How eliminating process helps you be more profitable

Dec 18, 2014 6:00:00 AM

When government contracting projects fail, a deep disconnect between business development and project execution may be the reason. Companies may stake their business on doomed contracts—including commitments where they cannot perform well because the work is not within their primary expertise or priced themselves out of a profit. Many government contracting companies we talk to lose money on at least some of their contracts. If you treat your processes as the strategic asset they are and use the right tools to manage them, you can lessen the risk that this happens to you.

A challenging task for all government contractors is estimating and calculating their indirect costs. Doing it incorrectly may leave them on the hook for making up the difference or perhaps losing a contract bid. Sometimes, they may be able to negotiate with their customers so they can increase billing amounts, but that, too, takes extra effort and comes with a cost. Other times, there are various reasons for why contractors cannot execute well once they’ve won a contract. Or they talked themselves and their client into a contract with extremely tight margins that might have been better not to pursue. What may be very common as well is that within the same organization, there could be multiple pricing business processes. What’s particularly upsetting is when a company repeatedly makes the same errors and misjudgments. How best then to learn from these situations and ensure they don’t happen again?

When we learn more about the experience of these companies, process disconnects are involved almost every time. Sometimes the business development teams simply do not know enough about the ins and outs of the construction, manufacturing, or professional services business to provide sustainable quotes. With great enthusiasm, they pursue projects that are doomed to fail or that cannot be executed profitably. In some companies, there is no white-glove check by the most seasoned people in the organization of all details to do with a contract right before a bid is submitted. And, at the end of projects, not everybody makes a consistent practice of reviewing them to understand and document what happened and what might need to change.

In an ideal scenario, capture and proposal management happen in the context of the entire operation, bids are closely vetted by senior government contracting experts, and the transformation of information to project execution is seamless. The cost figures in the bid already foreshadow a realistic project budget, consider actual resource overhead and availabilities, and include profit margins that are not just acceptable to government contracting clients but also make good business sense. From the very beginning of the life of a contract or project, all details are completely documented and transparent. There is no room for miscommunications that end up chipping away at margins. Naturally, your government contracting practice is infused with compliance at every step of every project.

To run your government contracting projects this way, point solutions are not good enough. You need to think about your processes as business-critical assets that you can control and improve. You define the best possible processes for your government contracting businesses, document them, put them into practice, and refine them as your business evolves.

That effort becomes very manageable when you use the right tools to facilitate it. In To-Increase RapidValue for Microsoft Dynamics AX, our business process management (BPM) solution, we provide a comprehensive library of optimized processes for government contracting. It covers the entire project lifecycle, from creating a bid, to winning a contract, to executing projects and delivering goods and services, to post-project wrap-up. We developed these processes together with government contracting experts McGladrey, so they incorporate their experience from many hundreds of projects with government contractors.

As a result of our complete integration, the RapidValue solution works entirely from within Dynamics AX, along with and just as well as our solutions for government contracting, construction, and manufacturing. With To-Increase, you don’t need to run two process models, one for government contracting and another for manufacturing or construction. RapidValue allows you to include all of your business processes and activities, making it easier to achieve continuous improvement. That’s where even leading government contracting software vendors can cause problems by not offering this functionality. We aim to make your life easier. When you use RapidValue, you can design, document, and optimize processes throughout your business, using a centralized resource that is fully integrated with Dynamics AX. RapidValue also makes it easy to provide your employees with solutions and process guidance, so they always know how their contribution figures in a given workflow and how it relates to the entire operation. That means no painful disconnect between business development and project execution. And, with our mobile BPM app, RapidValue INTERACT, you can ensure that your business development team and your project managers are always connected and on the same page.

If this sounds intriguing, please send me a note at mchapman [at] to-increase.com or contact To-Increase.

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About Author
Michele Chapman

Michele Chapman

Product Manager Finance Michele brings her 15+ of experience in government contracting and materials management to To-Increase as a product manager. During her career, she has held positions in supply chain for a government contracting company and for one of the largest providers of supply chain transportation solutions in the U.S. More recently, she was a principal consultant at a recognized software vendor for the government contracting market.
Michele holds a B.A. in French and International Studies from West Virginia University, an M.A. in French from George Mason University, and an M.B.A. and a Certificate in Supply Chain Management from the College of Business at East Carolina University.

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