Illustrative scenario · Civil contractor · Money and machines
We're busy, and profitable on paper. Why are we always short of cash?
₹2 crore of retention should have come backIllustrative
Not a client. A worked example of the method, with stated assumptions and public benchmarks. No result is claimed.
The business
A second-generation civil contractor in north India. About ₹80 crore a year, mostly government work. Accounts are in Tally. Each site keeps its own registers and equipment logbooks.
The owner's question
“We're busy, and profitable on paper. Why are we always short of cash?”
What's already in the records
- Tally ledgers for security deposits, EMDs and retention
- RA bills and measurement books
- Completion certificates and defect-liability dates
- Site store registers
- Equipment logbooks and diesel registers
- Equipment hire bills
What I'd join
- Deposits and retention against completion and defect-liability dates. This gives the money due for release that nobody has asked for.
- Steel and cement issued against quantities measured and billed. This gives wastage above the contract allowance, before it's recovered at a penal rate.
- Owned machines' logbook hours and diesel, set against hire bills across sites. This shows machines hired at one site while owned ones stood idle at another.
- RA bills against each contract's price-variation clause and the published indices. This gives under-claims to recover, or over-claims to correct.
What it could show, worked through
Retention. Suppose ₹40 crore of contracts finished their defect-liability period in the last three years, with 5% retention held. Then ₹2 crore should have come back. The join lists, contract by contract, how much has.
₹2 crore should have come back
Steel. On a project issuing 5,000 tonnes of steel, each percentage point of wastage above the allowance is 50 tonnes. At one public-sector contract's penal rate of ₹99,095 a tonne, that's about ₹49.5 lakh.
about ₹49.5 lakh a point
Machines. Two excavators hired at an assumed ₹2.5 lakh a month for six months, while owned machines logged idle elsewhere, cost ₹30 lakh.
₹30 lakh
Why it isn't obvious
The cash sits between the accountant's ledger, the engineer's file and the site's logbook, and nobody reads them together.
The decisions it opens
- Which releases to chase this month.
- Whether to move owned machines before hiring.
- Whether to correct store records or dispute measurements while the evidence exists.
- Which bills to re-claim before the final bill.
What you'd get
- Diagnostic: a ranked list, with the document behind each item.
- Sprint: a monthly release, claims and equipment tracker built from Tally and the logbooks.
Sources
- CRISIL rating reports on contractors: 180–587 days of gross current assets, mostly retention and deposits.
- BHEL general conditions of contract: 5% security deposit; steel wastage beyond 5% recovered at ₹99,095 a tonne.
- IIT Madras on escalation clauses.
- CAG Report No. 19 on Bharatmala price adjustment.
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