Do you remember when you used paper airline tickets to fly? It wasn’t very long ago airlines printed and processed 285 million paper tickets in one year for a cost of almost 100 Kroner each. And when you use an e-ticket with your smartphone to fly, have you wondered why your ERP system cannot give you the same mobile convenience and modern experience?
Discover How Modern Project-based ERP System Improve Operational Practices and Business Management
If so, read on this article regarding how modern ERP systems improve operational practices and find the lost dollars in your projects by avoiding:
- Lost opportunities
- Cumbersome proposal processes
- Project scope creep
- Poor staff utilization and resource scheduling
Find out more about the top nine areas Architecture & Engineering firms are losing profit, and how you can improve your business management and operational practices to find the lost dollars in your projects.
Lost Opportunities
Cumbersome Proposal Process
Flawed Estimating Process
Scope Creep
Poor Staff Utilization and Resource Scheduling
Poor Project Management
Long Invoice Cycles and Poor Cash Flow
Inefficient and Non-Integrated Systems
Poor Time Entry Culture
How much money is your firm losing every day because your processes are not well established, people are not held accountable, and/or the systems in place are not supporting their efforts? Find out more about the top nine areas Architecture & Engineering firms are losing profit, and how you can improve your business management and operational practices to find the lost dollars in your projects.
Lost Opportunities
Today, many firms are taking an uncoordinated approach to find and pursuing new projects. They are chasing opportunities triggered by the last downturn, but are losing more often. Why? Because they are going after opportunities they should not be pursuing in the first place. And while many things contribute to this, one of the top reasons is firms don’t have the visibility they need to see which markets and projects lead to higher win rates and larger profit margins.
Cumbersome Proposal Process
Putting together winning proposals is no easy – or cheap – task. And it becomes even more of a challenge if the information you need is unorganized, in multiple data silos, or just doesn’t exist yet. Successful proposals take time from not only marketing but project managers, principals, and other key team members. Firms can lose significant profits on a project before it even begins. Many firms don’t take the time and cost needed to put together a proposal into account to ensure they are achieving their desired profit margins.
Flawed Estimating Process
One of the biggest challenges firms face is underestimating the hours needed to complete a project. This becomes even more complicated when firms rely on a significant number of sub-consultants. Of course the ability to estimate varies depending on the contract type (i.e. time & materials vs. lump sum), but firms may not be leveraging historical project analysis or project costing to more accurately and profitably estimate the next project.
Scope Creep
Scope creep can be detrimental to projects, especially when poorly managed. Inaccurate estimates, loose time entry procedures, and delayed access to critical project information can all contribute to the problem. Delayed time entry and key project metrics mean project managers can’t proactively manage projects and identify scope creep before it’s too late. This can lead to project overruns, missed deadlines, and unhappy clients.
Poor Staff Utilization and Resource Scheduling
Total staff labor charged to billable projects has been moving alternately up and down within a 1-point range each year since 2012. In the 39th Annual Deltek Clarity A&E Industry Study, the figure is nearly flat at 59%.
Many firms struggle to maintain high utilization across the firm for several reasons including:
- Firms rely on the same teams to deliver the same projects leading to some staff being overburdened and others underutilized
- Without an accurate resource scheduler, project managers can’t see which team members with the right skills are available to execute the projects
- Disparate systems and spreadsheets used to manage projects result in more administrative time for billable employees to monitor and deliver projects
- A poor time entry culture leads to inconsistent or inaccurate entries, billable time slipping through the cracks, or hours having to be written off or moved to the overhead
Poor Project Management
According to the 39th Annual Deltek Clarity A&E Report, nearly 40% of firms have moderate to low confidence in their project reporting, which impacts their ability to effectively manage projects. Delivering successful projects is at the core of what A&E firms do and poor project management affects not only project and firm profitability, but also client satisfaction.
Key contributing factors include:
- Inexperienced Project Managers
- Lack of formal project management process
- Inaccurate or disparate project data
- Post-mortem access to data (reactive vs. proactive)
Long Invoice Cycles and Poor Cash Flow
On average, firms take 2-3 weeks to prepare invoices and send to clients. Combined with an average collection period of 71 days, it is no wonder that firms report poor cash flow. With that much lag time, firms are essentially giving free loans to their clients!
Certainly part of the long collection period is beyond a firm’s control. But, in many cases, internal delays are the lion’s share of the problem, including unclear invoices, inconsistency with client expectations, lack of alignment with contracts, leading to unnecessary administration to revise and clarify invoices.
Inefficient and Non-Integrated Systems
Many firms get caught up in the day-to-day project tasks and don’t take the time to critically look at project and firm processes to identify where they can drive efficiency. However, the annual cost of inefficiency can be quite eye-opening when firms take the time to take a closer look. If firms think about project team members, their hourly rates and multiply that by the number of hours wasted daily, weekly, monthly, and yearly in administrative or unnecessary tasks, firms can see a significant drain on profitability.
Poor Time Entry Culture
Today, most firms have adopted an electronic or mobile system for entering time. But, having the best system in the world won’t help if you don’t provide clear direction about what is expected. Professional Services Management Journal (PSMJ)1 found that by implementing daily time entry, firms can increase recordings of billable time by 3% from weekly time entry. For each person in your firm, that means 1.2 hours per week or 1.5 weeks of billable time. For a 30 person firm, that’s 46 weeks!
Conclusion
Implementing a modern, project-based ERP software can help you overcome these common challenges and streamline your business by integrating all of your financial accounting, project management, and business development needs into one system.
Source: Deltek
