Jacque Hinman made the following points regarding CH2M HILL’s performance:
- Capture Rate – Our goal is 60 percent, and the firm has hovered around 40 percent this year. We need to look at our inefficiencies and the projects we are pursuing. We may be more selective in our Go/No Go decisions; negotiate our wins more effectively; and look carefully at our global footprint, working only where we can win, be profitable, and be consistent with our strategies.
- Gross Margin Productivity – In 2013, less than 10 percent of our active projects across the Enterprise delivered 90 percent of our annual gross margin. This means the majority of our projects did not deliver significant margin; and in a number of these projects, we lost money. This is an issue in every market and every region. We need to make smart decisions about the projects we pursue – balancing return, risk, and strategy in a disciplined way to achieve our goals.
- Risk Profile – Over the past 5 years, we have lost millions of dollars on fixed-priced projects, mostly on construction projects. Again, every market and every region has these types of projects. There has been a lot of effort, across the Enterprise, to address these projects; and the staff assigned to these projects are working very hard to deliver good work.
What is the firm doing to fix these issues?
- Focusing on clients and improving sales – we must be client-centric.
- Improving operational performance and profitability – focusing on the things we do well and being the top firm in the markets we choose to serve.
- Refreshing our strategy – be more disciplined and target the appropriate markets and geographies.
- Improving long-term stockholder value while retaining our core values and behaviors – returning to the things that we all feel good about.