DEMISTIFIYNG THE BERMUDA TRIANGLE OF PROJECT MARGINS
Engineering projects, ranging from infrastructure development to industrial construction, are complex endeavors involving meticulous planning, precise execution, and a multitude of interconnected tasks. When these projects are initiated, companies typically allocate a certain percentage of the project cost as a margin or profit buffer. However, as the project nears completion, this margin often dissipates, leaving companies with narrower profit margins or, in some cases, even losses.
BUT, THERE IS A WAY OUT!
Business Savvy Engineers provide significant added value in Lump Sum Turnkey (LSTK) and Reimbursable Projects - they combine technical expertise with business acumen, resulting in several benefits for both the project, the client, and the executing organization.
BRIDGE THE GAP: Firstly, Business Savvy Engineers have a deep understanding of technical aspects and can bridge the gap between technology and business goals. They comprehend the project's technical requirements and translate them into tangible business outcomes. This aids in optimizing the design and selecting the appropriate technologies.
COST EFFICIENCY: Furthermore, Business Savvy Engineers can identify and capitalize on cost-saving/optimization opportunities throughout the project lifecycle. They can propose alternative, cost-efficient solutions, thereby staying within budget and enhancing the project's profitability.
CASH-FLOW: Another area where Business Savvy Engineers prove invaluable is in managing cash-flow. They recognize the importance of cash-flow and understand how it impacts the project’s finances and the organization as a whole. By implementing actions to improve the cash-flow, they will significantly enhance the DS/RO (Days Sales/Receivables Outstanding) and contribute to the financial success of the project and the organization.
RISK MANAGEMENT: Risk management is another area where they add value. They grasp not only the technical risks but also the business and operational risks that may arise. By conducting risk analyses and suggesting proactive measures, they help minimize unexpected costs and delays.
SEIZE OPPORTUNITIES: In addition to addressing risks, Business Savvy Engineers can identify and seize opportunities - proposing innovative solutions, integrate scalability into the project design, address sustainability aspects, and capitalize on market opportunities. This leads to increased efficiency, competitive advantage, and improved profitability.
COMMUNICATION: Moreover, they are proficient in effectively communicating with stakeholders (such as client, company, and suppliers) and understanding their needs. This facilitates building strong relationships and aligning the technical & commercial aspects of the project with stakeholders' expectations.
ENGINEER’S SKILLS: Business savviness expands the engineer’s skill set, increasing business awareness, increased engagement, and nurturing their potential as future leaders. This professional growth opens doors to new opportunities and career advancement within the engineering field.
