Bringing Money Home in Disruptive Times

Transcription

1 Spot on Customer Projects: Bringing Money Home in Disruptive Times 2017, Oliver F. Lehmann, MSc., PMP PMI Norway Chapter Trainer, Writer, Speaker; President PMI Southern Germany Chapter Adapt or Die, 25 September 2017

2 2 Contents A Primer on Project Business Management (PBM) PBM Challenges for the Seller PBM A Solution: Benefits Engineering Conclusion

3 3 Contents A Primer on Project Business Management (PBM) PBM Challenges for the Seller PBM A Solution: Benefits Engineering Conclusion

4 A Primer on Project Business Management (PBM) A Survey 4 N = 246

5 5 A Primer on Project Business Management (PBM) Internal Projects vs. Customer Projects Common Differences

6 6 A Primer on Project Business Management (PBM) Benefit Generation for the performing organization Internal Projects Customer Projects

7 7 A Primer on Project Business Management (PBM) Multi-Tier Project Supply Networks (PSNs) Customer 1 st Tier: (Prime) Contractors er Buyer Flow of money Flow of deliverables 2 nd Tier: Subcontractors Seller Seller

8 8 A Primer on Project Business Management (PBM) A Common Business Management Lifecycle

9 A Primer on Project Business Management (PBM) A Survey 9 Internal projects Customer projects

10 A Primer on Project Business Management (PBM) Details on the Survey: Customer Projects: What is the Future of the Business? Paper, free at PM World Journal Describes the market development for companies, whose business is in customer projects 10

11 11 Contents A Primer on Project Business Management (PBM) PBM Challenges for the Seller PBM A Solution: Benefits Engineering Conclusion

12 12 PBM Challenges for the Seller Two Major Goals Short term: Conflicting Bringing Money Home Long term: Complementing Creating Customer Happiness Survival Growth Development Monetary reserves to manage problems Being free for new projects Becoming incumbent Reference for future business Own satisfaction

13 13 PBM Challenges for the Seller Case Story From a provider s business plan: A portfolio with customer projects Forecasts for the year 2016 Planned profit from projects: 10% This looks like sound business. Payments from customers Cost for contractor Margin for contractor Project 1 12,500,000 8,150,000 4,350,000 Project 2 153,000, ,000,000 34,000,000 Project 3 9,800,000 8,200,000 1,600,000 Project 4 231,000, ,000,000 66,000,000 Project 5 16,000,000 10,900,000 5,100,000 Project 6 93,000,000 54,000,000 39,000,000 Total 515,300, ,250, ,050,000 General & administration Profit from projects 98,000,000 52,050, %

14 14 PBM Challenges for the Seller Case Story A middle-of-the-year assessment Made end of June 2016 Cost overruns in two projects have strong impact on the profit from projects. The company turned into a JAM (= Just about managing) The solution: Cost engineering Payments from customers Cost for contractor Margin for contractor Project 1 12,500,000 8,150,000 4,350,000 Project 2 153,000, ,000,000 14,000,000 Project 3 9,800,000 8,200,000 1,600,000 Project 4 231,000, ,000,000 66,000,000 Project 5 16,000,000 10,900,000 5,100,000 Project 6 93,000,000 73,000,000 20,000,000 Total 515,300, ,250, ,050,000 General & administration Profit from projects 98,000,000 13,050, %

15 15 PBM Challenges for the Seller Case Story The year is over Cost engineering caused delays in three projects. Payments were shifted into the next business year or withheld by customers. The forecast profit has turned into a loss. The company s future is endangered. Payments from customers Cost for contractor Margin for contractor Project 1 12,500,000 8,150,000 4,350,000 Project 2 153,000, ,000, ,000,000 34,000,000 14,000,000 Project 3 9,800,000 8,200,000 1,600,000 Project 4 214,000, ,000, ,000,000 66,000,000 49,000,000 Project 5 13,300,000 16,000,000 10,900,000 5,100,000 2,400,000 Project 6 58,000,000 93,000,000 54,000,000 73,000,000-15,000,000 39,000,000 Total 515,300, ,600, ,250, ,250, ,050,000 56,350,000 General & administration Profit from projects 98,000,000-41,650,000 52,050, % -9.0%

16 16 PBM Challenges for the Seller Another Survey #1: Conflicting business interests in the project among the parties

17 17 Contents A Primer on Project Business Management (PBM) PBM Challenges for the Seller PBM A Solution: Benefits Engineering Conclusion

18 18 PBM A Solution: Benefits Engineering Challenges for Contractors in Projects A Force Field Analysis Competitive behavior Poor cooperation with customer Impossible deadlines and budgets Resistant operations and other projects Equilibrium Restraining Forces Driving Forces

19 PBM A Solution: Benefits Engineering 19 Challenges for Contractors in Projects A Force Field Analysis Competitive behavior Poor cooperation with customer Impossible deadlines and budgets Resistant operations and other projects Organizational effectiveness Team spirit across supply networks Business acumen in project management Equilibrium Restraining Forces Driving Forces

20 20 PBM A Solution: Benefits Engineering Benefit Engineering vs. Cost Engineering Benefit Engineering Cost Engineering

21 21 PBM A Solution: Benefits Engineering Benefit Engineering Helping the customer with additional work, where it matters. Reducing risks Benefit Engineering

22 22 PBM A Solution: Benefits Engineering Benefit Engineering Helping the customer with additional work, where it matters. Offering benefits in return for New deadlines Additional payment Other valuable benefits Benefit Engineering Identify own problems Assess own strengths Analyze own costs vs. benefits Identify customer s needs Identify customer s wishes & wants Identify customer s risks & problems Define, propose & sell solution Implement solution

23 PBM A Solution: Benefits Engineering 23 Benefit Engineering You have to know the customer. Flexibilities Business interests Business needs Trust distrust Their dynamics of success and failure You have to know yourself What can we actually deliver? Where can we help? What do we need?

24 24 Contents A Primer on Project Business Management (PBM) PBM Challenges for the Seller PBM A Solution: Benefits Engineering Conclusion

25 25 Conclusion The Dynamics of Success and Failure in Supply Networks As project business managers, we must cope with disruptive dynamics and poorly negotiated contracts in modern supply networks. We need to develop new skills, to ensure happy customers and bring money home with projects. One of these skills is Benefit Engineering.

26 Questions? Spot on Customer Projects: Bringing Money Home in Disruptive Times PMI Norway Chapter 2017, Oliver F. Lehmann, MSc., PMP Adapt or Die, 25 September 2016

27 Case Study Thank you! 27 Image credits: Own work Nasa Shutterstock Andrey Burmakin Gustavo Frazao Looker_Studio

28 28 About Oliver Oliver F. Lehmann, MSc, PMP Born 1957 University studies in Stuttgart, Liverpool, primary degrees: Master of Science in Project Management (MSc) Project Management Professional (PMP) Chartered Commercial Manager (Groß- und Außenhandelskaufmann) PM Practitioner since ~1983 Trainer since 1995 with assignments in Europe, Asia, and USA Adjunct Professor at Technische Universität München Active at the Project Management Institute (PMI ) Member since 1998 Volunteer in various roles since 2001 President of the PMI Southern Germany Chapter e.v.

29 29 About Oliver Publications Book Papers