Private Equity Value Creation, from plan to profit in the construction sector

H&Z provided support to a European Private Equity backed portfolio company, a leader in the construction of temporary and permanent buildings. Following PE investment, procurement was identified as a key driver to improve profitability and build the operational capability to support the company's ambitious growth plan. 

Client Challenge

The client faced several challenges:

• Limited procurement capability with dedicated procurement resources spread across different countries
• Transactional focus, with limited strategic procurement activity
• Limited value resulting from strategic supplier relationships
   

H&Z Approach

H&Z leveraged their expertise in Private Equity backed projects and deep experience in construction and production sectors to support the post-transaction Value Creation Plan. Working in close collaboration with both the PE firm and the portfolio company the H&Z team used expert procurement knowledge, proven Value Creation methodology, and a good sense of Head, Heart, and Hand to identify the full 360° commercial and technical savings potentials to reduce costs in direct and indirect materials as well as subcontracting services.

In the second phase, combined cross-functional project teams developed and implemented category-focused procurement strategies to deliver double digit of P&L impact savings.  

In parallel, H&Z identified and implemented the structural enablers to optimize collaboration between central Procurement and Business Units, defining and implementing the Future Procurement Organisation, including roles and cross-functional interfaces.  

Results

• Rapid Procurement Value Creation Plan under two months post-transaction
• Double Digit P&L savings impact plus inflation cost mitigation
• Procurement category strategies for medium-term delivery
• Future Procurement operating model and roadmap H&Z transformed the identified cost improvements and made them P&L effective, realising the benefits through hands-on implementation of the Value Creation Plan.  

H&Z implemented category strategies to strengthen strategic procurement work, such as securitization of supplier production capacity, supplier development, and bundling. 

The team also changed the way the organisation managed their base of subcontractors, implementing wholesale arrangements for materials and transparent pricing for subcontractors.  

The team helped professionalise the client's procurement organization's maturity by implementing a procurement structure covering organization & governance, processes, systems and tools, and roles & responsibilities as key enablers.