Corporate governance is a concept that varies greatly between sectors, and between different firms within those sectors – it is difficult to pin down an industry-specific definition. However as a high-level overview, the European Corporate Governance Institute states ‘Corporate governance is the basis of accountability in companies… balancing corporate economic and social goals on the one hand with community and individual aspirations on the other’ (European Corporate Governance Institute 2004). Essentially this means prescribing regulations to ensure that those conducting business affairs fulfil all of their obligations both to shareholders and society. These regulations have been subject to a considerable overhaul following high profile scandals such as Enron, WorldCom and Parmalat, the most high-profile change being the introduction of the Sarbanes-Oxley Act, which affects any UK company listed in the US.
In the past 12 months there has been a further stream of new legislation and regulations, including the Basel II framework for European institutions and the UK Companies Bill, bringing significant changes to the requirements imposed upon organisations. Consequently, the systems that enable legislative compliance have been subject to increased scrutiny, and there is concern that many of them will prove inadequate, unable to provide the depth of information required once the legislation comes into force. With the threat of fines or even jail time for corporate officers who fail to comply, it is clear that action must be swiftly taken to remedy the situation.
Improving efficiency to remain competitive
Perhaps the most important conclusion for consultancies to draw from this is that the new regulations might not actually be such a bad thing. After all, if corporate governance requires the fulfilment of obligations to shareholders, then it can only be truly successful if business goals are achieved. So whilst the measures may have been drawn up to clamp down on firms that fail to meet their obligations, they also provide the impetus for forward-thinking firms to gain a real competitive advantage by implementing superior governance procedures.
Of course, aside from such concerns, providing in-depth information into ongoing activities presents enough of a challenge in itself. Many firms have traditionally managed projects using Microsoft Project or Excel, perfectly adequate on an individual project level, but severely limiting when dealing with multiple activities. There is no real way to manage concurrent projects, or provide a broader overview of all operations, yet an alarming number of companies have continued to operate in this manner, whether for lack of knowledge about the solutions available, or through lack of belief that they will really make a difference. This attitude towards project management must be swiftly addressed – after all, consultancies must consistently ensure successful project delivery in order to fend off the threat from newer specialist firms.
When working across multiple sites it can be extremely difficult to maintain the flow of information between teams out working on individual dispersed projects, and centralised management. All-too-often, details of project status, resource allocation and other pertinent nuggets of information are left tucked away in unread emails, hidden within spreadsheets on personal laptops, or in some cases, not recorded at all. For project managers trying to ensure the success of individual projects, as well as programme managers overseeing overall delivery, restrictions on this flow can prove harmful – without full visibility into activities, cost overruns, project delays and even project failure can occur. Our research has found that with the majority of projects, success or failure can be predicted as early as the 20 percent completion point, emphasising the significance of keeping management in the loop regarding ongoing status.
Client/consultancy integration is becoming an increasingly popular working method, in which a client assimilates consultants into its organisation for the duration of a project. Though this may be beneficial for the working relationship, it can make it harder for management to gain insight into the value of the work achieved by the consultants in question. When tackling governance, attempting to keep financial activities distinct can be a major pain point, whilst integration may also increase the risk of misreporting. To further complicate matters, different staff members require different sorts of knowledge about the same activities. For example, whilst a project manager may require in-depth information detailing work schedules and individual staff timesheets, the CIO is looking for a snapshot view of all the projects being undertaken by the business, with details of precisely where the budget is going. For senior management, the problem may not be a shortage of information, but rather that they receive too much, which is poorly organised and lacking in quality.
The upshot is that whether to comply with corporate governance regulations, or simply to improve the effectiveness of internal processes, a new approach to project management is needed, particularly for those businesses that are running multiple projects. This approach must give everyone in the chain the quality and quantity of information they require.
Optimising resources and driving revenues
When planning an overhaul of project portfolio management capabilities, the first question is where to start. In smaller consultancies, introducing new software may only cause minimal disruption, however this might not be the case with large firms, particularly those based in multiple locations. Primavera’s scalable project portfolio management solution can help them to develop the software in isolation from other IT systems, building up data and gradually bringing new users onboard. This method of implementation has the advantage of allowing dedicated project managers to get to grips with the new software at a lower level, without inconveniencing the rest of the workforce. They will then be able to provide the necessary training and support in advance of a full rollout.
Once the management solution is up and running, it can help optimise resources and drive revenues in two key ways. Firstly, it will offer a centralised pool of knowledge, meaning that – provided the employees embrace the new system – project status details will no longer be lost or go unrecorded. Everyone working on a project will have access to the same information, and this will improve the speed with which people work. Equally, it will enable senior staff to spot potential risks or delays well in advance, and take action there and then to ensure that a single project doesn’t spiral out of control and potentially impact on the resources available for other projects. The ability to accurately predict total project cost, and then deliver or possibly even improve on the estimated figure, will encourage both internal and external confidence – a basis on which to improve future revenues.
The centralised nature of a system such as Primavera’s will also help with corporate governance, providing management and accountants alike with the ability to drill down information to the required level. For company directors, shouldered with the burden of ensuring that financial reports and the like are accurate, this degree of insight can prove invaluable. Secondly, the system will provide immediate insight into current resource utilisation, identifying employees that are under capacity, or working on non-strategic activity, as well as highlighting projects that are badly under-staffed. Dashboards can then allow project portfolio managers to compare different ways of modifying resource allocation, enabling them to maximise the capacity of the existing workforce and bring under-staffed projects back up to speed.
Most managers would relish the prospect of increasing the amount of work completed without increasing resources, however it is rare that this becomes a reality. Once staff reach capacity, it is extremely difficult to try and encourage them to do even more. The Primavera solution can prove effective in these circumstances by reducing an employee’s existing workload. Reallocating resources and improving project visibility will leave some employees with spare capacity that neither they nor their managers knew they had, whilst others will be completing work faster and more efficiently, also freeing up billable hours.
Winning and retaining the best business
The most important reason for a company to employ a consultancy is to bring in additional staff with a particular set of skills. A problem when vying for new business is that consultancies often have difficulty ensuring sufficient resources to deliver the work involved. Even when this is assured in the immediate future, in six or twelve months time, there may be no guarantee that the work will be realistically achievable within the specified time frame. When implementing project portfolio management software, firms with specific business concerns have a tendency to input only the data that is expressly relevant to that issue. However, if a firm takes the time to undergo a more comprehensive data upload, resource allocation can be planned well into the future, in order to take advantage of any business opportunities on the horizon.
For example, it is in a consultancy’s best interests that employees designated to work with new clients are those with the relevant skill sets. It is no use simply assigning whoever happens to be available at the time – this has on many occasions led to consultancies recruiting additional staff to solve the problem. The big advantage of the integrated management of numerous projects is that it can identify whether or not this is necessary, in some cases allowing managers to negotiate these problems and ensure that the workforce can be reorganised in accordance with business need. The affected members of staff will be given advance warning of the changes, whilst other employees can be moved to cover the gaps. Management will possess comprehensive resource information, and need only hire more staff when a genuine need is identified. What’s more, CIOs can present potential clients with their own dashboards, detailing this information and effectively proving the ability of the consultancy to do the job required. Based on accurate and complete data, Primavera’s project portfolio management software offers tangible evidence – if it says that you can do a job, then you can do it, and the software can prove to clients that you can do it. What differentiates the software from other forecasting tools, is that it is deployed from planning right through to execution.
Once a client takes on a consultancy, the consultants can incorporate them into the system, so that they too will be given access to the project status information they require. This can help boost the consultancy’s credibility, demonstrating a high level of transparency from the outset, whilst all of the internal benefits of project management will be extended to the client.
Consultancies that deploy effective project portfolio management systems will have the ability to demonstrate a continually high standard of service and consistently predict final project costs, advantageously positioning them both to win new business and retain existing clients. Internally, it will give staff visibility into ongoing operations, crucial for corporate governance – ensuring the successful relay of information back to senior management – whilst enabling managers to optimise resource allocation, giving employees the work that they are best equipped to handle.
