Case study
The following is an excerpt from an analysis Virkum delivered for an Icelandic contractor with approximately ISK 1.6bn turnover and 37 FTEs.
Estimated earnings improvement
ISK 50m/year
Most likely scenario — without additional turnover or headcount growth. Virkum's analysis showed realistic earnings improvement of ISK 25–80m per year through formal subcontractor governance, clearer structure and targeted automation.
Operating revenue
1,592m ISK
↑ 18.4%
Annual earnings
204m ISK
↑ 21.9%
Earnings ratio
12.8%
↑ 0.4 pp
Purchased services
257m ISK
↑ 54.0%
Strengths
Profitable operations, strong equity position (50.1%), stable gross margin (66.6%) and improved efficiency per FTE. Revenue per FTE rose from ISK 33.7m to ISK 42.5m — a 26% increase over two years.
Risk factors and opportunities
Growing reliance on subcontractors (purchased services up 54% year-on-year), unclear processes for managing purchased services, and increasing need for formal management routines alongside a planned corporate split.
Same turnover — different earnings depending on how well improvements land. Assumptions are based on how much time converts into improved earnings.
Conservative scenario
Earnings ratio
12.8% → 14.3%
~ISK 25m/year
Most likely scenario
Earnings ratio
12.8% → 15.8%
~ISK 50m/year
Optimistic scenario
Earnings ratio
12.8% → 17.8%
~ISK 80m/year
Most urgent · 30 days
Formal process for subcontractor governance
Purchased services grew 54% in one year and now represent 16% of operating revenue. Without a formal process for selection, pricing and follow-up, margin erodes on every project.
30–90 days
Digital time tracking and standardised quoting
A mobile time-tracking solution and standard pricing based on real data saves ~10 hours/week combined for project managers and sales — and improves quote accuracy.
30–90 days
Real-time management dashboard
Automated dashboard for revenue, project profit, receivables status and staff utilisation. Replaces manual monthly reports and improves shareholder decision-making.
After 90 days
Structured customer database (CRM)
Existing customers are the most valuable sales channel — retention and renewals cost a fraction of new sales. Without systematic follow-up, that opportunity is left unused.
Closing note from Virkum
The company is well run and profitable. The analysis is therefore not about correcting poor management, but about opportunities to lock in current performance and prepare the company for the next operational phase — without increasing turnover or headcount.