Project planning and control

Project operations are engaged in complex, often large scale, activities with a defined beginning and end.  The methods applied by engineers and planners who worked in complex defence and construction projects have been applied to projects as diverse as new product launches.  Large scale undertakings consume a relatively large amount of resources, take a long time to complete and involve interactions between different parts of an organization.  To plan and control a project, a company needs to formulate a model which describes the project’s complexity and project it forward in time to ensure that the project will achieve this.

The elements of a project

• A definable end result, output, or product, which is defined in terms of the cost, the quality and timing of the output from the project activities.
• Many different tasks are required to be completed to achieve a project’s objectives.  The relationship between all these tasks can be complex, especially when the number of separate tasks in the project is large. 
• A project is usually a ‘one-off”, not a repetitive undertaking.
• All projects are planned before they are executed and carry an element of risk.
• Projects have a defined beginning and end, once the temporary concerntration of resources have contributed to the project objectives, these resources are redeployed.
• The resource needs for a project change during the course of its life cycle.

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What is your operation’s contribution to the organization’s goals?

The ability of any operation to play a strategic role within the organization can be judged by considering the organizational aims or aspirations of the operations functions.

A Four-Stage Model was developed, by Professors Hayes and Wheelwright of Harvard University, with later contributions from Professor Chase of the University of California, to evaluate the competitive role and contributions of the operations function of any company.  Particularly, black owned companies in South Africa that are in dire need to breach the private sector.  This model traces the progression of the operations function, of  from a largely negative role of Stage 1 operations to the dynamic element of competitive strategy in Stage 4 operations.

In a Stage 1 organization the operation is considered as a “necessary evil” as other functions regard it as holding them back from competing effectively.  The operations function becomes reactive and inward looking and contributes minimally towards competitive success.  The rest of the organization would inevitably not look to operations as the source of any originality, flair or competitive drive.  The operation becomes “internally neutral”, a position it attempts to achieve not by any positive aspirations but by avoiding the bigger mistakes.

Breaking out of Stage 1 begins by comparing itself with similar companies or organizations.  During this stage of progression, the organization may not yet be particularly creative in the way it manages its operations but is attempting to be appropriate, by adopting best practice from its competitors.  Using the best ideas and norms of performance from the rest of its industry is trying to be externally neutral.

Stage 3 operations aspire to be clearly the very best in the market.  Organizations try to achieve this by understanding the company’s competitive or strategic goals and then organize and develop the operation’s resources to excel in the sector that the company needs to compete effectively.  Operation managers will now develop appropriate resources and assuming the role of implementers of strategy.  The operation will soon become internally supportive by providing a credible operations strategy.

A Stage 4 company views the operations function as providing the foundation for its competitive success by focusing on all long term goals.  Likely changes in markets and supply will be forecast and operations-based strategies will be developed to provide the company with the performance required to compete in future market conditions.  It becomes central to strategy making.  Stage 4 operations are creative and proactive and are likely to organize their resources in ways which are innovative and capable of adaptation as markets change.  After all, market leaders tend to be one step ahead of competitors in the way they create products and services and organize their operations.

This Four-Stage Model assesses the performance of the operation compared to the function’s latent aspirations.  As companies move from Stage 1 to Stage 4 there is a progressive shift from its contribution being negative  through to a paradigm shift of strategic contributions.

The roles of the operations function

Any part of your organization will have their own role to play in achieving its success.  At the simplest level the role of each of these functions is reflected in its name.  In an era when operations are continually being outsource, the operations function will need to justify its continued existence within the business.

One role of the operation is to support business strategy.  It must develop its resources to provide the capabilities which are needed to allow the organization to achieve its strategic goals.  All important elements of the operation, its technology, staff and its systems and procedures, must be appropriate for the company’s competitive strategy.  The better the operation is at maintaining its infrastructure, the more support it is giving to the company’s strategy.  A different business strategy would require the operations function to adopt different objectives.

Companies continue to formulate some kind of strategy during its existence but it is the operation which puts it into practice.  Strategies are by no means tangible and all you can see is how the operation behaves in practice.  In essence, the most original and brilliant strategy can be rendered totally ineffective by an inept operations function.

Another role of the operations part of the business is to drive strategy by giving it a long-term competitive edge.  Different functions within the business have different effects on a company’s ability to prosper.  For example, if the finance function does not control cash flow accurately, the business could run out of cash and all business activity would soon cease or have a serious short term effect on business.  Poor marketing management will hamper the company in the medium term.  No amount of efficient financial and marketing management can compensate for poor operations performance though.  Sloppy service, slow delivery, broken promises, too little choice of services or an operations cost base which is too high will prove detrimental to company long term goals.  Any business which makes its services better, faster, on time, in greater variety and less expensively than its competition has the best long term advantage any company could desire.  All the things which promote long term success stems directly or indirectly from the operations function.  In effect, this function becomes the custodian of the organizaton’s competitiveness.  It ultimate role is to do things better and deliver services better than similar operations.

In conclusion, operations must support strategy by developing appropriate objectives and policies for the resources its manages, make strategy happen by translating strategic decisions into operational reality and provide the means to achieve competitive advantage.

The responsibilities of operations managers

Operations managers are responsible for all activities in the organization which contribute to the effective production of a service.

The responsibility of operations management also explores the possible consequences of the actions of the other functions and their impact on the operation.  This becomes an indirect responsibility of the operations manager, namely, to inform other functions of opportunities and constraints provided by the operation’s capabilities.  They will need to discuss with other functions how both operations’ plans and their own plans might be modified for the benefit of both functions.  Other functions will subsequently be encouraged to suggest ways in which the operations function can improve its service to the rest of the organization.

This approach of mutual responsibility for other functions’ activities seem somewhat idealistic underlying what should be good practice in any organization.  However, internal customer-internal supplier relations yield huge benefits in breaking down some of the traditional organizational barriers.

Regarding the direct responsibilities of operations management, the exact nature of these responsibilities depend on the way the organization has chosen its operation function.

When the operations management team attempts to understand what it is trying to achieve two sets of  decisions are involved.  The first is to develop a clear vision of what role the operation is to play in the organization illustrating the operation’s contribution to the organization achieving its long-term goals.Then determine whether these goals have any implications for the organization’s performance objectives.  These performance objectives include the quality of the service, the speed with which they are delivered to the customers, the dependability with which the operation keeps its delivery promises, the flexibility of the operation to change what it does and the cost of producing the service.

Operations management involves hundreds of minute-by-minute decisions throughout the day as well as week.  It becomes imperative for operations managers to have a set of general principles which can guide decision making towards the organization’s longer-term goals called an operations strategy.  This involves placing operations strategy in the general strategy hierarchy of the organization, connecting functional and business strategies together.  Operations performance objectives will need to be prioritized to positively affect customer needs and competitor behaviour.

The design of the service is crucial to an area which is always under the direct responsibility of the operations function which is the transformation process itself.  This process design means designing the whole network of operations which provide inputs to the operations function and deliver its output to customers.

In order for design activities to work effectively they need to be planned and controlled.  This involves the deciding of what the operation’s resources should be doing, then ensuring that they are really doing it.

The strategy has been formulated, the services and processes designed and the work is being planned and controlled on an ongoing basis. The continuing responsibility of the operations manager is to improve the performance of this operation.  Failure to improve at least as fast as competitors or at the rate of the customers’ rising expectations is to allow the operations function to fall short of organization expectations.  Or simply making operations better is stopping them from going wrong in the first place.

The elements of job design

Job design defines the way in which people go about their working lives and positions their expectations of what is required of them.  Perceptions will also be influenced as to how they contribute to the organization’s goals and vision.  Interactions with colleagues will be governed and channeled and formalizing the flow of communication between different parts of the operation.  It helps to develop the culture of the organization: its shared values; beliefs and assumptions and should be viewed as the central aspect of the design of any transformation process.

Delivering a service on a continuous basis involves a whole range of different tasks which need to be divided between all role players in the operation.  The different task allocations will depend on your job design approach.  One operation might include a repetitive task to encourage simplicity and efficiency.  Or allocate a wide variety of tasks to each staff member to reduce monotony.

Sometimes the sequence of tasks is dictated by the design of the service or the sequence is determined by the desire to avoid mistakes. A standardized sequence of tasks is designed largely to prevent errors in the process.

Some jobs can be performed effectively in more than one place.  However, different locations could also mean different task allocations.

Instead of allocating a well defined set of tasks to each person in the operation, a larger set of tasks are allocated to a group of people.  This group might choose, or be guided to, a flexible task-sharing, or a task-rotation, pattern of working.  The success of this group depends on its size and its interactions with other groups and individuals.

Very few jobs do not involve interaction with tools, equipment, machines or facilities.  Inappropriate positioning of the hardware elements could result in an ineffective interface even though the task is well defined.

The conditions under which jobs are performed could have a significant impact on personnel’s effectiveness, comfort and safety and not the details of the tasks themselves.  Typical decisions include determining lighting intensity, noise control or air quality.

There is a difference between allocating tasks and encouraging autonomy depending on what the job implies.  Allocating the responsibility for the effectiveness implies that the staff can also modify the way a task is performed.

The decisions in the elements of job design have implications for the skills and capabilities which staff will need to perform their jobs effectively.  The skills necessary might include simple manual skills, monitoring and measurement skills, scheduling skills or even problem-solving skills for improving the job.

Debt collection agencies versus Lawyers

Debt collectors get paid when they collect money for the client and only when they collect.  They will usually work hard in negotiating with the debtor and attempt to reach a settlement before resorting to any legal action.  Agencies work fast and phone at odd hours and will try anything legal to collect the outstanding amount.  A substantial amount of attention will be spent on whether it is possible to collect the debt and in certain cases determine whether the debtor has any available assets, if necessary.  Communication remains as simple as possible in order for the debtor to understand all aspects of the collection process.  If a lawyer is appointed, you will need to pay for the legal service, as well as paying a commission to the debt collection agency hired.  Agencies can be extremely effective against “professional debtors” and missing persons can be traced as well.  Furthermore, there is a keen interest in collecting debt and in all processes related to it.

Lawyers, on the other hand, get paid as they go, usually in advance.  This is a paid service irrespective of the results.  Lawyers get stuck right into the legal process with minimal negotiations, if any, and may work fast, but for some reason rarely give that impression.  The only pressure used on the debtor is to have the matter pursued in the courts and their efforts might appear sluggish.  No attempt will be made to establish whether the debtor has any other assets to settle the debt.  All the processes will also be explained using jargon or not explained at all.  Yet they are not quite effective against “professional debtors” as locating debtors is not their business.  There is generally no interest in the debt collection process at all.

Many organizations would opt for a debt collection service initially depending on how unemotional or selective you want this process to be.  However, lawyers are usually used as a “shock tactic” when they are asked to send the debtor a letter of demand.  The idea would be to startle the debtor into paying.  This sometimes works.

During the initial communication, the lawyer will not insist on knowing what the matter is about and this letter is not free.  Ensure that you know how much it is going to cost and weigh that against the size of the debt.  Also consider the psychology of the debtor.  For example: Is he used to receiving letters like this?  Will he just shrug?

Once this technique is used regularly a bulk rate will probably be introduced.  However, the success rate of these lawyer’s letters are not too high and further legal action would be required incurring more costs.

Your approach to your outstanding debt is hugely dependant on the goals and resources of the organization as well as the size of the debt to be collected.  This ultimately means that there would be incidents when you should initially approach a legal solution but if long term feasibility becomes a primary objective debt collection would yield more benefits.

Selecting the right debt collection agency

To select a service provider you need to define what you want the agency to achieve, be aware of how you are going to assess the response you get to your approach and be clear how you are going to manage the relationship with them.  You need to be sure that there are organizations that are both interested and capable of developing a strategic relationship with your business.

Selection begins once the initial goals are defined and the planning is under way.  It ends when the contract is signed and the transition from the current regime to the supplier begins.

During the selection process the specification of the debt collection service should be developed with a quantified baseline, growth plans and trends.  The contract management structures should be outlined and candidates should be identified to fill contract management roles.  The evaluation process and framework and devising evaluation criteria should be established at this stage as well.  Once the organization decides to get the right service provider you could allow that company to set the baseline.  However, if you don’t have a baseline you will never know whether you are achieving benefits or not.

Once all the objectives have been set, you will have to define how you will work with the service provider.  It is useful to start thinking about this relationship while producing the specification and developing the baseline.  You should not look for characteristics that you like but also whether they have the coverage you need: geographic spread, technical ability and good processes.  Past history with good site references and valid experience could also prove helpful but ensure that you can define what you want.

Why do organizations outsource?

Organizations have carried out a wide range of diverse and frequently non-core activities in-house before the modern era of outsourcing.  There was a perceived benefit to running them in-house, however, these activities were driven by poor supplier management and bargaining or lack of real competition in service provision.  These non-core activities came as baggage after an acquisition or merger and the opportunity was not taken after a thorough viability study.  Pure size of the organization was a goal regardless of the actual nature of the operations.  French and Japanese banks were classic examples of this where the only measure used was asset size and any operation that increased this was brought into the organization.  Traditionally, a vertical integration was pursued as manufacturers sought to control the value chain, for example, to ensure the supply of a rare commodity.  This resulted in divisional heads building empires without due regard to their true corporate goals and vision.

            Changing markets and increasing regulation in many operational areas, such as debt collection, are now forcing a fundamental re-assessment of these activities.  This has led to an increasing shift back to core operations and activities often leading to further shrinkage of the value chain directly under the organization’s control.

            The most important reasons why companies outsource are thus as follows:

• Reduce and control operating costs
• Improve company focus
• Gain access to world-class capabilities
• Free up internal resources for other purposes
• Obtain resources not available internally
• Accelerate re-engineering benefits
• Deal with a function that is difficult to manage or out of control
• Make capital funds available
• Share risks
• Obtain a cash infusion

“Leveraged benefits” will also accompany the implementation of outsourcing that are not usually expected such as:

·        Acting as a catalyst for change by highlighting the need for improvements within the organization

·        Challenging, aiding and supporting internal initiatives such as IT implementations, process modeling and business process re-engineering

·        Initiating cultural change, especially in the South African context, by educating people about creative service delivery options

·        Stimulating critical business analysis as business processes and their costs need to be documented

·        Focusing on the current cost of services when outsourcing becomes a reality

·        Where it works well, introducing outsourcing to other areas of the organization

·        Invigorating everyday business practices by converting sluggish functional areas into dynamic, successful ones and stimulating internal competition and price.

·        Implementing BEE initiatives by outsourcing to the unexplored market

Benefits of outsourcing your debt collection

Most companies do not have the resources or the experience in recovering outstanding debt and internal programmes usually produce unsatisfactory results due to its back office status.  Outsourcing entails low fixed fees and a high success rate allowing the business to concerntrate on their core business operations.  Besides experiencing peace of mind that your debt is being handled and collected effectively and professionally an immediate cash flow injection will occur.

Outsourcing delivers highly visible and fairly dramatic changes such as reduced costs, reduced staffing levels, surplus management time and inflow of cash from asset sales, surplus accommodation disposal or any other means that has a stimulating effect on the business.  Organizations also outsource to maintain competitiveness.

A professional accounts receivable collection company is a team of professionals, trained to be courteous and efficient and organized specifically around a proven collection process.  This results in more calls made courteously and in a timely manner.  The process of outsourcing is usually seamless as your customers will not realize you have hired someone from outside to handle the collection process.  Calls will be made and answered in the client’s name and all communication will carry their brand identity.  A good outsourcing company will collect receivables by using skillful collection processes and techniques.  They will understand a particular receivable and be well equipped to answer customer’s needs.  Regular reports on the status of accounts enables the client to make more strategic decisions.

In essence, the outsourcing company will provide a collection service effectively, efficiently, without disrupting customer satisfaction and without the addition of extra staff, added office space or time to manage them or the collection process.

Executives view outsourcing as a means to reshape their corporation, to move away from the vertically integrated organizations of the past and create more flexible, focused organizations that rely on outsourcing to enhance their core abilities and optimize relationships with their customers.

In fact, outsourcing could have the same kind of importance as mergers and acquisitions in creating the competitive organizations of tomorrow.  A definite trend exist clearly showing outsourcing relationships to be increasingly collaborative.  Many of these relationships evolve into alliances and joint ventures accelerated by new organizational models being developed by the growth of e-business where collaboration with different partners in different ways is a competitive necessity.

An organisation’s ability to create and sustain these relationships will be essential to its success in the twenty-first century.