We are Project Business Experts at ADEACA. So, what do we mean by “Project Business”, how is that different than Project Management, and why is that important? The point of this article is to properly define Project Business as a category of business, and to demonstrate why it is an important concept to improve business results.

 

Defining Project Business

Project Business companies organize their primary business activities in projects. They are sometimes called project-based, project-driven or project-centric companies. These companies operate in project-driven industries such as Architecture, Engineering & Construction, ETO Manufacturing, and Professional Services – we call these Project Industries at ADEACA. Project Businesses span many traditional industry labels, but they have the same fundamental business practice – they deliver projects for their customers.

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The Difference Between Project Management and Project Business

Project Management is the application of knowledge, skills, tools, and techniques to complete projects. Project Management is something that a business does, regardless of the type of business it is. Project Management is done by retailers, manufacturers, pharmaceutical companies, wholesalers, as well as AEC, ETO and PSO companies.

Project Business, on the other hand, is a higher-level function. It defines, in its essential form, the type of business the company is. As stated earlier, Project Businesses are commercial entities that deliver projects for their customers. Project Management is a central component of a Project Business, but it is not the only activity.

Another way to look at it is to consider that projects are temporary, and therefore managing a project is temporary. However, Project Business is enduring, and therefore managing a Project Business is an enduring activity, separate from but subsuming Project Management as a discipline.

 

Projects as a Business Model

If we consider projects as a type of business model, we can compare it to other traditional industry sectors, such as retail, manufacturing or distribution.

If we think of a Retail Business, it is about reselling goods to consumers. It doesn’t matter what goods you sell. You could sell clothes, tires, cars, light bulbs or stuffed animals. Whatever it is, if you sell it to consumers you are a Retail Business.

If we think of a mass Manufacturing Business, it is about producing products and selling those products to a distributor, retailer or end customer. It doesn’t matter what products you make. You could make clothes, phones, furniture, or televisions. Whatever it is, if you manufacture it you are a Manufacturing Business.

Project Business is the same. It is about running projects as your business. It doesn’t quite matter what the end product or service is.

project-business

Project Business is a significant portion of all companies

It could be a building, a bridge, an airplane, custom software, a corporate tax report, a new business strategy, or an engineering design. Whatever it is, if you produce it by running and delivering projects to your customers you are a Project Business.

Considering all the traditional project-based industries, about 20 to 25% of all businesses are Project Businesses. This is significant, and comparable to the other sectors such as Retail, Manufacturing and Distribution. So, we must take them seriously.

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How Project Business is Different

Although we can compare Project Business to Retail, Distribution or Manufacturing, there are some major characteristics unique to Project Business that make it significantly different from these traditional industries and underscore its complexity.

To restate, projects are temporary and mostly unique to each customer. Contrastingly, Retail, Distribution or Manufacturing companies produce or sell the same goods repeatedly. This consistency allows these companies to take advantage of standardized processes and KPIs, automation, and economies of scale much more easily than Project Businesses. As a result, these traditional businesses are more predictable and replicable than their Project Business counterparts.

If we delve deeper into the process side of these firms, we can uncover even more complexity in Project Businesses. In traditional industries, processes are standardized no matter who is doing the work. For example, the way a television is assembled is the same regardless of the worker assembling it. Or, the way a sale is entered in the POS system is the same across a retail company, no matter where the store is or who the sales person is. Processes and data are completely standardized in these traditional industries.

Conversely, in a Project Business, the way processes are completed can differ depending on who is doing them. For example, the amount of detail included in a project plan can differ between different project managers with different preferences. Similarly, the way a project is estimated and budgeted could differ based on different locations and diverse sales teams. Even the information and data that is considered important and used to make critical business decisions can be different or derived differently across the company. This characteristic of Project Business makes it ever more complex and difficult to manage than traditional businesses.

To illustrate the effect this difference has on business performance, we have seen productivity in traditional sectors continue to grow while it has remained stagnant or even faltered in Project Business sectors. This increase in productivity has largely been attributed to technology. However, in traditional industries it is much easier to apply technology to standardized processes and data in order to automate and accelerate production. The same is not so easily accomplished with Project Businesses with their unique products and non-standard business practices.

construction-low-productivity-workforce

 

The Way Forward for Project Business – Project Governance

In order to improve the way traditional industries have for the last 30 years, Project Business needs to govern their business activities in the same way these traditional industries have – and I don’t mean “corporate governance”. I mean controlling your business processes to optimize business performance. For Project Businesses, that means Project Governance.

To have an impact on Project Business, it is crucial to think of your business as a Project Business in the first place – like Retail or Manufacturing. If you are in a Project Industry, such as AEC, ETO or PSO, recognizing that, at its core, your business is a Project Business will help you prioritize and optimize your activities and investments properly.

 

Activities in which every Project Business engages:

Project Operations

  • > Scheduling
  • > Resource management
  • > Change control
  • > Risk & issue management
  • > Time & Expense
Project Financials

  • > Costing / Estimating
  • > Budgeting
  • > Cost control
  • > EAC / BAC
  • > Cash flow management
Project Analytics

  • > EVA / EVM
  • > Forecasting
  • > KPIs
  • > Profitability
General

  • > Project-Owner Collaboration
  • > Portfolio / Program Management
  • > Human Resource Management
  • > Sales
  • > Customer Service
  • > Business Intelligence
  • > Business Financials

 

Once we do this, we can start to see why the business isn’t running as well as it could, where the problems are and what we need to do to solve them. For most Project Businesses, the lack of standardization and integration is the key problem, and this really boils down to governance. We need to create the governance structure that will set up the company for success.

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How do we do that?

Step 1: Standardize

Companies in traditional industries have their processes and data standardized. This allows them to govern their business effectively and produce reliable, consistent metrics to measure business performance in any area.

As stated earlier, we can see that that Project Business has a standardization problem. Processes aren’t uniform, and they rely on individuals who take extreme liberties with them. As a result, it is difficult to control the business functions and create standard metrics to measure performance. Therefore, the first step is to standardize processes around best practices and standardize data to derive consistent metrics.

Step 2: Integrate

Companies in traditional industries have all their processes and data integrated. That is how a Retailer uses demand information captured at the point of sale to drive supply chain decisions. It is crucial to the structure of the traditional business that processes and data are integrated so they don’t lose valuable time and information throughout the business’ value chain.

Typically with Project Business, processes and data are dispersed among numerous people, departments and systems. The second step is to unify and integrate workflows across departments and business units. As part of this progression, we need to integrate data into a single source of truth that everyone can rely on. Only by integrating our processes and data can we achieve full company alignment toward strategic goals.

Step 3: Systemize

The last step is to systemize the first two. Retail, Manufacturing, and Distribution companies employ Retail, Manufacturing, or Distribution solutions and systems that take care of their core business, ensuring that processes are followed, and data are integrated. That is how that Retailer automatically places a new order with a supplier based on real-time POS data.

Most Project Businesses are not set up this way. Project Businesses end up with a disparate landscape of disconnected systems and applications. Processes and data end up in various spreadsheets, project management applications, time-keeping applications, the ERP and CRM, a budgeting system, a separate data warehouse, and the list goes on.

This typical state of affairs makes it extremely difficult for Project Businesses to improve in any meaningful way in the digitized 21st century. They end up trying to optimize all these systems and processes separately, which only exacerbates the core issue because processes and data become even more entrenched in their separate status quo.

Systemizing processes and data across the company codifies standardized procedures and integrates information in real time. The system enforces the standardization and integration for you. As a result, your Project Business becomes fully aligned as an organization and you know exactly how the business is performing at all times.

These three steps create the process and project governance structure that allows Project Businesses to operate with similar transparency and control as traditional industries.

Infographic: Project Governance Simplified in 3 Steps

 

Project Business Automation

At ADEACA, we use this perspective to create project-centered solutions for project-centered companies. We attempt to address the core Project Business first. We put the essential project business activities into a unified system that sets up this structure and aligns the company. We call this Project Business Automation.

PBA helps you run, manage and organize all critical areas and controls of your project business. At its core, Project Business Automation standardizes and integrates your processes and data to bring you trusted, real-time insight and enhanced collaboration practices that lead to more projects on time and within budget. And, improving your Project Business is what it is all about.

You need to embrace your identity as a Project Business. Once you do that, it is easier to see how you can improve. Unifying your core Project Business activities and setting up your Project Business structure first will give you the foundation to scale, grow, diversify and increase profitability. Whatever the future of your Project Business shall entail, set it up for success.

 

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About ADEACA

We are Project Business Experts.

Project-driven companies need project-driven solutions. We provide Microsoft technology solutions and services to project-based companies.

Who We Serve

We serve mid-market companies that organize their business activities in projects. They operate in project-driven industries such as Architecture, Engineering & Construction, ETO Manufacturing, and Professional Services. If you are a project-based company with roughly 100 to 3000 employees, you have come to the right place. ADEACA is a Microsoft technology partner bringing innovative solutions to customers just like you.

What Project Industry are you in?

What We Do

We provide project business solutions & services for project driven companies, based on Microsoft cloud technology and platforms. We help you standardize and integrate your processes and data to bring you real-time insight and company-wide collaboration so you can deliver more projects on time and within budget.

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