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Uncertainty analysis of
Proposals via Milieu Analysis
Chakradhar Iyyunni, Ph.D. , Faculty L&T Institute of Project Manag...
2Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry
Agenda
Plan for the talk
Motivation – 1 ...
3
Motivation
• With the induction of “Stakeholder Management” knowledge
area into PMBOK 5th Edition, we explore its influe...
4
Background (1 / 5)
Industry “positioning” in India:
• Historical success and “optimistic” growth scenarios is not
enough...
5
Background: Challenges for ESO (2 / 5)
• Teams are
– small in size, moderately skilled
– relegated to a support function...
6
Background: Current State of ESO (2 / 5)
• Teams are:
– small in size, moderately skilled
– relegated to a support funct...
7
Background: Current State (3 / 5)
• Account / Customer-specific teams fall prey
– to discontinuous usage of engineer's s...
8
Background: Uncertainty Description (4 / 5)
Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Indu...
9
Background: Literature (5 / 5)
• Cova (2002) : reactive to pro-active approach to proposals
• Holstius (2xxx) : relation...
10
Proposal Dimensions (1 / 5)
• The interaction between actors in the Milieu that increases the
fitness of the proposal
•...
11
Proposal Dimensions (2 / 5)
• Technical:
– meet the technical specifications
– provide technical training to employees
...
12
Proposal Dimensions (3 / 5)
• Financial:
– favorable financial terms and conditions
– payment schedule and flexibility
...
13
Proposal Dimensions (4 / 5)
• Social:
– extent of networking
– past customer feedback
– relationship with the end-user
...
14
Proposal Dimensions (5 / 5)
• Political:
– consideration of customer market position,
– market share of the product/ser...
15
Why is a “Proposal” key to the organization?
Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing In...
16
Illustration: Organizational Snap-shot (2 / 4)
• An ESO organization's account strategy is crucial to maintain a
sustai...
17
Illustration: Account snap-shot (3 / 4)
– Account Management is a complex process ~ market influences and
industry tren...
18
Illustration: Proposal Snap-shot (4 / 4)
• Proposals should be analyzed by industry type, market
conditions, customer p...
19
Results: Proposal Characterization on
T,F,S,P dimensions (1 / 6)
Uncertainty in Proposals via Milieu Analysis in Engine...
20
Results: Assessment (2 / 6)
Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry
Dimension ...
21
Results: Milieu Characterization (3 / 6)
Internal Milieu
External Milieu
Uncertainty in Proposals via
Use for managing ...
22
Results: Conclusion ( 4 / 6)
Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry
Category ...
23
Results: Conclusion ( 5 / 6)
Uncertainty in Proposals via
• Invest to Build robust project/ program pipeline
• Stakehol...
24
Results: Future Work (6 / 6)
Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry
What else...
25
Summary ( 1/ 2)
• Relational dimensions play an important role in winning
proposals.
• Pre-sales practices facilitating...
26
Summary: Directions and Good News (2 / 2)
Uncertainty in Proposals via
The Good news
• Engineering Service Organization...
27
Thank You.
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Final chakradhar purohith proposal milieu analysis (without account data unpublished)

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Transcript of "Final chakradhar purohith proposal milieu analysis (without account data unpublished)"

  1. 1. 1 Uncertainty analysis of Proposals via Milieu Analysis Chakradhar Iyyunni, Ph.D. , Faculty L&T Institute of Project Management Monika S. Purohith, PGPEM Student, NICMAR, Pune 27 September 2013
  2. 2. 2Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry Agenda Plan for the talk Motivation – 1 slide Background – 5 slides Proposal : Role and Characterization of – 5 slides An Illustration – 4 slides Results, Conclusion, Future Work – 6 slides Summary – 2 slides
  3. 3. 3 Motivation • With the induction of “Stakeholder Management” knowledge area into PMBOK 5th Edition, we explore its influence on Project Proposals. Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry • The premise in the work relates to the important role given to the project proposal – address the needs of the customer milieu – determine business viability ( read as: competitive advantage) – Ensure delivery excellence • The “service provider” / “EPC contractor” should develop flexible, adaptive and innovative ways to market project capabilities and operate beyond transactional (logic) response.
  4. 4. 4 Background (1 / 5) Industry “positioning” in India: • Historical success and “optimistic” growth scenarios is not enough • Customer focus without technological competence is short- sighted-ness • Diversifying capabilities (to include industry-specific expertise and consulting) as opposed to differentiating them • Global “Plays” (by leveraging their competencies, breadth of industry exposure and project execution capabilities) without inclusiveness (segmented exposure) Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry Level 3 behaviour – Leadership in Managing Uncertainty needed !
  5. 5. 5 Background: Challenges for ESO (2 / 5) • Teams are – small in size, moderately skilled – relegated to a support function in the minds of the customer's engineering teams, – use of the bottom of the talent pyramid (0-3years experience) Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry • Projects are – of short duration, needs to be delivered rapidly, – lacks customer & industry big picture – unable to absorb product liabilities. – diffused scope statements which are lacking in specific work expectation guidelines • Customer Organizations are – lack of clear engineering services outsourcing budgets – emerging industry trends (low cost, specific functionality) create over-optimistic expectations
  6. 6. 6 Background: Current State of ESO (2 / 5) • Teams are: – small in size, moderately skilled – relegated to a support function in the minds of the customer's engineering teams, – use of the bottom of the talent pyramid (0-3years experience) Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry • Projects are – of short duration, needs to be delivered rapidly, – lacks customer & industry big picture – unable to absorb product liabilities. – diffused scope statements which are lacking in specific work expectation guidelines • Customer Organizations: – lack of clear engineering services outsourcing budgets – emerging industry trends (low cost, specific functionality) create over-optimistic expectations
  7. 7. 7 Background: Current State (3 / 5) • Account / Customer-specific teams fall prey – to discontinuous usage of engineer's skill, knowledge and continuity in the type of work performed – lacking both in maturity and value even though increased skill level – un-clear role among the various actors in the Proposal and Delivery milieu – significant effort for proposal creation – not billable Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry The underlying uncertainties become risks and problem situations • Organizational influence on poor proposals – Undue impact of personality of the project account manager, – Lack of synergy between sales and delivery teams, – intense competition and attrition of account managers. – unable to address the multiple levels of accountability in the customer organization,
  8. 8. 8 Background: Uncertainty Description (4 / 5) Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry Category Type Uncertainty Description Market Internal Business-specific (ESO is either an Imitator or Innovator) External Market risk (Consumer specific, related to dynamic aspects from PES(T)LE analysis) Technology Internal Novel to Organization not to the market External Current work by your competitor (unknown to you) People Interaction & Processes Internal Motivation, Professional pride, organizational culture External Technical competence aligned to project requirements Customer Relationship & Information Internal Status of Sales-delivery synergy of internal milieu, Tension from cultural dimensions mismatch External Status of Trust, Matching of requirement to expectation between organization and customer
  9. 9. 9 Background: Literature (5 / 5) • Cova (2002) : reactive to pro-active approach to proposals • Holstius (2xxx) : relational dimensions of proposals important • Tikkanen (2007): two levels of relational dimensions – (1)project level relations (2)firm-level relations • Combined scope-schedule risks be managed at Proposal level (Iyyunni 2013) – address uncertainties: Market, Technology, – role definition in the Milieu Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry
  10. 10. 10 Proposal Dimensions (1 / 5) • The interaction between actors in the Milieu that increases the fitness of the proposal • Two classes – Functional class : Technical, Financial – Relational class : Social, Political Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry
  11. 11. 11 Proposal Dimensions (2 / 5) • Technical: – meet the technical specifications – provide technical training to employees – use of latest technology and offer customizations – technology and domain knowledge availability – technical resource availability – alignment of technology with the scope of work – certifications and accreditation – access to and availability of infrastructure – access to engineering consultants – R&D activities in the sector Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry
  12. 12. 12 Proposal Dimensions (3 / 5) • Financial: – favorable financial terms and conditions – payment schedule and flexibility – insurance against delivery problems – Using right type of contract (fixed price, time and material, profit-sharing etc.), – financial risk assessment plan Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry
  13. 13. 13 Proposal Dimensions (4 / 5) • Social: – extent of networking – past customer feedback – relationship with the end-user – alignment with the vision, mission and goals with customer – trust and reputation among customer's milieu – articulation of the customer's need – collaborative orientation of the customer Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry
  14. 14. 14 Proposal Dimensions (5 / 5) • Political: – consideration of customer market position, – market share of the product/service by customer organization, – ESO's market presence specific to service/solution – local partners, referrals, influence on customer's milieu, – understand and maintain clients reputation in industry- segment and market – customer's influence on peer-group in industry segment – associationwith standard and professional bodies – supply chain relationship, – alignment to government regulations Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry
  15. 15. 15 Why is a “Proposal” key to the organization? Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry Illustration (1 / 4)
  16. 16. 16 Illustration: Organizational Snap-shot (2 / 4) • An ESO organization's account strategy is crucial to maintain a sustained growth. Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry • Account growth depends on success (size and volume )at proposals Data deleted
  17. 17. 17 Illustration: Account snap-shot (3 / 4) – Account Management is a complex process ~ market influences and industry trends, – customer organization's strategy and – ESO‘s sales team priorities, technical team capabilities – Age and Health of the accounts (mentioned in paper) Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry Account Number Ratio of Current year to Previous Year Revenues YoY-1 YoY-2 YoY-3 YoY-4 1 1.55 1.45 1.30 1.49 3 3.21 1.59 1.16 1.18 4 2.89 1.50 0.92 0.93 6 2.74 1.37 1.97 1.37 7 0.75 1.59 4.01 1.10 8 1.77 2.61 4.82 1.73 11 1.09 1.31 1.15 1.06 12 1.90 1.29 0.99 1.27
  18. 18. 18 Illustration: Proposal Snap-shot (4 / 4) • Proposals should be analyzed by industry type, market conditions, customer profile, customer relationship parameters Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry No. Proposal Description Win / Loss Reason for Win / Loss 1 Large scale data (in PDM system) Win Social, political, Financial 2 Passenger bus for India launch Win Social, Political 3 Asset Management Win Technical 4 Large engineering engagement Win Social, Political 5 Engineering “Program” Win Technical, Social, Political 6 New PLM implementation program Loss Social, Political, Financial 7 Large Automotive design project Loss Technical 8 Medical device development Loss Political
  19. 19. 19 Results: Proposal Characterization on T,F,S,P dimensions (1 / 6) Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry Proposal No. Rating on these aspects of Proposal Technical Financial Social Political 1 4 4 3 3 2 4 4 3 3 3 4 4 4 3 4 3 4 3 3 5 4 3 3 4 6 4 4 2 2 7 2 4 3 3 8 3 4 1 1 • Customer profile is also a key determinant of proposal quality – geography, market segment, R&D spend etc.
  20. 20. 20 Results: Assessment (2 / 6) Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry Dimension Scheme-1 Scheme-2 Scheme-3 Functional Technical 0.46 0.4 0.34 Financial 0.18 0.2 0.22 Relational Political 0.18 0.2 0.22 Social 0.18 0.2 0.22 Proposal No. Weighted assessment Scheme-1 Scheme-2 Scheme-3 1 3.6 3.7 3.6 2 3.6 3.7 3.6 3 3.8 3.85 3.82 4 3.2 3.15 3.25 5 3.6 3.7 3.6 6 3.3 3.4 3.16 7 2.7 2.6 2.9 8 2.5 2.55 2.37 • cut-off score: (1) overall- 3.0 (2) technical dimension - 4.0 • 3.0 to 3.3 to be in the grey area (either a win or a loss)
  21. 21. 21 Results: Milieu Characterization (3 / 6) Internal Milieu External Milieu Uncertainty in Proposals via Use for managing the appropriate dimensions Milieu Engagement plans by Proposal Project Manager.
  22. 22. 22 Results: Conclusion ( 4 / 6) Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry Category Type Stakeholder Responsible Proposal dimension Market I Senior Marketing team Political E Sales person, Vertical Head Social, Political Technology I Subject Matter Expert Technical E Discipline Team Technical People Interaction & Processes I Project Manager/ Account manager ; Delivery Team Social E Resource Management Team Social Customer Relationship & information I Account Manager Social, Political E Project Lead/ Project Manager Social, Technical I – Internal ; E – External • Every stakeholder has a key role to play for ensuring proposal quality!
  23. 23. 23 Results: Conclusion ( 5 / 6) Uncertainty in Proposals via • Invest to Build robust project/ program pipeline • Stakeholder / Milieu role clarity is vital and crucial
  24. 24. 24 Results: Future Work (6 / 6) Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry What else? Translating our understanding of customer needs to functional and relational dimensions How? 2nd level of parameters listed here.
  25. 25. 25 Summary ( 1/ 2) • Relational dimensions play an important role in winning proposals. • Pre-sales practices facilitating intense action ‘upstream' of project by anticipating, defining and constructing of project scopes have to be developed and refined. • Managing relationships and networks, during a proposal life- cycle, and good decision making methodologies (like AHP) are crucial. (PMBOK 5th Edition, Stakeholder engagement process group) Uncertainty in Proposals via Milieu Analysis in Engineering Outsourcing Industry
  26. 26. 26 Summary: Directions and Good News (2 / 2) Uncertainty in Proposals via The Good news • Engineering Service Organizations have understood the need for relational dimensions. A rough guess that 40-60% revenues come without the need to bid. Directions • Strategy dimensions: (1) Articulation of Customer need (2) organization’s ability to differentiate technology for meeting the need • Measurement on the Social, Political dimensions and maturity (a la CMM) is yet a distant goal. • Correct excessive Customer focus with technological competence”
  27. 27. 27 Thank You. Presentation Title
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