At the time of writing all we hear is credit crunch, credit crunch, credit crunch!  Yet today as I write inflation has dropped 1%, little signs of recovery.  The major fear I have for all of us is the credit crunch is being reported often times on figures which are in arrears.  I can say from information I have, there is an air of expectation about mortgages etc being released and investment in our construction community commencing.

Furthermore, I have to say that the so called “lobby bodies” within construction are highly ineffective in their approaches to Government.  As an aside, a sister company I own have a body which is going to be slightly different in approach.  I cannot understand why our Politicians have not at least grabbed the initiative to make Northern Ireland PLC the lowest tax rate, lowest PAYE rate, lowest corporation tax rate in the UK or Europe so that companies will invest here.  The Northern Ireland exchequer may cry a little that they would be losing revenue but the real fact is they will be gaining future revenue from lots of inward investment and maybe we will become a society of producers and not reliant on service industries which are failing or being employed in the main by Government bodies.

Leaving that aside, what can you do?  The first thing is when you are entering into new contracts is to examine exactly what you are doing.  Ensure in this climate that a contract and letter of credit is in place.  Have you in fact actually checked out the credit worthiness of the company you are dealing with?  (We are doing that now on a regular bases).  Set credit limits and enforce them, but more importantly for the Contractor and Civil Engineering Contractor, know the rules that you are operating under.  Examine the contract closely and do a risk analysis on exposure within that contract.  Check the reality on liquidated damages, check the reality on how you have programmed the work, is it capable of being attempted and completed in that time?  Many projects fail through unrealistic expectations.  Claims are made as a result of negative equity on the account which should never have been there in the first place.  

Real time management and real time reporting should be ordered and something I have said a long time ago, Head Office must be copied in on all correspondence before it is released, lest there is correspondence in the food chain that would come back to hunt you.  No agreements should be made in respect of any matter which impacts on time and money without the Directors or Managers of the Company being aware of their implications!

Take advice - in the main and until now many companies have meandered forward on a cash flow basis only without taking advice.  Take advice from your bank and stick with them, don’t give them shocks, let them know what is happening well in advance.  Have you taken benefit from the delay in returns that are afforded by the Governments presently for VAT etc?  Were you aware of these?  Have you been informed by your Trade Association?  The answer is probably not.  That’s ineffective in my view.  

Moving forward, are there other channels opened to you for work, can you diversify, can you be creative?  In the real world of commerce our industry should look at other industries and how they survive in credit crunch times.  The real companies that survive are creative, they are controlled and they are pro-active.  Another thing that I notice our industry is extremely poor marketing.  At Kearney Consulting we are actually marketing on a 24/7 basis, but it is targeted.  We have facility to actually help you improve your image, we have a corporate design department within the company and now is a good time for companies to re-brand and re-engineer their whole image.  You may be trimming down, you may be laying off staff or sending back plant and machinery but the important thing is people need to know you are there.

So the moral of the story to date is get your act sorted out, get your image clean and credit control in place.  Start with the small things and they become big.  Start to read the contract.  Contact ourselves or other bodies who are equally as good at giving you a risk analysis of what you are supposedly to do.  Set your site controls in place, that you have adequate and proper correspondence and another thing which we find in practice in this day and age, so many people allow the problem to meander until it becomes a major issue affecting their company.  Deal with it head on - you get more respect that way.  

For next month I would like you to send me copies by email of your worst case scenarios and I will try to address them.  Let’s make this page effective in this climate.  Let’s have a question and answer - OK I am not the fount of all knowledge, but I will find out for you.  Here’s looking to a brighter future and I believe it is coming, because our figures say the “seeds of change are underway”!  Maybe someday the real time press will catch up