1. Understanding Uncertainty in Account-specific Project Pipeline
Management via Milieu Analysis in Engineering Outsourcing
Industry
Chakradhar Iyyunni and Monika S. Purohith
Keywords: Project Proposal, Uncertainty/Risk
Management, Milieu, Engineering Services
I. ABSTRACT
Project Marketing should go beyond conventional
approach of responding to tenders, i.e., "request
for quotations" (RFQ). The service provider should
develop flexible, adaptive and innovative ways to
market project capabilities and operate beyond
transactional (logic) response. The pre-sales
practices facilitating intense action ‘upstream' of
project by anticipating, defining and constructing
of project scopes have to be developed. In this
paper, we focus on managing relationships and
networks during a proposal life-cycle of
conceptualization, responding to tenders up to the
win/loss decision. This will be studied via
categorizing proposal activity on four dimensions:
technical (T), financial (F), social (S) and political
(P). These attributes characterizing Engineering
Service Organizations (ESO) and Customer
interaction play a very important role in ensuring
robust project portfolio and hence a sustained
growth of account teams.
This article first identifies and defines the
relational and functional characteristics of
proposals (T,F,S,P) that the business actors need
to constantly nurture during the proposal life-
cycle. The milieu can be broken down into internal
and external actors who influence the business
processes. Thereafter the study shall analyze the
network and manage uncertainties, and the factors
influencing the award decision.
We conclude that project managers and marketers
should also focus their attention on the
management of milieu before, during, and after
completion of the proposal-as-a-project to
enhance their win ratios for project proposals and
account success. The analysis is also amenable to
use of the analytical hierarchy process (AHP) for
various decisions (bid/no-bid, sub-contract or not,
win/loss) that govern the proposal process.
II. INTRODUCTION
Leading Indian ESO contractors are now successfully
competing in the global market by leveraging their
competencies, breadth of industry exposure and
project execution capabilities. Although, the historical
success in IT/ IT enabled Services(ITeS) point towards
application services, vendors are diversifying
capabilities to include consulting, industry-specific
expertise and infrastructure management. As domestic
vendors expand their global footprint understanding
the inherent and project-specific uncertainties is vital
for market dominance.
These uncertainties get realized into risks and problem
situations due to the fact that, projects in ESO industry
is of short duration, needs to be delivered rapidly,
lacks customer & industry big picture and ability to
absorb product liabilities. Teams are small in size,
moderately skilled and are relegated to a support
function in the minds of the customer's engineering
teams, uses of the bottom of the talent pyramid (0-
3years experience) as its primary instrument for
delivery. Even though there is extensive use of
information and communication technology (ICT)
enablers yet work definition is lacking in specific work
expectation guidelines resulting in diffused scope
statements.
The inability of account teams to adequately address
the discontinuous usage of engineer's skill, knowledge
and continuity in the type of work performed (thereby
lacking in maturity and hence value though there is an
increase in skill level, [1]). This creates role stress in
teams and organization but significantly puts
tremendous pressure on the project proposal process
[2, 3]. Refer [15] for other aspects of risk management
in IT projects. The critical aspect for success in ESO is
managing a pipeline of projects which involves being in
control of managing customer relationships, pre-sales
activities and offer management.
Due to the above factors, the conventional logic of a
product business promotion does not work with the

2. ESO-specific project business. Such pre-sales
practices facilitating intense action ‘upstream' of
project by anticipating, defining and constructing of
project scopes have to be developed. The proposal
process in ESO industry have a unique/specific buying
procedure, a long negotiated process (in relation to the
size of the project), fragmentation of buying centers
(small elements instead of the integrated EPC,
Engineering Procurement Construction projects and
internally to an ESO, different sets of expertise lie in
different teams hence needs integration) and a need
for large number of projects, un-clear role among the
various actors in the milieu. Also, the delivery teams
have to spend a significant effort for proposal
estimation which may not count towards their
utilization or billability.
The other factors, not considered here, that impact
proposals (in ESO or customer organization) are: the
influence of personality of the project manager/account
manager, synergy (to address assumptions) between
sales and delivery teams, lack of clear engineering
services outsourcing budgets in customer
organization, ability to address the multiple levels of
accountability in the customer organization, industry
trends and emerging market imperative (low cost,
specific functionality), intense competition and attrition
of account managers. Thus, the account mining and
account farming processes are crucial, given the
above challenges of the ESO industry.
III. MILIEU ASSESSMENT AND ANALYSIS
Cova et al. in their work on project marketing in 2002
have instigated that the seller should go beyond
reactive approaches to proposal preparation in favor of
a proactive approach[4]. This brings into focus the
extreme difficulty of assessing the impact of
exchanges between the customer and supplier as well
on the difficulty for a supplier to forecast, hence the
relationships between the actors become during the
proposal related transaction.
Cova et al. also stated that entering project business
may become hazardous and resource consuming
venture instead of a profitable activity if the supplier is
unskilled in analyzing all the different kinds of risk
involved in international projects[4]. The statement
definitely holds true for IT/ITeS industry. Holstius
(1989) has shown that the analysis of risks and steps
taken to reduce these risks are necessary to attain
success in project marketing. Holstius concludes that
the relational dimensions of a project proposal is
influenced by both the project portfolio and multiple
relationships associated with project marketing.
Tikkanen et al. have considered relationship
management as a foremost strategic issue that
contributes to individual projects and their
management [7]. The first level includes the
management of relationships and networks related to
individual projects from the beginning of a project until
to its completion. The second level is the company
level above single projects; it encompasses
relationships between firms and other organizations
during a longer period of their multiple project activity
in a broader economic, social and political business
network.
Heinsz [14] and co-workers have highlighted the
importance of managing external stakeholders
(political risk management is termed as “corporate
diplomacy” in their work)and its influence on market
capitalization and financial returns. While Remington
[8] has expounded on the merits of managing the
public relations (read political dimension) during
project execution.
In this research, we have identified the importance of
response to proposals, i.e., bidding for a tender just
not for the sake of win, rather to execute a quantifiable
analysis on all the dimensions (including but not limited
to the technical competency and financial
remuneration) of the project. A successful project
milieu support is established by identifying the
strength and weakness of the project in functional as
well as relational dimensions. Such analysis can be
effective in building counter-measures for the
uncertainties associated with the offer and formulate a
unique strategy to deliver value.
Iyyunni identified combined Scope-Schedule risk may
arise from un-mitigated risks in either Scope Plan or
Schedule Plan or due to some compounding effect
because of missed-steps in integration between Scope
and Schedule Plans. Much of these combination risks
maybe addressed at the proposal stage by creating a
plan to address the uncertainties directly i.e., many
delivery risks come from proposals. The uncertainties,
from Figue-1 and Table-1 in Reference[1], stem from
(1) Market i.e., PES(T)LE, (2) Technology, (3) People
interaction and processes and (4) Customer
relationship information.
Table-1: Description of uncertainty for ESO projects
Category
Uncertainty
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)

3. Technology
Internal
Novel to Organization not to the
market /those outside the
organization
External Current work by your competitor
which is as yet unknown to you
People
Interaction &
Processes
Internal
Motivation, Professional pride,
organizational culture
External
Technical competence and
capability aligned to project
requirements
Customer
Relationship &
information
Internal
Status of Sales-delivery synergy,
Tension from cultural
dimensions mismatch
External
Status of Trust,
Recognition/matching of
requirement to expectation
between organization and
customer
It is also possible, in organizations which are capable
but not mature (in the CMM framework), that such
risks in proposals (and also in delivery) could arise
from specifically the break-down of communication,
situations threatening the viability of customer-specific
business model or broadly from undeveloped
organizational culture such as lack of vision, coherent
strategy, established processes etc.
IV. DEFINITION OF DIMENSIONS
As per the traditional system of a project offer, most of
the project based companies have always
concentrated on two ways to strengthen their offer as
compared to their competitors, which are described
below, Technical and Financial.
In the technical dimension, the service provider for a
project concentrates on meeting the technical
specifications, and prepares by providing technical
training to employees, use of latest technology and
offer extra features or customizations. This
assessment is characterized by technology availability,
resource availability, alignment of technology with the
scope of work, know-how availability, certifications and
accreditation, access to and availability of
infrastructure, access to engineering consultants, R&D
activities in the sector etc.
In the financial dimension: favorable financial terms
and conditions, payment schedule and flexibility,
insurance against delivery, type of contract (fixed
price, time and material, profit-sharing etc.), financial
risk assessment plan etc..
The above dimensions are usually referred to as
functional dimensions. Further to this, Cova suggests
add two relational dimensions, namely, political and
social [4].
In the social dimension: 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 and network, articulation of the customer's
need, collaborative orientation of the customer etc.
In the political dimension: consideration of customer
market position, market share of the product/service by
customer organization, ESO's market presence
specific to service/solution offered, local partners ,
referrals , influence on customer's milieu,
understanding and maintaining clients reputation in
industry-segment and market, customer's influence on
peer-group in industry segment, advantage of
association via standard and professional bodies, local
partners, supply chain relationship, alignment to
government regulations (such as business/work visa in
a foreign country), mapping and use of common
resources etc.
V. PROBLEM FORMULATION
Account management is a very complex process with
a huge set of market influences and industry trends,
customer organization's strategy in adapting and
orientation towards out-sourcing and ESO‘s account
and sales team sector-wise priorities, technical team
capabilities and resource management plans.
An ESO organization's account strategy is crucial to
maintain a sustained growth.
Table-2 lists the growth of 13 accounts over a 5-year
period. Accounts (numbered) 2 and 10 being newer
customers have only a 2-year and 3-year data
respectively. We note that the general growth rates
are high in early phase and then saturate to a certain
level.
The data reflected reflects year-on-year (YoY) growth
for the 13 accounts (see Reference [11] on using such
measures for analysis).
In Table-3, we comment on the age/ maturity and
health of the accounts. Based on internal data (not
shown here), we classify the age of the account, from
the history prior to the 5-year period.
The health of the account is classified based on the
growth of the account from year-4 to year-5 (as listed
in the last column of table-1) i.e., low indicates a YoY-4

4. score of 0.9- 1.1, medium as 1.1-1.4 and high as
greater than 1.4.
The ESO senior management sets a strategy for the
growth of the accounts for the year ahead. Some of
the factors that influence this strategic direction are
customer response to ESO (direct feedback and year-
ahead plans for outsourcing), trends in the various
industry segments (hence the portfolio orientation),
internal technical build-up (providing service/solution
clarity with clear project management processes
supporting delivery excellence).
Based on the revenue targets set for the accounts, a
project pipeline needs to be built (which rests on
proposals and proposal win ratio).
Table-2: Accounts with Year-on-Year growth
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
2 (a) (a) 28.50 1.75
3 3.21 1.59 1.16 1.18
4 2.89 1.50 0.92 0.93
5 3.07 1.83 1.02 1.08
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
9 19.40 6.67 1.03 1.20
10 (b) 2.37 1.34 1.11
11 1.09 1.31 1.15 1.06
12 1.90 1.29 0.99 1.27
13 1.33 1.89 1.40 1.34
Table-3: Age and Health status of Accounts
Account
Number
Age of
Account
Health
1 Mid High
2 Early High (b)
3 Mid Medium
4 Mid Low
5 Early Low
6 Early Medium
7 Mid Low
8 Early High
9 Early Medium
10 Early Low
11 Mature Low
12 Mature Medium
13 Mature Medium
The premise in the work relates to the important role
given to the project proposal in addressing the needs
of the customer milieu and in determining the business
viability of the ESO.
We also make a strong assumption that account
growth is reflected in the quality of the proposal
process. We show a sample set of proposals with
both wins and losses from the accounts listed above.
Listed in Table-4 is a sampling of proposals from
different account teams. The customer segmentation
details and technical know-how details of the
proposals have not been considered here.
The proposals are categorized as win or loss (as per
their status) and the perceived reasons for the win or
loss are mentioned.
Table-4: Proposal description and win /loss status
VI. METHOD
In Table-5, we reflect the opinion of a member of the
business development team, on the quality of the
proposal across the four dimensions.
See Section VII and Section VIII, for suggestions on
improving this assessment. The proposals are
analyzed as per the four dimensions mentioned in
Section III.
Table-5: Proposal assessment on T,F,S, P dimensions
No. Proposal Description Win /
Loss
Reason for Win /
Loss
1 Large scale data restricting in
PDM systems
Win
Social, political,
Financial
2 Passenger bus benchmarking
for India launch
Win Social, Political
3 Asset Management Win Technical
4
Large engineering engagement Win Social, Political
5 Multi project Engineering
cooperation
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

5. We use AHP to work out a base set of weights
(scheme-2) for each of the four dimensions. From the
AHP results, we have made a simplifying assumption
that F,S,P dimensions have the same weight. See
Reference [10] for similar assessments. We perform a
sensitivity analysis to these assessed weights, as in
Table-6.
Table-6: Weights for T,F,S,P dimensions for Proposal
assessment
VII. RESULTS & CONCLUSION
Based on the weights considered in Table-5, we arrive
at a score for the strength (quality) of the proposal.
The results in Table-7 indicate that there is a minimum
overall score for reasonable success. The results of
the above analyses also indicate a cut-off score for
overall assessment (on all four dimensions) to be 3.0
and for the technical dimension alone to be 4.0.
For now, we consider the overall score between 3.0 to
3.3 to be in the grey area (either a win or a loss). We
will address this apparent deficiency in the example
problem and future work.
Table-7: Sensitivity analysis of the Proposal
assessment.
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
Figure-1 and Figure-2 below show the assessments
for the stakeholders or actors internal and external to
the ESO.
Figure-1: Stakeholder matrix of the internal actors in
an ESO
1.Senior
management
2.Sales
Team
3. Pre-sales
team
4.Project
Manager/
Account
manager
5.Quality
Team
6.Vertical
head
7.Subject
matter
experts.
8.Discipline
team /
Horizontal
team
9.Project
Lead
10.Sub-
contractors
Figure-2: Stakeholder matrix of the external actors in
an ESO
1.Customer
outsourcing
manager
2.Customer
Contract
Manager
3.Consultant
to customer
4.customer
project team
5.Competitors 6.Customer
discipline
engineers
7. Consultant
to ESO
Ideally, there should be a mapping of internal and
external stakeholders on the various dimensions, the
influence diagrams are indicated (but not specific) on
page 94 of [4]. Such a network diagram based on
Proposal
No.
Rating on these aspects of
Proposal
T F S P
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
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
CONCERN/INTEREST
POWER/INFLUENCE
CONCERN/INTEREST
POWER/INFLUENCE
LOW HIGHMEDIUM
MEDIUMHIGH
HIGH
LOW HIGHMEDIUM
LOW
LOW
MEDIUM

6. various dimensions can be addressed via the analytic
network process (ANP, [16]).
The deficiencies in the various proposal dimensions
should be addressed by the stakeholders, refer Table-
8, especially those internal to the ESO milieu. Such an
responsibility assignment can be tracked via a risk
management process (details not listed here).
The results, Table-7, do not have the granularity for
detailed judgments and point to a more detailed
assessment via the use of sub-dimensions for each of
the four dimensions.
A more granular assessment using Expert Choice© [9]
is proposed. In this case the sub-dimensions would be
considered in the average sense for the entire
proposal project. A snapshot of the assessment is
provided in Figure-3. Here the dimension and sub-
dimension assessment are specific to a certain
account team which indicates very high maturity on
both functional and relational dimensions.
The results indicate that the current proposal has an
overall score of 0.381 against the ideal of 0.424.
Decision to bid or not bid would depend on detailed
comparisons with respect to various criteria. A detailed
description of the method is left to future work.
Table-8: Mapping of Uncertainty to Stakeholder
responsibility
Category
Uncertainty
Type
Stakeholder
Responsible
Proposal
dimension
Market
internal Senior Marketing team Political
External
Sales person, Vertical
Head
Social,
Political
Technology
Internal Subject Matter Expert Technical
External Discipline Team Technical
People
Interaction &
Processes
Internal
Project Manager/
Account manager ;
Delivery Team
Social
External
Resource Management
Team
Social
Customer
Relationship &
information
Internal
Account Manager Social,
Political
External
Project Lead/ Project
Manager
Social,
Technical
Figure-3: Sample proposal assessment in AHP
Figure-4: Proposal evaluation matrix
The space of allowable proposals that can be bid is
usually large. Hence a number of proposals may not
get bid. Such a decision can be done using AHP.
Figure-4, highlights the strategy that needs to be
adopted by account teams. As team resources are
constrained, assumed zero-sum game, trade-off
sector-2 (“Can do”) with sector-3 (“Build Capability”).
We now discuss some improvements for the given
work.
The definition and rating scale will need clear definition
for the sub-dimension dependent as well as the sub-
phase of the proposal project. This is shown Table-9
below.
Table-9: Weights for proposal dimension as per phase
of the proposal life-cycle
Sub-Phase of Proposal
Functional Relational
T F S P
Pre-sales activities 2 1 4 3
Conceptualization to RFI/
RFP stage
3 1 2 4
RFQ to the Quotation 4 3 2 1
3. Build
capability
1. Go for it
4. Don't
touch
2. Can do
LOW HIGH
HIGHLOW
INHERENT CAPABILITY
PROJECT
ATTRACTIVENESS

7. The results from the AHP can be converted to
organizational benchmarks. The method is elaborated
in [10].
The results would prescribe a different minimum on
each dimension at different stage and reinforce our
result a minimum overall score for reasonable
success.
The analysis of the proposal or account pipeline can
be considered at three sub-phases: (1) pre-sales
activities, (2) conceptualization activities leading to
RFI/RFP (Response for Information/Proposal) and (3)
the Response for Quotation, the Quotation and
win/loss result. This could lead to, for instance, three
AHP analyses, over various phases of the proposal
with results in the same vein as [13].
VIII. FUTURE WORK
We also suggest a more detailed analysis via use of
sub-dimensions, which is discussed above, at two
more levels:
1. The proposal-delivery life-cycle, i.e., delivery
excellence, has a significant impact on future
proposals. Also, the strength of interactions
between the various levels of both the Customer
and ESO organization (within the network) will
need characterization both on the social and
political dimensions (via Analytic Network
Process, ANP).
2. Other factors, that may have a significant impact
on success and its role can be assessed
separately [10], are: account manager
(competency, performance of account manager),
sales person (effectiveness and performance of
sales activities), priority of the account for the
business unit in the organization, the energy,
maturity and team [2, 6] and organizational
development stage [3] and enthusiasm levels
[12] for a given proposal in the team.
IX. ACKNOWLEDGMENT
The authors would like to thank the following
persons: CI to K.V. Sai Prasad, Tejas Shah and
Vyomkesh Mishra (L&T Technology Services) for
interesting discussions related to the motivation
presented and other account managers for their
validation of the above work, MSP to Prof. P.M.
Deshpande (NICMAR) for the opportunity to attend
PMI Research Conference at IIT-Madras, CI and
MSP to Prof. Tapan Bagchi (Director, NMIMS-
Shirpur) for encouraging us on collaborative work.
Prof. Krishna Moorthy (Dean, L&T Institute of
Project Management) for his continued guidance
and motivation for developing Figure-4 through the
product analogy.
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