Process Setup Project Based SME
Challenge / Requirement
With a number of informal separate project management systems in place to monitor and assist with the day to day implementation of customer projects, the function of procurement was generally overlooked and thought of as a limited support function, managed on an adhoc basis by different staff members. This approach limited the company’s visibility of cost management during customer projects, with cost overruns common practise only detected at project completion.
With the implementation of a formal Project management purchasing structure including a comprehensive purchase and Bill Of Materials tracking document, limiting all adhoc purchasing activity without pre-managerial approval and project timeline tracker, all purchasing activity with in the business was captured and controlled. Real-time cost tracking was enabled to allow all stakeholders to manage potential overspends as they occurred when there is the opportunity to either rectify any overspend or reduce spend in other areas to compensate.
Providing the business with real-time cost management data and placing stricter controls on the purchase and movement of goods through the business allowed senior stakeholders to manage the profitability of projects to a greater level. With greater cost visibility the business experienced an instant change in stakeholder mentality to a more cost aware standing.
The changes made resulted in all subsequent projects costs being better controlled with a shift from an expected approximate 5% overspend per project to an average 7% cost saving against projected budgets.