Underwater water oil pipe laying company, Bn$1 in sales
The client is a fast growth company that lays underwater pipes to connect off-shore oil rigs to on-shore storage installations. It manages 8 to 11 parallel projects each ranging from tens to hundreds of millions of US$.
Each project has its own management whose role also includes coordination with client on scope of work adjustments, time frames, work coordination and so on. In spite of the well structured project teams, available budgets and good customer relations, most projects failed to meet time tables and budgets, negatively affecting profitability.
Over the years, the client hired several project management consultancies to help improve the situation yet, the problems persisted. At a certain point I was asked to step in and hopefully resolve the problem.
My work started with studying the company, its structure, decision makers, processes and so on. I then moved on to study the most problematic project under execution. This project was a high profile, first-off for the client thus its importance was not only on the business side but also as a reference.
I spent most of time interviewing managers and executives and comparing their 'stories' to the original structure and process related to me by top management. The information mostly coincided. One point was clear though, that all project management teams were hired at the last minute, clearly hiring whoever is available and not the best of kind.
Next question was why are project management teams hired at the last minute. This led me back to pre-project bidding and organizational activities. It is here that the seeds of failure were sown.
Two key findings came to light, both - extremely simple to solve.
The first point was the bidding stage, administered by the Bid Manager who relies on technical, professional and budgetary inputs from managers who are also involved in project execution. The managers, being under pressure, never took bids seriously and would provide off hand, inaccurate and incomplete answers. Once contracts were awarded, the gaps surfaced resulting troublesome projects before they began.
In addition, the newly (and lately) appointed project management team felt no ownership on the errors and the blaming game started, wasting energies internally rather than on solutions.
Therefore the solution was to hire the best available project managers during the bidding stage who will undertake a project once awarded. The project managers bring an integrative professional background, verifying bid quality. In addition, managers were instructed to give bidding a high priority and ensure their contributions to the bids are top class.
The process is estimated to increase company profitability by 20-30% and support additional growth. The solution required no restructuring, no personnel changes no tedious reports and slowdowns. Just a simple change of focus.