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If the distinctive features of service companies operating on a job order basis are underestimated, this will hinder strategic business planning and adequate performance control.

Staff first. Human resources are the true heart of a company and therefore, managing their time is a key factor. Therefore, managing the planning and reporting of hours worked, as well as all the legislative and contractual obligations relating to these resources, is a matter of paramount importance.

Furthermore, in this type of business, the “corporate zone” goes far beyond the four walls of the plant. Work takes place not only at the headquarters but also “on the move”. And mobility is a concept that implies monitoring difficulties and lack of communication. Therefore, mobile technologies should be adopted to improve communication processes.

Companies that work on a job order basis are networks that need a great degree of resource flexibility. In fact, to deal with the variable workloads, they often resort to external professionals. Therefore, integrated planning and management should be ensured.

Another key factor is the ability to obtain a prior and non-repetitive assessment of costs. Undertakings providing services sign mainly lump-sum contracts, a type of agreement that often conceals snares in profit margins. The non-repetitive nature of the processes lays the foundations for feasibility studies that highlight the costs of human resources, technical resources, and procurement needed to manage each order.

Not only invoices for part payment but also project milestones methods require defining the accounting adjustments to be made when the financial statements are elaborated and when they are checked during the course of the year. What costs the company has incurred and accounted for against those that have not recorded revenues yet should be measured. This means having to assess the works in progress, or adopting a management approach on an accrual accounting basis.

Hence, the importance of preventive management of cash inflows and outflows, because the economic balance may not match in the financial balance. The main cash outflows are represented by the cost of human resources. These are monthly financial disbursements that cannot be deferred. Conversely, receipts (active flows) vary greatly based on the type of contract determined.

In order to correctly manage these critical issues, a tool that can embody these specific requirements and turn them into its distinctive elements should be adopted. Only software designed and developed for companies that work on a job order basis can take up the gauntlet of critical issues and guarantee business is properly managed.

What is The Project Economy?

Project Management Institute (PMI), the main international organisation that spreads and advances the cause of project management, has recently defined “project” as “a temporary endeavour undertaken to create a unique product, service or result”. Nowadays, more than ever before, it is clear that the “temporary” element mentioned in this definition is of paramount importance. If, on the one hand, technological evolution and digital transformation have gradually dethroned approaches and skills, on the other hand, prompt organisational and economic actions have become essential and a priority for every company. The ability to quickly transform ideas into reality is now the determining factor of a company’s effectiveness.

This is the context in which “project economy”, a term coined by PMI in 2019, aims to be a model for truly transforming change into opportunity. Quietly but powerfully, projects have displaced operations as the economic engine of our times. That shift has been a long time coming. The project economy is an extremely useful paradigm shift for managing both the innovation and the growing complexity now typical of every business sector. Whenever it is required to combine increasingly numerous and diverse skills, the project approach acquires further importance.

Current picture

In 2017, the Project Management Institute estimated that the value of project-oriented economic activity worldwide would grow from US$12 trillion in 2017 to US$20 trillion in 2027, in the process putting some 88 million people to work in project management-oriented roles- and those estimates were made before nations started spending trillions of dollars on pandemic-recovery projects. Data supported by a very precise statistic: organisations that have not adequately structured themselves in the context of change, report a 67% increase in projects that fail in the last five years, crushed by a too sudden transformation of one or more related factors – directly or indirectly – to the project itself.

People centricity

In 2020, Mohamed Alabbar, the founder and chairman of Emaar, the giant Dubai-based property developer, announced that as part of a shift to project-based work, the company had abolished all traditional job titles—including his own—and that employees would now be defined not by the department to which they belonged but by the projects on which they worked. In a similar move, the Richards Group, the largest independently owned ad agency in the United States, has removed almost all its management layers and job titles and now refers to most of its employees as project managers.

A planned (and hoped for) paradigm shift that will certainly have profound organisational consequences. Every single individual will be fully responsible for their own objectives, which in fact outlines a concrete alternative to corporate structures as we know them today. A model that tends to fostering human capital potentials, hence reducing hierarchy and bureaucracy to a minimum. Therefore, the project becomes the core of the company and it is no longer the result of top-down inputs and actions.

The Principles of The Project Economy

Continuous updating and training are the key words to address project economy as well as observing the three principles underpinning the model outlined by PMI:

Ability is agility: To fail fast and move to what’s next progressively is far more effective than a perhaps more brilliant but rigid strategy.
Technology rules, but people influence: Technologies are only as smart as the people behind them, and people can be smarter.
It’s a project leader’s world: Turning ideas into reality will be increasingly project based. In a scenario in which everything is destined to become a project, the impact on work will certainly be profound. The primacy of those soft skills that now can be definitively called power skills will be sealed. The operation of organisations endemically more and more fluid and agile will depend precisely on the cross-sectional nature of such skills.

Projects used to be temporary, and operations permanent, but now the reverse is true. Operations keep you afloat temporarily, and change is what’s permanent. Anticipating, managing, and driving change thus become the prime directives. And what’s the best way to do those things? Welcome to The Project Economy Age.

Sources:

– Il Sole 24 Ore

– Harvard Business Review

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According to research by the Project Management Institute, 28% of projects fail because they are based on inaccurate cost estimates.

Partial analysis of stakeholder requirements and lack of visibility on costs, human resources and skills availability are among the main causes of this trend.

In engineering companies, a further challenge is the complexity of projects. This complexity stems from the need for preliminary analyses and feasibility studies which are not immediately attributable to an actual project, yet demand hours of time and call extensively on resources.

This is why preventive cost analysis is essential in this context.

Such analysis enables accurate appraisal of the costs associated with the stages prior to the execution of the project and, through the correct allocation of time, resources and materials used in pre-sales, it also guarantees a precise definition of the mark-up.

How? A combination of historical data from implemented projects and current requirements is used to minimise any loss of profits, and to allow simulated forecasting scenarios that account for resources, time worked, hourly rates and overall profitability.

Akeron Project Business Automation has built-in features that allow you to historicize and analyse the progress of each project by specific size (sector, work team, time, technical resources and materials used). The advantages contribute to the realization of a credible feasibility study that allows:

Development of greater awareness of production capacity
Establishment of the correct selling price
The achievement of a good balance between sales and production

Thanks to Akeron Project Business Automation, the complexity of projects will be mitigated by the simplicity of using a software which can provide full visibility and supervision of the entire project cycle.

According to the Project Management Institute, the failure of many engineering projects can be traced back to the quotation management phase. Another study, conducted by the University of Aalborg (Denmark) also confirms that in nine out of ten projects, costs are underestimated and have a negative impact on profits (Source PMI.org).

To overcome this critical issue, engineering companies need a software solution that can support the quotation phase in an analytical and timely manner.

Akeron Project Business Automation is the ideal solution: it allows you to manage the entire project life cycle and includes features dedicated to the correct definition and allocation of resources and time.

First of all, the system allows you to set up the Corporate Organizational Chart, from which you can quickly identify the availability of all human resources and their related roles in the company.

The second preliminary element enables establishment of the typical Phases to be evaluated and managed in a project.

These two aspects are preparatory to the definition of the Service Catalogue, which allows the company to codify the elements of its offer, including a more or less detailed description and definition of the specifics, which are useful to enhance the economic proposal.

As such, the estimation phase can be concretized in the Sales Module for each prospect or customer, and reviewed by the system according to the object of the offer and analysis of all the elements that would have impact at a company level, should the proposal be accepted.

Akeron Project Business Automation allows a preliminary assessment, precisely targeted and analytical of the costs attributable to a specific project order, to enable definition of an appropriate mark-up.

If the feasibility study is positive, the system allows the creation of an Offer Document, based on a predefined template, that can be edited and shared with the customer via e-mail or through the use of the Reserved Area.

Finally, the solution allows management of the quotation phase outcome:

Revision, which allows changes to be made to the existing document.
Negative Closure, which indicates a failed negotiation, but thanks to the storage of relevant information, makes it possible to analyze the causes of failure.
Positive Closure, from which the project order can be automatically opened and populated using the elements previously defined within the offer.

Thanks to the support of Akeron Project Business Automation, the realization of a project is not only greatly simplified but profit can be maximized through precise cost estimation.

We are experiencing an unprecedented impact on our personal and working lives as a result of Covid-19 and measures taken by governments to tackle it. Customers, suppliers and employees were, and still are, being driven towards digital channels.

“In 2021, at least one third of European information workers will work mainly from home, compared with 4% in 2019….in 2021, every company will focus on technology-fueled experiences, operations, products, and ecosystems” (Forrester Research: European Predictions 2021, published 2020).

The first wave of digital transformation was needed overnight and led to smart working from home, where possible, and remote interaction with customers and suppliers. This involved mostly office automation, collaboration tools for communication and mobile apps for customer interaction and fulfilment. Change which was expected to take place over 3 to 5 years was ushered through in 3 to 5 weeks.

In the same report Forrester states that: “Digital leaders will drive double-digit growth in 2021.” To achieve this second wave of digital transformation will require focus on elevating the human experience for all kinds of business application.

Elevate human experience in Professional Services Automation

Human experience in an evolving digital world consists of the customer, employee and user experience. Take for example a professional services organization like a marketing & design agency. The agency in question is technologically advanced and employees are used to collaborating and interacting with customers on their projects through technology. Yet on average 5 to 8 applications are used to exchange project work. And e-mail is used to exchange information, which is sometimes prohibited because of a customer’s or supplier’s privacy and data protection policy, and an audit trail is also missing. Switching between applications with ‘copy and paste’ reduces individual and team productivity. Taking a people-centric approach for customers, suppliers, employees, management and other stakeholders, puts the user at the center of the digital experience for professional services.

The marketing & design agency mentioned above looked at how team productivity, and thus business performance, could be improved. This was achieved by making sure that customers, suppliers and employees are supported by a project management system to plan activities, measure progress, keep informed and share information in real time. Reducing the number of applications and optimal data integration with salesforce automation, human capital management and financial systems, creates informed and empowered users. When something goes wrong in a project it is almost always down to communication and how people collaborate. Technicalities are seldom the cause.

Investing in core business system innovation pays off in terms of digital leadership, so timing is everything. And in the current circumstances, it is the most viable option for growth. A modern software platform for professional services automation like Kairos Software improves the human experience, productivity and business performance.