Profitability variance

Identifying best practices for team design and operational processes to boost profits

Advanced Industries, Engineering

Making accurate forecasts on profits and expenses depends on achieving consistent results across similar projects within an enterprise.

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Goal

A global engineering consultancy’s senior leadership faced a common but vexing problem: the profitability of projects undertaken by its three business lines varied considerably. The company had two goals: to gain a better understanding of the performance drivers and to achieve net profits of 10 percent on a sustainable basis. To do this, management recognised they would need to establish standardised policies and approaches in how project teams worked.

Insight and Action

Since team design and productivity are influenced by multiple factors, QuantumBlack knew that an effective approach must consider traditional inputs as well as nontraditional sources of information. Accordingly, we aggregated six years of latent data from 14 systems comprising 12,000 projects—a total of 92 terabytes worth of data—to evaluate the variance of project profitability and cost across the three business divisions. Our analysis identified and quantified performance factors in areas, such as team composition, communication, project commercials, and project management technology. By focusing on how these factors affected the engagement and productivity of teams, we were able to recommend a series of steps to improve communication, transparency, and composition.

Results

  • 13Percentincrease in project profitability through standardised team designs and processes
  • 92TBworth of data was analysed to accurately forecast results and take preemptive action when projects were underperforming