Data science has emerged as a disruptive force in engineering and construction. Across the design-build lifecycle, firms are using predictive data modeling, real-time analytics, and even built-in sensors to identify business patterns and anticipate pitfalls. The Balance Small Business documents some great examples here.
Many mid-sized to smaller firms just don’t have the resources or rationale to justify an investment in big data, though. Because they are always buried in current contracts and chasing the next one, there’s usually a rush to close out completed projects without a formal review. Data-driven introspection is a rare commodity!
Even without a PhD in data analytics, there are still steps your firm can take to boost strategic planning using historical data.
First, a disclaimer: it is very difficult, if not impossible to forecast revenue from past results. Just because you did $5 million with one funding source this year, next year you might only garner $200,000. For contracts that run five, ten, fifteen years, an annual review will, by definition, be short-sighted.
Also, data can be deceiving – just because a contract is written for $2.1 million, it doesn’t mean you will get any or all of that revenue in the bank. Tracking historical data on a more granular level allows you to be more proactive, especially as you near upper limits on open-ended contracts. Specifically, if you’re regularly analyzing revenue by funding source, you will be better able to:
1) focus business development efforts
The BD team does not typically get in the weeds of analyzing contract deliverables against forecast, nor should they. But balancing real-time performance with a longer view can help you prepare for the ebb and flow of the sales process by identifying higher potential clients and teaming partners. These efforts are particularly helpful for seller-doers who are balancing current obligations while building future revenue streams.
2) keep your best people busy
Historical revenue reviews can identify downward trends that could put you in jeopardy with labor forecasting. If your best people aren’t fully utilized, you could stand to lose them during a slowdown.
Tips for Implementation
They say that those who fail to learn from their mistakes are doomed to repeat them. That was certainly the case with Beauvais Cathedral in Medieval Europe. It collapsed and was rebuilt multiple times over centuries due to poorly designed flying buttresses, so that “…the world’s most ambitious gothic edifice remains a masterpiece of beauty but a failure of function.”
Similarly, danger lurks for project managers who do not keep a consistent and systematic record of contract documentation. Relying on institutional knowledge is dangerous. People come and go, and you don’t want to find yourself searching email archives and sticky notes on paper files for critical project information.
Document, Document, Document
That’s why I recommend making a contract completion checklist and storing it in your project management system of record. That might include documentation on:
Requirements to close out the contract
Final invoice structure guidelines
Records of project waivers
Scanned copies of final paperwork submissions
Lessons learned from both project managers and staff
Client feedback and concerns
If you have a consistent process for tracking metrics and details that might be needed down the road, you’ll avoid unpleasant surprises—like realizing you never invoiced for a project that may have only lasted three days. An aggregated review of contract details on a regular or milestone-based frequency will also help you spot trends in your portfolio before it’s too late to do anything about them.
The AEC industry is known for being extremely unpredictable, but taking the time to review historical data in conjunction with real-time project updates will pay off with more confident business development and operational efforts.
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