After 24+ within the Datacenter Industry, there is still https://www.linkedin.com/in/martin-kipping-8981678/a lot of potential how small- and medium companies can optimize their performance -and profitability- within their projectbusiness.
Looking at the lifecycle of a design-and-build project, you regularly see the following steps:
Sales-Engineering-Calculation-Quotation-Negotiation-Order-Deployment-Projectmanagement-Installation-Training and Handover to the customer.
After the identification of an opportunity by the sales, typically the next step is getting the engineering/solution sales architects involved. Here we find a first checkpoint to define the way forward within a project. Usually, only a few organizations check whether the opportunity is worth to pursuing further and the chances of success are realistic.
Very often, a lot of time and effort are put in unrealistic requests which consume the company resources. It is very worth installing a “Bid-/No-Bid” criteria already at this early stage. With a proper checklist -eventually based on historical data and lessons learned- it easily can be decided whether is is worth spending resources on a request or if the engineering team should focus on different priorities. It may take some time at the beginning of a project but it is definitely worth it.
If the engineering team takes over, the result of this stage -after engagement with the customer- is a technical concept and BOM (Bill of materials). This is the basis for the commercial calculations. The company may include their own products here but very often also 3rd party components will be used. Here the next level of optimization will come into place.
Under short given timelines and no professional supply chain setup, a lot of companies must deal with only 1 quote from 1 supplier. Very often for crucial -and expensive- parts of a project. It is not sure that this quote is the most competitive one and may limit the overall project’s chances of success. Therefore, it is crucial to include procurement in the game.
First for a proper vendor qualification within an audit process. This helps to set up the supplier as an official partner and predefines important contractual relationships like quality and T&Cs. Having multiple comparable suppliers for a craft available for the calculation- and bidding process will immediately increase the chance of winning the project and is a crucial part of the risk mitigation process.
After being awarded a project, it is highly recommended to define a dedicated project manager as the SPOC (Single Point of Contact) towards the customer. This person is responsible for the deployment of the project in terms of quality, time, and costs. The project manager coordinates the company’s own production processes but also 3rd party suppliers, logistics, and the installation team.
This person normally has a strong personality with high communication and problem-solving skills. One major responsibility is to take care of the calculated internal budget for the project. Should the customer demand additional products and/or services, the PJM should be brave enough to secure financial success.
After a successful handover of the project to the customer, it is always recommended to provide maintenance capabilities. Those ensure the functionality of the system -very often we are in mission-critical applications- and expand the lifetime of the solution. But it also helps to keep a good customer relationship after a one-time installation. Having an installed base of projects built up after some years, recurring service revenue -with good margins- will become an important part of the business. At the end of a technological lifecycle, modernizations, replacements, and new-builds will bring more opportunities.
Lastly, it is worth mentioning that the overall aim of doing project business is the need to be profitable – no one wants to lose money. Therefore it is highly recommended to keep the cost-situation under control during each project step. This leads to at least 4 different project-calculations: budgetary-, final-, execution- and post-project-calculation.
The first 2 are important during the sales processes, and the last 2 during and after project execution. Especially the post-project calculation will show if the desired margin is achieved or not. Knowing the reasons for success or failure including a professional lesson learned process to share do’s and don’ts will help the company to optimize performance, minimize risk, and increase profitability. And there will be a happy customer.
Author: Martin Kipping
