Project & Procurement Management Benchmark Report

Transcription

1 Project & Procurement Management Benchmark Report Why collaborative sourcing and efficiency of collaboration organically creates business opportunity and how you stack up to your peers.

2 What we discovered Efficiency of collaboration organically creates business opportunity Teams which collaborate and employ collaborative sourcing strategies see significant cost savings per project and can manage projects more efficiently. Collaborative change management and reporting is critical Project teams which collaborate on a central platform are able to manage change better and write significantly fewer change orders per project. Work is more work than you think Employees are more productive when using a system which allows reportable, enforceable business processes. Time is running out Projects are becoming more customized and complex, but turn times are remaining the same, requiring businesses to turn over greater complexity in the same amount of time.

3 Methodology Noosh is a project and procurement platform for business service providers. Our data set represents $12B in transactions from some of the world s largest and most influential brands. We analyze this data to look at industry-wide trends. Our market segments include marketing and print service providers, engineering services, major syndicated media, and enterprise shared services. We ve also surveyed the industry at large to provide industry perceptions of several trends. In this report we share some of the most interesting takeaways we ve found as we combed through the dataset for the years Read on for reports on collaboration, project management, and benchmarks representing top project and procurement management practices.

4 Collaborative Sourcing Collaborative sourcing events lower overall project costs by an average of 20.7%. The act of collaborative sourcing (multiple bidding on one central platform) results in 20.7% average savings, when comparing the lowest estimate versus the average of all estimates. Savings from Collaborative Sourcing Traditionally Sourced Projects Collaboratively Sourced Projects Optimize projects for a true multiple bidding scenario when appropriate to drive down project costs. Final Cost Project Costs Final Cost Final Cost Project 1 Project 2 Project 3

5 Order Value Number of events per project and project s dollar value are positively correlated. Value of orders on highly collaborative projects is higher than those with fewer collaboration events.this implies that as project values increase, more collaboration is necessary to successfully bid, win, and execute projects. Compete for bigger business by leveraging efficient, structured, and reportable collaborations. Average Project Value $25k $20k $15k $10k $5k $0 Correlation between Average Number of Events and Average Project Value* y = x R² = Average Number of Events

6 Savings Optimal savings (with 99.9% confidence interval) is between 4 and 6 estimates per project. Collaborative sourcing has been shown to lower overall project costs, but the average you save increases as you receive more and better estimates. Establish a reliable community of suppliers to support your multiple bidding efforts. Number of Estimates Received Average Percent Savings with 99.9% Confidence Interval* % 15% 20% 25% 30% 35% Average Percent Savings *99.9% Confidence Interval for Average Percent Savings, Based on Number of Estimates Received The meaning of the 99.9% confidence for a particular group of RFEs is that there is 99.9 percent probability that the true mean of the average percent savings for that group is captured within the confidence interval.

7 Change Orders Users manage change better than industry to reduce costs, resulting in substantially fewer change orders. 32.6% of all professionals surveyed believe that change orders are a commonplace, if not necessary, part of the project and procurement process. Noosh users manage change at a much more efficient rate, some 94.7% of all order values remain unchanged or become less expensive throughout the management cycle, implying change orders that increase costs are written for only about 5.3% of all orders. Change Management by Industry Perception 32.6% Change Management by Noosh Users 5.3% Percent respondents who believe change orders happen nearly all the time or very frequently. Percent of orders with change orders that increase costs Utilize a central repository for all project-related communications and information to reduce error and missed information.

8 Project Reports & Their Importance Surveyed professionals find project metrics to be critical to business operations, but are unable to adequately report standard processes. Metric Order (project) turn time Importance of Report to Business Extremely Important, 67.4% of the time Ability to Report Only 39.5% of respondents rate their company s ability as Extremely Well Specification quality Extremely Important, 65.1% of the time Only 30.2% of respondents rate their company s ability as Extremely Well Quote estimate and response time by customer Extremely Important, 60.4% of the time Only 30.2% of respondents rate their company s ability as Extremely Well

9 Average Spend Top 20% of Noosh users are able to manage over $7.9M or more on average per year. 25% 20% Average User Spend Management Average Noosh users are able to manage an average $1.9M per year. Optimize your buying and procurement processes and enforce with reporting to ensure optimal employee productivity. Percent of Users 15% 10% 5% Average Noosh User [ Top 20% [ 0% $100K $200K $300K $500K $700K $1M $1.3M $1.5M $1.7M $2M $3M $5M $7M $10M More Spend Managed per User per Year

10 Employee Productivity Top 20% of users on average manage 2009 or more line items per year, 3.6x the average. 44.3% of surveyed professionals say they (or their employees) manage 250 line items or less per year, 30% of which say they manage less than 175 items per year. Average Noosh users manage 553 line items per year, and best in class Noosh users manage 3.6x the overall system average. Set and enforce structured collaboration processes to greatly increase employee productivity. *This correlation is representative of 2013

11 Project Collaboration An average project team has 6.9 members and collaborates with 4.1 companies per project. Research shows that more collaboration is required to execute higher value projects, and average projects require more collaboration than one might think. Use a central location for all project-related communication, files, and specifications to maintain a reportable single system of record to prevent costly rework and mistakes.

12 Project Events Every project has an average of 33 fully-reportable collaborative events. Collaborative events, such as a file upload, request for quote, receiving an estimate, or sharing spec details are common to completing projects, but they are often locked inside and spreadsheets. This bottleneck prevents important reporting to gain critical business insights as well as accurate expectation management for clients and executives. Optimize your projects for structured collaboration with fully-reportable collaborative events to drive enforceable project and procurement processes.

13 Project Complexity Projects have become 48% more complex in the last 4 years Deliverables per Project Total deliverables per project have grown by 48% since 2010, but turn times have remained steady, with 60% of projects being completed in the first 29 days. This implies that businesses must execute increasingly complex projects without increasing turn times to compete. Understand how to reduce your turn times by discovering bottlenecks in processes through reporting. Number of Items Year

14 Project Practices Total quantities per line item are dropping, and percent of small orders is increasing. Custom orders, small runs, and targeted marketing campaigns are changing the project and procurement management process -- 51% of all orders have fewer than 1000 pieces. Large order quantities remain steady, but mid-size orders are rapidly shrinking. Optimize your processes to handle small batch orders and custom targeted work more efficiently. % of all Orders 55% 50% 45% 40% 35% 30% 25% 20% Percent of Order Quantity Size per Year 42% 35% Small Quantity Orders Large Quantity Orders Mid-Quantity Orders 22% 44% 34% 22% Year 46% 31% 23% 50% 28% 22%

15 Estimate Turn Times 31.5% of users receive first estimates within 1 hour of submitting an RFE. Time to First Estimate Collaboratively sourcing RFEs on the Noosh platform allows 31.5% of users to have a first estimate in-hand within 1 hour, and 50.3% of users see a first estimate within 3 hours. 17.3% 31.5% Estimate <1 hour Estimate 1-3 hours Leverage smart technology choices to create continuous business value for your customers. 28.1% 23.2% Estimate 3 hours - 1 day Other

16 Summary of Benchmarks <1 hour - RFE to first estimate 31% of the time 5.3% - projects with change orders which increased project costs 20.7% - average savings on collaboratively sourced projects average number of line items top 20% of Noosh users manage per year $7.9M - amount of average yearly spend managed by top 20% of Noosh users