Crisis in the construction industry
You will not have missed it, there is a crisis. There are layoffs, cutbacks and many companies are going bankrupt. One message after the other is appearing on the internet. Real estate concerns and construction companies are falling down. Including the big boys. Terrible, but could this possibly have been prevented?
Everything seems to go well, new assignments are arriving, there is not a lot of absenteeism in the staff and your suppliers are doing well too. And then, all of a sudden, a small part in the project is going wrong. Your customer is not paying and the employees do not register the work hours. After a thorough investigation it turns out that the situation has been grave for a long period of time. Conclusion: your project management is faulty. But where is the problem and how do you solve it? Or even better: how do you prevent a situation like this one?
Looking at the future through the rearview mirror
A customer that does not pay might not seem so bad at first sight, but if the problem remains then this will influence the rest of the projects. Because if a customer does not pay you, then you yourself can not meet your payment obligations. The consequence of that is that a third party gets in trouble as well. It is a kind of chain reaction.
Many companies prefer to stick to the comfortable past despite mistakes in the project management. Changes can turn out negatively after all. But what if they remain at a standstill, or perhaps do not even have a choice? To stand still is to die, implementing changes might be a risk, but it is still better than stagnation.
Companies need to carefully watch their processes and the market around them better than before. By real time monitoring and information supply they can react better to changes. A company might rigidly believe that they are doing well and that everything is working as it should. But what if the market is experiencing changes and there is no timely response? Take Nokia for example, they did not see the Touch Screen and App revolution coming. They stayed with the comfortable past, while the competition reacted to this revolution, which caused Nokia to lag behind quite a bit. To turn the tide a deal was closed with Microsoft. Nokia will release mobile phones using the Windows 8 platform from now on. This impromptu decision brings along risks for both parties. One the one hand Microsoft might be dragged into a dangerous situation. On the other hand Nokia does not choose, unlike the lion’s share of the market, for the Android platform, which owns a bigger share of the market. Even though Nokia tries to catch up now, the competition that responded swiftly maintain a larger market share. After all, they have gained a fair share with Android. On the other hand, Nokia uses a relatively new and lesser known platform to conquer a market share. The question remains whether this collaboration can still turn the tide. In the case of a multinational like Nokia the word “bankruptcy” won’t be an issue that quickly. But think of the smaller companies; if they do not position themselves properly in the market and react to changes, they will lag behind helplessly.
An overview of the complete project planning and the external and internal factors is therefore essential to the timely reaction to change and the directing of projects. All information that belongs in project management, like monitoring of the own company and the market, needs to be available and accessible. For many it seems simple and under control. But for companies that work on a project driven basis the ordered availability of project information is a tricky issue. Many companies organize everything neatly in Excel spreadsheets or even with yellow Post-it notes. Clear to the individual employee, a disaster for the internal overview. It is a cheap form of project management for the employer, but in the end it is a real killer. Without a proper project administration the odds of an impromptu decision that turns awry increases. With a good project administration you increase the odds to survive any crisis.
Better project management or economizing?
For most companies an investment in software for project management is not at issue. It is going well, everything is working as it should and well, sure, there is the occasional miscommunication. And then there is the moment that they notice there are quite heavy miscommunications, and that the project process is not running as smoothly as they thought. This is also the case with companies that went bankrupt. No control on the project management. And all the while they were thinking it was going so well. The problem does not always have to be internal; as mentioned before a chain reaction can emerge.
Take for example the construction industry: the prices of raw materials fluctuate. Can anyone today tell you with any certainty what the construction of a project would cost in a year? No, they can’t, but with the right internal information and market information it is still possible to anticipate it. The expected financial situation can be determined which allows running and future projects to be adjusted in time. In any industry, the market is ‘working’ and is subject to changes, possibly even on a daily basis. It does not matter in which industry a company operates, construction, IT, service or advice. All these companies are dependent on óne thing: the contractors and the accompanying orders. From introduction, offer, invoicing, time tracking up to the end station. Everything has to run well and clear. For every aspect someone else is responsible. Does the internal, external communication and tracking of those not run in the right way? Respond in a timely fashion and prevent problems in the future. Ensure that the proper project notes are there, monitor the project administration and prevent serious reorganization actions such as layoffs.
Because with less manpower there is also a lesser amount of work getting done. We are not just talking of construction workers for example, but also less people at the office that manage the project. If knowledge and vision flow away here, then this has major consequences on the project control. And you have guessed it, this in turn has consequences on the entire process. This is how entire construction projects are paused in the Netherlands, construction companies are declared bankrupt and placed under guardianship. Another chain reaction, because think of all those involved around such a project. Their internal project management is jammed as well. Economizing can be a good solution sometimes, but often it causes more external problems then that it solves structural problems.
Investing in a software package to optimally control the project management and solve structural problems is a ‘no go’ for many companies. After all, the employees are already familiar with the current package, they would need to invest time and energy in the new software, while that time and energy is crucial for the running projects. The costs for such a package must be very high, and that is something the company can’t handle right now, and who can tell if really works later on?
But what if a package like that is exactly what puts a company back on track? Ensuring that every project is clear in itself and remains that way. That there is control on the costs as well as on the planning which allows a company to react in time to a situation? Ensuring that important matters do not come as a suprise with all the consequences that would bring. What if an investment in this kind of software ensures that a company does not have to intervene at the last minute and then still collapse?
That is why: project management is anticipating!