Project-based services companies do all types of project related work such as inspection, testing, installation, modifications, maintenance or even decommissioning of their customer’s main assets or plants. The project service companies charge asset owners for labor, material and equipment, usually through short or long frame agreements. Many project-based service companies also have an extensive rental business to support various services, in addition to multidiscipline skills set that adds to their value proposition in the different markets they sell into.
Some challenges for project-based service companies
Delivering on time and budget
The responsibility for delivering the projects on time and budget sits with the project service company, even with some negotiated frame agreements since each service project is often tendered and calculated separately. This also gives these companies some very good market opportunities to increase the price in good market conditions, as well as lower the prices when the competition is tough. It’s all about knowing your cost structures and having an efficient standardized execution model.
Delivery of equipment and resources
Making sure that delivery of equipment and resources is a critical activity for all project service companies, especially in complex offshore environments. Streamlining offshore logistics and material transfer with full visibility and transparency is always critical in-service projects on offshore assets.
Additional challenges for project-based companies include:
- Understanding your cost structures to set the right margin
- Lack of standard project templates of typical services including the timelines
- Getting the right resources and equipment on time for the job
- Making sure that project and supply chain collaborates and shares real time data
So, how can companies improve project margins in the energy industry?
Get all the experience structured and available for the next shift
Even though a large portion of work and equipment in a project-based company is repeatable, many companies fail to create templates and catalogue of repeatable project elements.
To better learn and standardize incoming demand and prevent unnecessary customization, the project-based services companies should create templates of standard project types for each delivery set—specifically for high-volume projects. A set of standard project template guidelines for each project type could include initial estimation effort, competence mix, equipment, remote support and other essential topics.
This type of continuous standardization work will allow significant learning and will also over time decrease response time. This will give planners a much better project demand overview, and resource scheduling techniques can be put in place, to optimize internal work force, and reduce ad-hoc subcontractor requirements. By recording actual progress and efficiency, the resource management can really be a competitive edge for these type of service companies.
A much smoother digital transformation Journey
The right ERP for your industry should be the corner stone of your digitalization journey. Product features and pricing will always be important, but with the explosion of digital commerce these are rapidly becoming commodities—things that companies compete on but not things that set a brand apart in the mind of the customer.
So, what will it take? The answer to the question is simple, but hard to achieve: Standing out is about developing the ability to secure customer loyalty and repeat business. The ability to create delighted customers. We call this the Moment of Service. It is the moment when everything that goes on in your business comes together. When the hundreds of decisions, thousands of processes and people all align to deliver your company at its best. Your greatest moments of service in your projects.
Want to know more about how IFS has been helping Project Based service companies over the last three decades? Download the new IFS Whitepaper: Selecting software for Project-Based service companies.
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