Skip to content
Made on Merit
Menu

ECONOMIC LEVERAGE

Build the case from your own work.

Separate financial effect, useful capacity and cash timing. A model is a starting point, not proof.

Talk about the opportunity

Evidence before value

If we can’t prove the connection, we don’t count the value.

  1. Assumption
  2. Baseline
  3. Change
  4. Verify
  5. Value
  6. Update

Value pathways

  • Direct financial effect
  • Useful capacity
  • Cash timing

Not the same thing. Released time is not automatically profit.

A model we can test together

Illustrative examples, not client results.

Annual effects after adoption, before programme and operating costs. We do not show a net figure until running costs are known.

Financial effect, useful capacity and one-time cash release are shown separately. They are not added together.

Value Trace
  1. Original constraint
  2. Operating capability
  3. Measured baseline
  4. Observed change
  5. Verified result
  6. Value

DIRECT FINANCIAL EFFECT

  • Material purchasing

    C$13,500 / year

    C$900,000 × 2% × 75% = C$13,500 / year

    Working assumption Illustrative
    Annual material spend
    C$900,000
    Comparable net buying improvement
    2%
    Illustrative realization factor
    75%

  • Changed-work contribution

    C$18,000 / year

    C$4,000,000 × 6% × 10% × 75% = C$18,000 / year

    Working assumption Illustrative

    Gross change-order revenue is not all profit.

    Annual revenue
    C$4,000,000
    Changed work as a share of revenue
    6%
    Contribution on additional captured changed work
    10%
    Illustrative realization factor
    75%

  • Financing benefit

    C$2,465.75 / year

    C$3,000,000 ÷ 365 × 5 × 75% × 8% = C$2,465.75 / year

    Working assumption Illustrative
    Annual credit sales
    C$3,000,000
    Days collected earlier
    5
    Illustrative realization factor
    75%
    Annual financing rate
    8%

USEFUL CAPACITY

  • Request coordination

    345 hours / year

    10 × 46 × C$60 × 75% = C$20,700 / year

    Working assumption Illustrative

    Useful capacity, not automatically profit.

    Request coordination hours released per week
    10
    Working weeks per year
    46
    Coordination hourly cost
    C$60
    Illustrative realization factor
    75%

  • Field time

    621 hours / year

    12 × 1.5 × 46 × C$50 × 75% = C$31,050 / year

    Working assumption Illustrative

    Useful capacity, not automatically profit.

    Field people affected
    12
    Field hours released per person per week
    1.5
    Working weeks per year
    46
    Field hourly cost
    C$50
    Illustrative realization factor
    75%

CASH RELEASED ONCE

  • Working capital released once

    C$30,821.92 once

    C$3,000,000 ÷ 365 × 5 × 75% = C$30,821.92 once

    Working assumption Illustrative

    Cash principal is shown on its own line and never added to recurring annual effects.

    Annual credit sales
    C$3,000,000
    Days collected earlier
    5
    Illustrative realization factor
    75%

Value Trace

  1. Original constraint
  2. Operating capability
  3. Measured baseline
  4. Observed change
  5. Verified result
  6. Value

No-double-counting rules

  • Released time is not automatically profit.
  • Working capital principal is not recurring profit.
  • Do not double-count the same mechanism through two labels.
  • Keep direct financial effect, useful capacity and cash timing visually separate.
  • A projection may start the model, but measured results replace it when evidence exists.
  • All public figures remain synthetic or illustrative unless explicit client evidence is authorized.