6 What risks are associated with Dean’s proposal? ‘There must be a better way of running this place!’ said Dean Hammond, recently recruited General Manager of B&B, as he finished a somewhat stressful conversation with a complaining customer, a large and loyal local building contractor.

‘We had six weeks to make their special staircase, and we are still late. I’ll have to persuade one of the joiners to work overtime this weekend to get everything ready for Monday. We never seem to get complaints about quality

. . . our men always do an excellent job, but there is usually a big backlog of work, so how can we set priorities?

We could do the most profitable work first, or the work for our biggest customers, or the jobs which are most behind.

In practice, we try to satisfy everyone as best we can, but inevitably someone’s order will be late. On paper, each job should be quite profitable, since we build in a big allowance for waste, and for timber defects. And we know the work content of almost any task we would have to do, and this is the basis of our estimating system. But, overall, the department isn’t very profitable in comparison to our other operations, and most problems seem to end up with higher-than-anticipated costs and late deliveries!’