Record and conquer
28 April 2011
Information gathered by collecting data is key to the management of suppliers and deliveries
Successful projects, and indeed successful companies, rely on effective records that allow efficient collation and analysis of data. Anna Mitchell explores how to implement data collection processes and why they are vital.
It’s not always obvious, but data informs a large part of anyone’s actions. Purchasing decisions made on cost are informed by data. If you choose to travel by rail because it’s quicker than the same journey made on road you’re using data. An exercise plan that measures your progress on lap times, or heart rate or weight lifted uses data. We’re all used to using data to inform decisions but how many managers fully realise the importance of formally recording this information to efficiently run their business?
“Most companies already record all the data they need,” answers Tom Stimson, president of The Stimson Group. “But it may not be in a form that is easy to evaluate.” The Stimson Group is based in Texas and provides business consultancy services for providers of communications technology, and in particular AV products.
He advises that an integrator should, at a minimum, record the actual cost including shipping of all products and supplies used in projects, the actual labour hours by person/skill applied to each job as well as where non-project hours go, and the corresponding “sold” price for each of these. “Projects are typically based on budgets so you need to record the variances between the original budget and the actual execution,” he argues.
Roland Hemming, an audio consultant and project manager specialising in the audio industry, agrees that managing data effectively plays a vital role in any project. “On the whole people don’t fail [a project] because they made one colossal mistake,” he says. “It tends to be death by a thousand cuts, so lots of little issues add up. It’s the tracking of those issues as you’re running projects and ensuring that your budgets are monitored as the job goes on that is really important.”
“In order to properly budget a project and to be competitive, we have to understand the costs,” agrees Stimson. “We can’t control every variable, but strive to keep costs down regardless of the price sold. Recording the data provides us the opportunity to analyse it. For instance if you discover that your team consistently runs over the labour estimate on certain types of project, you could address the estimate, the execution or both.
“Without data, we are just guessing and I find that when it comes to perceptions of our own performance, we are often quite wrong. We have a saying that goes: ‘The company that won the bid is usually the one that made the biggest mistake on the labour estimate.’ Proper job costing will help us improve future estimates.”
Hemming acknowledges that the data collected during a project can be used to inform subsequent projects and help companies avoid repeating mistakes. He adds: “Very few people carry out decent post-project analysis.”
And Hemming thinks now is the time for the AV industry to start implementing processes to approach projects more scientifically. “We’re not as professional as we could be and I don’t think we invest enough in processes to make us operate more efficiently. It’s can we come in at the best price? What’s the margin on the equipment? Not, how can we run what we’ve got more efficiently?”
“I don’t think there’s enough going on in this area at the moment. There’s a focus on buying product cheaper and margins, not about the processes you’re following. And that’s massively important right now because a lot of clients now want [integrators] to have a quality manual and a quality manual is all about processes.
“Management of delivery, making sure equipment is being delivered on time and as efficiently as possible and monitoring all aspects of this is really critical. And then the other thing is just basic communication between different people involved and your own team. Is the project engineer actually putting together the job in the way that the person who sold the job to the client intended?”
If these variables and processes are handled and monitored “scientifically” using concrete data to inform progress reports and analysis of a project the integrator is equipped with some powerful tools. So, Hemming and Stimson’s arguments make a good case. Data is important, vital even, for successful project management. Once that fact is accepted the next stage is to find effective and efficient methods of recording it.
“You have to crawl before you can walk,” says Stimson. “There are many software programs you can buy for this purpose or you can develop your own database platform. However, my recommendation is to first learn how the data relates by gathering it on a job by job basis in spreadsheets. If you are already doing this then it may be time to move into project software or an enterprise resource planning (ERP) system.
“Project software will allow you to budget, order and track a job from one program. These products typically include a purchase order module, inventory control, labour scheduling and timesheets. Most will interface with your accounting system via batch data exchanges. An ERP system on the other hand does all of the above plus non-project related resources. ERP typically connects to accounting and customer relationship management (CRM) systems in real time. In either case, you should be able to get up to the minute reports on any customer, job, invoice or employee.”
Hemming provides software, programs, websites and tools designed to help his clients manage their projects effectively. “We’ve found it a very interesting process to go through with companies and every company is different. There isn’t a standard set of processes you can put in place that will suit everyone.”
He does say that a very important rule to follow is to keep everything electronic. “Anything that can be online, collaborative, shared and instantly updated should be,” he argues. “We’ve recently implemented a system for a client where the delivery note will arrive onsite on their iPhone with a live link to the office. They tick off the items on the iPhone allowing comprehensive tracking of all equipment. It will even notice if a thing went on a van at one end and didn’t arrive at the other. If an item goes missing it is flagged up immediately.
“A lot of people in the industry don’t have that level of control over their stock. They’ll sign a delivery note and will hand-write on it that an item didn’t arrive. That note will not be processed until the next day. It’s slow, inefficient and unwieldy. Yet the kit we deal with in our industry is really expensive. One box goes missing and it represents a lot of money.”
Hemming stresses that managing deliveries is massively important. “Ask if you are going to an unnecessary number of suppliers because that will impact in a number of ways. Firstly just your straight delivery costs [are higher] but you’re also increasing your risk by going out to so many different people. Things are going to go wrong somewhere if you’re ordering from too many places rather than trying to centralise suppliers.”
But, there’s no point collecting the data if you don’t use and evaluate it. And, although having these systems and processes in place will give you a clear view of your company’s operations, a business will need to analyse its operations carefully to be truly successful.
“For any given business or project there are key performance indicators (KPI) that management should track,” points out Stimson. “Some things like cash flow, need to be monitored every day. In terms of project data, we need to pay close attention to the expected cost to complete the job. How many more man-hours will it take to finish? When we don’t focus on completion, jobs tend to drag on and that is when we start to loose money. Evaluating project data can help understand if project managers plan well, if technicians are efficient and if our designs are accurate.”
Hemming says: “You should have procedures for everything and they should be carried out in a structured, clinical way. It’s not about analysing data afterwards but analysing what’s going on during a project and ensuring your processes are being kept to. That way nothing gets left out of a project, they happen on time and if they don’t happen on time you can let people know in advance and mitigate problems.”
He says that reporting and analysis of a finished job has its place but it’s actually far better not to let mistakes happen in the first place. “The idea behind putting these systems in place is to run a job better not to analyse mistakes afterwards.
“We’ve just written some database software for a client that takes them through quoting for a job to ordering for it and ongoing budget analysis. Obviously you can review the analysis of the budget against what was purchased, what was paid for. That’s just as useful during the job as after the job. You use the data to track exactly where you are and when the question comes: ‘do I have a few hundred pounds spare?’ you can say ‘no I haven’t’. Then you make a decision based on the fact you know you’re going to go over budget. It’s a more effective way to work than putting tools in place to analyse why you have gone over budget after a job is complete.”
And Stimson has a warning for companies that don’t collect, use and learn from data. “A new client of mine was not collecting data on a job by job basis, management was not aware of which business segments were delivering the most profit. When a neglected product line suddenly started losing business to a competitor, the company’s net profit disappeared. Upon analysis they learned that this one product line was their only profitable revenue. If they had been using the data they already had, they might have avoided a crisis. We are now working to correct their cost assumptions while we implement an ERP system.
Stimson concludes: “When we think we know what went wrong, we might change our behaviour. When we know in quantitative terms we are more likely to act upon the right things.”