This is my bullet point summary on the failure of Ebert Construction, based on the news articles I have read.
The company made its name working on developments for Fonterra. However in recent years it moved away from its core business into the residential sector, where it encountered problems.
Summary of reasons for Ebert Constructions’ failure:
– The decision to move away from core business model, the specialist construction of dairy plant operations, into the residential property development space
– High levels of competition in residential construction placed pressure on margins
– Managers who were ostensibly less experienced in scoping residential development projects under-quoted and didn’t allow enough margin for cost overruns
– Managers had a philosophy of “get the job, get it on the books”
In other words, Ebert Construction failed because it moved into a business area where it was not familiar with the rules, and tended to underquote for residential property development projects in a highly complex and competitive market.
A mixture of inexperience, rushed processes, competitive pressures, a departure from the core business model, and a poor management philosophy led to the failure of the company.
