How Viable is the Design Consultancy Industry?

How Viable is the Design Consultancy Industry?

The answer in my view really depends on how strategically focused the industry really is?

I say strategically focused because the company in question will need to (a) understand its strategic intent and (b) formulate/implement a clear road map that will take it to the intent.

It is not uncommon to hear strategies relating to market penetration, market development, key account management, increased revenues and gross margins etc. this is easier said than done!

It is uncommon however to obtain real clarity on the direction needed to enable the company to achieve and sustain its intent.

It is this gap, the distance and journey time between where we are today and the strategic intent that needs to be addressed. This is the strategic focus that is missing.

Why is distance and journey time a bigger challenge in the design consultancy industry? I will attempt to answer this question in my next post.

Food for Thought - When should risk money be used on a project?

Food for Thought – When should risk money be used on a project?

In a design environment, more and more risk money is set aside/ “tapped” into, to deal with “risks”, but are we using this money for a good cause or are we merely fueling project complacency?

Risks do need to be identified and mitigated before they materialize and become issues.

The question I guess here is, would you really want to cost and set aside risk monies for all identified risks, including project performance related risks?

Or would you only capture risk money for risks that are outside of the control of projects?

Risks do need to be identified and mitigated for all risks including for those that are performance related. I just wouldn’t keep risk money in my risk pot for funding performance related risks.

In funding performance related risks you are merely camouflaging/ distorting the true underlying performance of a project.

Transparency is key for early warnings and to steering the project back to targets.

© 2015, Majed Bushnaq

Food For Thought - Reason for Bad Leadership

Food For Thought – Reason for Bad Leadership

The reason there are bad leaders in my opinion boils down to all the connotations relating to personal greed/selfishness, empire building, competency issues, inabilities to think strategically, holistically and comprehensively, resistance to change, where the focus is purely on managing the “status quo”…and the list goes on.

Bad leaders may exhibit one or all or a combination of the above attributes of bad leadership.

The impact of bad leadership can be measured based on the weight of these attributes and how they ultimately and collectively effect the business as a whole.

Think of this as a sailing boat, place too many “bad attributes” of significant weights and the boat or business will eventually sink.

Good leadership is about creating a win win situation for both the business and its key assets, it’s people.

© 2014, Majed Bushnaq

The Viable Business Model

The Viable Business Model

The Viable Business Model needed not only to sustain the business into the future but also to allow it to compete effectively with competitive advantage

Introduction

In my earlier blogs, I questioned the viability of the design consultancy industry and their ability to sustain themselves into the future.

I looked at why strategic focus was a bigger challenge in the design consultancy industry and asked what was needed to deal with the challenge.

In this blog, I will attempt to discuss the viable systems/business model needed not only to sustain the business into the future but also to allow it to compete effectively.

A viable business must be strategic in its outlook, encompassing in its reach, comprehensive in its depth and holistic in its approach. A viable business must be designed from the outset with viability in mind to ensure sustained competitive advantage and business growth. All its business components must work together in tandem with strategic outlook, be able to encompass the needs/dependencies of one another, strive for comprehensive, insightful excellence and be driven by a holistic business ideology.

So what does a viable business really look like?

Can you tell if a business is viable by looking at its organization chart? Is the organization chart the right place to start building a viable business?

Commencing with the organization chart is in my view a recipe for walking in the dark leading to inefficiencies, complacency and possible ultimate demise of the business.

What is needed is a clear understanding of the business model, it’s structure and the implementation of five key management functions namely policy, intelligence, control, coordination and operations. Let’s dwell in this in a bit more detail taking the following business scenario as an example:

Business Scenario

Let’s consider a global engineering firm that provides design engineering services to a number of sectors. Typically in such a model, the business will be located in different regions, countries and offices.

How do you design a viable business?

If we take one step backwards and ask some fundamental business questions, then the answers should give us a clue of the kind of business structure we will need to adopt.

Step 1 – Begin by defining the business key success factors?

  1. Design/Engineering success factors – clear scope/requirements identification, efficient/effective technical delivery, quality/consistency, standardization (minimal duplication) ownership and responsibility
  2. Organizational success factors – learning, competitive, entrepreneurial, incentivized performance etc
  3. Financial transparency and accuracy – forecast costs, fees, revenues, multipliers, gross margins, WIP, utilization levels, resource demand profiles, cost variances, schedule variances etc all need to accurately represent underlying performance of projects. These KPI’s provide transparency and early warnings on the project’s health at any given time.
  4. Project management success factors – consistency in how we manage projects, report/manage projects underlying performance, early warning, risks, issues, changes etc. manage cost variances, schedule variances, estimates at completions
  5. Business Development – reputation, integrity, quality of service, client relationship, marketing, bidding, competitive pricing and work winning strategies etc.

A closer examination of the business critical success factors would actually aid in conceptualizing/validating the overall business model needed to achieve these success factors

Figure 1- The Viable Business Structure

Step 2 – Design a winning/relevant business structure that can help achieve the required critical success factors

As the key critical success factors are centered around organizational factors, technical delivery/quality, project management and business development, I have designed my global business structure with these four driving elements in mind.

Basically what I am stipulating here is that if you succeed in each of these elements then you will achieve all of the defined critical success factors. And if you fail in anyone of these elements then the success of the other elements can also become affected.

All of these four elements, organization, technical delivery/quality, project management and business development are interlinked/interrelated in some way or form i.e.: bad project management can lead to technical delivery/quality issues which can in turn result in client relationship problems that can affect future business development.

So the focus is to continuously strive towards achieving excellence on each of the four drivers highlighted in this business scenario. Achieving excellence means meeting all evolving (existing and future) business critical success factors and this in turn should lead to a viable and sustainable business.

Business Structure for Critical Success Factor 1 – Technical Delivery and Quality

The business structure I have designed in figure 1, looks not only at the vertical structures from each of the different levels i.e. global, regional and country level but also attempts to define the horizontal interfaces/links between each of these levels. So technical delivery as a main strategic success factor involves the creation of:

(a) A global technical (and not business sector) lead for each of the business sectors – example, infrastructure, properties, utilities sector etc.

(b) A global technical discipline leads for each discipline within each of the sectors – i.e. highways. Traffic, clean water, geotechnical etc.

(c) A regional technical (and not business sector) sector lead for each of the business sectors

(d) A regional technical discipline lead for each of the disciplines within each of the sectors – i.e. highways, traffic, clean water, geotechnical etc.

(e) Country technical discipline engineers

Reporting Levels & Responsibilities

(a) Country technical discipline engineers report to their related regional technical discipline leads

(b) Regional technical discipline leads report to the regional technical sector leads and global technical discipline leads. Regional technical sector leads ensure proper integration of disciplinary design processes (purely technical role). The global technical discipline leads capture lessons learned, ensure design consistency and develop standardization wherever possible.

(c) Regional technical sector leads report to global technical sector leads – global technical sector leads responsible for driving efficient and effective global integrated design processes (purely technical role)

(d) Global technical discipline leads report to global technical sector leads – global technical sector leads responsible for driving efficient and effective global integrated design processes (purely technical role)

Business Structure for Critical Success Factor 2 – Project Management

The following is required:

(a) Global project management lead – responsible for Global P&L of live projects and in driving project management consistency and financial transparency (highly skilled project manager with emphasis on project management system/solutions development)

(b) Regional Project Management Lead – responsible for Regional P&L of live projects and in driving project management consistency and financial transparency (same skill level as the global project management lead) – reports to Global project management lead.

(c) Regional sector project management lead – responsible for the P&L of each of their designated sectors. They report to the regional project management lead

(d) Country project managers – these project managers report to the regional sector project management lead and are responsible for their projects P&L.

Business Structure for Critical Success Factor 3 – Business Development

Here, business development is responsible for converting corporate policies/strategies on revenues into tangible results at a global, regional, country and sector levels. The structure should be designed to include:

(a) Global business development lead for each of the sectors and

(b) Regional business development leads for each of the sectors

Step 3 – Design The Management Functions

Now that we have conceptualized the business structure required to achieve the business critical success factors, we are now in a position to turn this structure into a viable business proposition.

Figure 2 – Viable Business Model – Global Level

Viability in this context means (a) looking at the business structure from a management functions perspective and (b) designing/continuously optimizing each of these functions to achieve excellence in the business overall time, cost and quality parameters

Figure 2 illustrates the business viable model from a global level perspective, it must be emphasized however that for the business to be viable, the business at a global level cannot be considered in isolation of the regional business level (figure 3) which in turn needs to be viewed in conjunction with the country level business model (figure 4).

Figure 3&4 Viable Business Models – Regional and Country Levels

The management functions referred to in this model refers to operations, coordination, control, intelligence and policy.

(1) Operations function– these are the processes associated with for example (a) the global lead railways, rail structures and signaling (b)regional lead – traffic and (c) traffic disciplines at a country level

These operations and their processes link both vertically within each of the business levels and horizontally across all the three levels ie global, regional and country.

(2) Coordination function– this function is required to (a) remind of the important role managers have i.e. traffic discipline manager has of not only managing his processes to achieve excellence in time, cost and quality but also of the interfaces with other managers responsible for some of the other disciplines and (b) coordinate resources requirements across all the various divisions etc

(3) Control function – this function is required to ensure (a) that all business defined/approved processes are actually adhered to and (b) control any conflict

(4) Intelligence function – needed to report on the threats and opportunities and dealing with these via the control function.

(5) Policy – is used to turn vision and strategies into tangible policies that can be picked up by the intelligent and control functions and implemented all the way down and across the various business levels.

All management functions need to be in touch with the environment for any threats or opportunities.

In my next blog I will zoom in on the viable business model’s project management function.

Meanwhile, would love to hear from anyone out there with any comments.

© 2014, Majed Bushnaq

Why is Strategic Focus a Bigger Challenge in the Design Consultancy Industry & What is Needed to Deal with the Challenge?

Why is Strategic Focus a Bigger Challenge in the Design Consultancy Industry & What is Needed to Deal with the Challenge?

In my earlier blog posted on 22/10/2014, I looked at the viability of the design consultancy industry and asked why the strategic focus was a bigger challenge to achieve then in other industries. I drew a straight line, a direct correlation between the strategic focus and achieving/sustaining the intent hence industry viability.

In this blog I will attempt to answer some of these industry challenges (and solutions) that are resulting in this gap, the gap in distance and journey time between where we are today and the strategic intent.

Let’s consider distance first.

When I talk about distance I am literally referring to how far away the industry is from achieving its full potential.

The strategic intent set by a business defines where the business wants to be in five to ten years from today.

The strategic focus is the tool needed to achieve the full potential that will lead to this intent. This full potential must be capable of dealing with the most challenging of intents. The strategic intents themselves must not be unrealistic but dictated to a certain extent by the full capability potential of the business, and I stress full and not current potential. A word of caution here, the full potential is not static state but dynamic.

The benefits associated with a business that strategically focuses on achieving its full potential is a combination of organic and non-organic growth, sustainability and viability.

So to answer the question on why the strategic focus is more of a challenge in the design consulting industry, I would say it basically boils down to:

  1. Organizational/business design
  2. Culture & excessive resistance to change
  3. Tactical non holistic views of the business strategic intent
  4. Greater emphasis on engineering/design works at the expense of focusing on the road map leading to the strategic intent

What is needed to close this gap in distance?

The industry needs in my view to look at implementing four key areas:

  1. A viable systems/business model
  2. Encourage and not destroy both entrepreneurship and intrepreneurship at all levels of the business. If you are wondering about the difference the former is external related and the latter is internal.
  3. A culture that competes for the future by continuously challenging the assumptions and is prepared to forget the past.
  4. Performance related incentives to create a win -win situation for all business and staff alike.

The journey time for closing this gap will ultimately depend on the level of commitment from the very top of the organization. The extent of commitment from the top, CEO, COO level etc will mean the difference between a relatively short journey time and a very long one. The focus in hand must be to narrow the journey time as leaving it for too long may lead to the business demise.

In my next post I will discuss the viable systems/business model, meanwhile I would be happy to answer/debate any questions any of you may have on my initial two blogs.

Author of Blog: Majed Bushnaq

Food for Thought- Incentivizing to Maximize Profitability

Food for Thought- Incentivizing to Maximize Profitability

In a project environment it is the project team, lead by the project director who are ultimately responsible for delivering the agreed contractual scope first time every time at least cost (budgeted cost).

Least/budgeted cost is the optimal delivery cost with no inbuilt contingencies whatsoever. It is the minimum known effort (measured in hours) required to deliver the scope.

In simple terms, a project/delivery team that manages to deliver the scope at the budgeted (least) cost, is a team that maximizes profits to the business they are working for.

Maximizing profits therefore requires each individual on the project striving towards achieving their own individual budgets making up this “least cost”.

The Business should not only focus on requiring that each project delivers at their agreed least/budgeted costs, but also encourage by incentivizing each project team member, the “grass root level” to adhere to their allocated budgets.

Objective performance measurement techniques are vital for incentivizing to maximize profitability.

Earned value management applied at both a project and individual resource/staff level will provide the tool and means to steer the project/all involved in meeting their target budgets and in maximizing the project’s profits.

A pre-defined/approved maximum bonus can be paid to a project that successfully delivers its contractual scope within its budgeted cost.

Similarly each project team member’s bonus can be related to their performance (measured in cost variance at completion of the project) and proportional to the overall work effort involved (measured in the team member’s budgeted cost as a ratio of the overall project budgeted cost)

Incentivizing to maximize profitability as described above would in my opinion not only create momentum at the senior project management level but also the vitally important “grass root level”. It will encourage more team “belonging”, innovation/entrepreneurship, efficiency/effectiveness and result oriented teams.

Can this be the way for the future?

The creation of a feeling of belonging, partnership at every level of the business and incentivizing to maximize business profitability.

What do you think?

© 2015, Majed Bushnaq

Food for Thought - Why performance measurement techniques are vital

Food for Thought – Why performance measurement techniques are vital

Objective performance measurement techniques play a crucial role in deriving project transparency and early warnings.

Without use of such techniques:

(a) Projects are more likely to drift into the unknown from a time, cost, quality perspective and

(b) Projects driven businesses are at risk of sudden demise

Objective performance measurement techniques therefore have a much more fundamental role than incentivizing to maximise profitability.

Let me explain:

On my first point (a) above, Earned value management or EVM for short (used extensively by major defence companies) have been used for many years as an objective performance measurement technique and a management tool for aligning projects towards their target time, cost and quality parameters.

But EVM is not a “magic switch” where at a “push of a button” you extract objective performance related information and with another you manage the project.

EVM is an entire strategic, holistic, encompassing and comprehensive project management approach in its own right.

EVM can be categorised by a set of 25 Attributes based on the ANSI/EIA 748 requirements and the UK Association of Project Managers (APM) Guidelines.

The aim of each Attribute is to guide/enhance the development of a viable project organization.

How you set it up and how you apply EVM on projects will determine the success or otherwise of a project(s) in terms of its time, cost and quality parameters.

On my second point (b) above, business financial reporting must be driven by the project(s) true/real time underlying performance.

Failure to correlate financial results with true status of projects performance can lead to the business demise.

© 2015, Majed Bushnaq

Food for Thought - How Transparent is your Industry?

Food for Thought – How Transparent is your Industry?

I believe the consultancy industry in general has a long way to go to reach an optimal and sustainable state.

They are way far behind in my opinion when compared to lets say similar types of working environments within the defence industry for example.

One reason for this ‘lagging behind’ is the very stiff resistance to change and determination to continue with the status quo and industry management “norms”.

Project management methodologies leading to increased transparency and early warnings is commonly seen as intrusive and a non-welcomed burden.

Top management buy-in, commitment, drive, together with major cultural changes is needed to evolve business critical transparencies/early warnings to sustain such businesses into the future.

What do you think?

© 2015, Majed Bushnaq