strategy shifted as they sat back and identified the types of clients and projects that were most profitable for DSW. Furthermore, they could narrow down what they were and weren’t comfortable with and move forward bidding on projects that made SENSE. They put out for just over 222, a nearly 50% reduction in the number of bids from 2 years prior. They increased their close amount to 9% of the bids, and their total volume. While it went down from $150MM to roughly $80MM, they were closing 9% of the total volume. Allowing them to shift manpower from pre-construction/estimating to production and project management.

“This approach saved us a ton of manpower and hours,” said Callahan. "We were getting the jobs we wanted vs. taking on anything we could get.”

SIDE BENEFITS

Through this process, DSW also realized they needed to streamline operations, to work more efficiently. They were able to eliminate three full-time positions, saving them over $1MM in overhead. Ironically, the reduction in workforce made the bidding and preconstruction process more collaborative. Instead of the blame game, there was a team-focused approach to the job, which in turn has improved morale. These are intangible benefits of working smarter as an organization. “We got rid of a million dollars of overhead, and their jobs might actually be easier because there are fewer people muddying the waters, and there is a greater collaboration within the team. They see value in what they are doing,” analyzed Callahan.

Additionally, they had been so hyper-focused on new bids, that they didn’t realize a large portion of their total revenue should be brought in by change orders during the production phase of the projects. In 2021 they saw approximately $1MM in change order revenue and tripled that in 2022 with over $3MM in change order revenue. “This was a huge realization that we were managing our projects better and bringing in more revenue by having efforts focused on the projects,” remarked Callahan. The company went in one year from losing money to making a significant profit in 2022.

CONCLUSIONS

Working with the Growth Solutions Team has helped Diversified Site Works improve their focus and efforts to improve their overall efficiency and profit margins. By identifying and narrowing their focus, DSW can look forward into 2023, work the business plan further, adjust as needed and hopefully realize even greater profits this year. “I appreciate that I can always call the Growth Solutions Team, have that check-in or brainstorming session, and they’ll get me straight and keep me on track. This relationship has been invaluable to our business,” concluded Callahan.