Any type of business can manage projects, but it doesn’t necessarily make you a Project Business. Many companies may conduct internal capital projects to improve efficiencies or create something new, but it’s not their bread and butter. For project-based companies, or Project Businesses, delivering projects is how they directly serve their customers, and essentially, how they make money. The projects they deliver directly affect the bottom line, seeing as it generates their revenue and cost.
Internal Projects vs. Delivering Projects
Whether you’re running a project internally for a company or delivering a project as a Project Business company, there are similar challenges. However, when you’re running a Project Business, your entire enterprise is organized either within, around or in support of projects. If you think about it, the challenges are greater than if you just run the odd project. In addition, the impact and importance of getting it right, as in delivering the project on time and within budget, is much higher than if you just do the occasional one-off project.
This blog is the first of a seven-part blog series exploring why productivity in Project Businesses have flatlined by diving into the seven challenges of Project Businesses. Understanding these challenges will make it easier to take the necessary steps to be more productive, profitable, and ultimately successful.
Challenge #1: Acceptance of the Status Quo
Project Businesses are operating the same way they did 30 years ago. Not much has changed. According to Henrik Lerkenfeld, VP of Engineering at Adeaca, Project Businesses are submitting RFPs and RFIs for ERPs and business systems with requirements that are mostly limited around project accounting. That said, the assumption is that any kind of financial and operational project management is done in third party applications or spreadsheets, but not in the main business application.
Why? Probably because of habit. It’s what they’ve always done.
Project Businesses must start to demand more from the business solutions they adopt. Sticking to the status quo means technology providers will continue to sell glorified accounting software, which means Project Businesses will continue to manage their business through Excel spreadsheets and disparate point applications.
“If we talk about another macro industry like manufacturing, that would not be accepted,” said Lerkenfeld. “You’re not going to have a discrete manufacturer having three separate solutions to manage their inventories, their shop orders, and their material requirements planning, so why should Project Businesses accept that?”
There’s simply not enough pressure put on technology providers to bring better solutions to Project Businesses. And there needs to be.
If you are in construction, engineering, ETO manufacturing or professional services, we encourage you to challenge vendors to provide more. Seek a Project Business Automation solution for your project-based company.
Download the Project Business Automation Blueprint to learn more about creating a comprehensive business system for your Project Business.