In this critical episode of Construction Hot Takes, Adam and Jeff unpack a cautionary tale of a seemingly successful construction firm that nearly faced collapse—caused by an overlooked culture breakdown.
It started subtly: a regional manager, promoted beyond his experience level, quietly falsified financials, inflating revenues with unapproved change orders and silently escalating costs. Despite robust processes and experienced leadership, no one caught the growing crisis. The issue only surfaced when the manager, overwhelmed by guilt, confessed to the VP directly.
The real questions are haunting:
Why didn’t the VP or CFO notice the anomalies earlier?
How did a billion-dollar company’s sophisticated checks and balances fail so spectacularly?
Why did project managers feel unable or unwilling to speak up?
Adam and Jeff dive deep into what happens when culture quietly deteriorates, overshadowing strategy, structure, and process. They emphasize that no amount of software or structure can replace accountable leadership and a transparent culture.
Listen to this eye-opening story about the subtle yet destructive power of unchecked company culture—and ask yourself, could this be happening unnoticed in your organization?
Tune in as we explore:
(00:00) Reporting structure and accountability issues
(03:45) Was it intentional or just opportunistic?
(06:53) A consultant questions the reporting practices
(10:33) Why hands-on management still matters
(15:01) Cultural training and what accountability really means
(18:41) The cost of poor communication
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Episode 13 Transcript: When Culture Breaks: The Million Dollar Wake-Up Call
Adam Cooper:
It’s a warning story. It’s an idea. This could be happening in your business. A cautionary tale.
Jeff Robertson:
Yeah. And if you’re not paying attention, are you sure this isn’t happening to you?
Adam Cooper:
We’ve helped hundreds of clients build better construction companies. We love this business. We love the people. And we’ve seen what running a successful, profitable business takes. We’re sharing it all with you here on Construction Hot Takes. This week it’s just you and me.
Jeff Robertson:
You’re making me nervous with this.
Adam Cooper:
Oh, you’re going to have fun with this. I have a story a friend told me—I promised I’d keep everything anonymous. He was telling me this over lunch, and my mind started racing. I knew I had to talk to you about it, so I saved it for today’s hot take.
Jeff Robertson:
Alright, hit me.
Adam Cooper:
So, my friend says there’s this company VP visiting one of their newer regional offices. The regional manager there is younger and running about $40 or $50 million worth of work—heavy commercial and light industrial. This regional office is part of a billion-dollar company.
The VP flies out, and the regional manager picks him up at the airport. On the way back, the regional manager starts crying in the car and says, “I can’t keep this hidden any longer—I need to tell you what’s been going on. I’ve been falsifying financials. I’ve been entering change orders into the system that the owner hasn’t even seen or approved. We’ve done the work and paid the subs, but I don’t know how to get these change orders approved. So, I’ve been falsifying everything.”
Jeff Robertson:
Wow.
Adam Cooper:
It’s January, so they’ve already closed the year for tax purposes. When I heard this, I immediately wondered about the reporting structure. Turns out, this manager reports directly to the VP in the car. The VP reports to the CEO and CFO. And apparently, no one besides the VP and CFO sees the detailed financials.
It raised huge questions for me—how did the VP not catch this? How did the CFO miss it? There were multiple systemic breakdowns. They had processes, systems, workflows, authorizations—but it was the perfect storm of everyone checking boxes without actually doing their job.
Jeff Robertson:
I’ve got questions. Was this intentional fraud or just opportunistic?
Adam Cooper:
My understanding is this regional guy got promoted above his experience level. He didn’t know how to approach the owner about these changes and started doing work at risk without any plan to get paid. He didn’t want to look bad, so he kept the facade going. It turned into a Ponzi scheme—eventually, it had to crash.
Jeff Robertson:
My first thought is, how is this guy even running an office? It sounds like first-year project manager stuff.
Adam Cooper:
Exactly. He was a successful PM elsewhere and put his hand up to manage this new satellite office. But when he got there, he didn’t actually know how to do the job.
Jeff Robertson:
So, this $50 million in revenue—how many projects was this?
Adam Cooper:
Two or three. And he wasn’t just inflating revenue. He actually paid subs for all the unauthorized work. Worse yet, he had three project managers under him. One got fired for refusing to falsify reports. One quit over it. The third kept quiet and still works there.
Jeff Robertson:
I recently had lunch with a CFO friend at a large electrical contractor, and we discussed risk. He said his biggest fear is exactly what he doesn’t know. This situation you’re describing is the ultimate example of hidden risk.
Adam Cooper:
As a consultant, I immediately thought about their systems. How did monthly reporting fail? The VP kept getting the same story from the regional manager—that change orders were pending approval. Yet no one questioned why these were aging for months.
The CFO met monthly with the VP but never pushed for real answers. There were layers of breakdown—financial, training, process—but the biggest was culture.
Jeff Robertson:
Culture eats strategy for breakfast.
Adam Cooper:
Exactly. If the culture says “don’t question your boss,” you end up here. And it wasn’t just a process failure—it was a culture of silence.
Jeff Robertson:
You’re right. Process matters, but people matter more. The VP, CFO, and management layers never asked the tough questions. There should’ve been healthy skepticism: “Why is nothing changing month after month?”
Adam Cooper:
The young manager volunteered for the role, but he clearly wasn’t ready. Whoever put him there delegated responsibility—but you can’t delegate accountability.
Jeff Robertson:
Right. Accountability still sits with leadership. I’ve seen companies rely too heavily on processes, abdicating actual management responsibility. The processes are just tools—they can’t replace accountability or questioning minds.
Adam Cooper:
Exactly. This billion-dollar firm is now facing a multi-million-dollar problem. The regional manager might face criminal charges. And it all came down to leadership blind spots and culture.
Jeff Robertson:
Smaller and mid-market companies face this too. You can’t rely solely on processes. You need a culture that encourages people to ask tough questions—regularly and comfortably.
Adam Cooper:
I think that’s the key lesson. A healthy culture ensures problems surface early. Without that, even the best processes won’t save you.
Jeff Robertson:
Agreed. It’s about training people to speak up and leaders to listen—and having clear accountability at every level.
Adam Cooper:
That’s our hot take for today. A cautionary tale: culture matters more than you realize, and the costs of ignoring it can be devastating.
Jeff Robertson:
Absolutely. Thanks for sharing this story. It’s an important wake-up call.
Outro (Adam Cooper):
Thanks for listening to Construction Hot Takes. If you enjoyed this episode, follow us on Spotify, Apple Podcasts, or YouTube. Got questions or topics? Email us at hottakes@ascentconsults.com. For direct support, schedule a free consultation at ascentconsults.com. Catch you next time!
