Alvaro Correia JrSenior Project Manager| AccentureSao Paulo, Sp, Brazil
Usually we conduct projects to create a new capability or to enhance an existing one. Sometimes measures are done to check if the project objectives have been achieved. But it is rare that Project Services is not seen as a cost to reach the outcome, when it could be seen as business partner. Why is that in your opinion? Are the barriers the way projects are linked to business, our mind sets, what else? Do you see value for PMs in this approach?
I saw this example from Rolls-Royce TotalCare program, and I thought if we could find ways to bring the concept to the PM world. RR is paid for the hours airlines are able to fly rather than for repairs. More details in the link.
https://blogs.microsoft.com/transform/2016...dwqzx1faqgtm3pc Saving Changes...
Perhaps I am missing something, but isn't this the difference between Time & Materials contracts and Fixed-price contracts? If you were to use a fixed-price type of contract, the price of the services would/should be aligned with deliverables.
Now if you are saying - what if the deliverables are not aligned with customer/business goals? Then there could be an alignment problem that needs to be addressed. Or, perhaps, this is a new concept and we don't know whether or not the deliverable will satisfy the goal. We now enter the separation between the Project and the Product (I am sure Sergio will chime in here), and I think the partners will have to evaluate on a case by case basis whether they can support a Project based deliverable vs. a Product based deliverable.
For example, the Project can build an eCommerce website, but whether that Product can actually achieve the eCommerce revenue targets is an issue separate from the project. Could the organization that built the eCommerce site agree for payment based on the eCommerce revenue that their customer brings in? Probably not a good idea.
Having said that, I don’t think Rolls-Royce’s situation is unique, because there are some cloud-based software models that are priced by revenue levels of the customer.
Alvaro, is this aligned with what you were looking for? Saving Changes...
Alvaro Correia JrSenior Project Manager| AccentureSao Paulo, Sp, Brazil
Hi Samuel,
Thanks for your reply. Yes you got the point. On your example of the eCommerce website, can´t we think on elements to be included in the project to enable the organization that build the website to become part of the success? Saving Changes...
Yes, we can and should think about the elements to enable success (response time, ease of use, convenience and the list goes on). However, these won't necessarily guarantee success... the eventual success could actually depend on various external factors such as pricing, market-positioning etc. Saving Changes...
Surendar EnduriPMP| Ogilvy PennyWise SolutionsHyderabad, India
Thank you for bringing up this topic and views from the community.
Agree, this may have to be picked up case by case.
Just wanted to touch up some thing relevant here.
Some of the IT development companies have started aligning their project billing models to the customer success. For example, the performing organizations get paid only 30 to 40% of the project cost initially then the performing organization would share the profits from the product or service that is delivered to client on ongoing basis. Saving Changes...
Alvaro Correia JrSenior Project Manager| AccentureSao Paulo, Sp, Brazil
Thanks Samuel and Surendar for sharing your perspectives. Surendar touches on a point that it might need to be case by case. Samuel is right that in many cases there are many other drivers to the desired business outcome that the project has limited or no influence. So you probably has to be selective here. But it could become more common, and I believe customers are demanding this, expecting project organizations to go a step further in helping their business. Saving Changes...
Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
As a consultant I work in this type of modality lot of times. It is working "at risk". You will work for a minimal amount and the hugh once will pay to you if you reach some project objectives. What you have to take into account is clear diffenrentiate between product objectives and project objectives. For example, to accept project objectives like "growth 5% in market share in the current year" is totally wrong. You will growth thanks to the product/service/result the project will create not by the project itself. And somebody has defined the right product/service/result to achieve that. The only thing you will be responsible for is to create the product/service/result as defined. Saving Changes...
Stéphane ParentSelf Employed / Semi-retired| Leader MakerPrince Edward Island, Canada
I'm with Sergio on this as well. The benefits realized by your project deliverables is often beyond your realm of control.
This modality is more prevalent in outsourced operations contracts with service level agreements. Saving Changes...
Alvaro Correia JrSenior Project Manager| AccentureSao Paulo, Sp, Brazil
Thanks Sergio and Stéphane for your inputs. Yes Stephane in outsourced operations the service provider can get more control on the end-to-end process, so it is easier to be close and influence the business results, As you both pointed out, it is not recommended to commit with results that are beyond your control. Saving Changes...
