Background

The client, a global leader in the construction of fuel-based turnkey power plants, and part of a multinational company group, was faced with huge losses from cost overruns and penalties for late completion of sold projects.

These problems were caused by a combination of rapid growth, inadequate processes and a lack of communication along the entire value chain.

Analysis

The partnership with ManTec started with an analysis of the main workflow process of the business, during which, in cooperation with the client’s staff, a thirty meter length of brown paper was used to capture and communicate the main issues in the value chain.

These issues were later addressed in nine work streams, staffed by key client personnel and supported by ManTec specialists.

Main focus areas

Management

Poor communication and a lack of management structure caused difficulties, especially where process steps interfaced, and roles and responsibilities were not defined with the necessary precision.

During the project those problems were effectively eliminated. Management structures, processes, roles and responsibilities were defined, the required skills requirements were established and a framework for continuous improvement was developed.

Planning

Capacity planning was insufficient. In spite of being a mainly project-based business, virtually no milestones were in place and variance reporting was non-existent. As a result, there were frequent shortages or surplus of capacity in engineering and other key functions.

The project team successfully designed and implemented a process-related capacity and resource planning program that fitted into the existing software environment.

Quality

A new workflow process, which included quality gates, was designed and implemented by the project team. A concept for the standardization and modularization of power plant engineering and construction was also successfully developed.

Sales and Business Development

The process of turning sales leads into signed and attractive contracts was characterized by a lack of rigorous processes and communication. The project team created a comprehensive process, which included definitions of roles and responsibilities and quality standards, to eliminate these weaknesses.

Results

Within five months the project brought to a halt and turned round the negative spiral of poor communication, ill-defined empowerment and silo mentality leading to sub-optimisation.

With the help of ManTec specialists, structured processes were defined and largely implemented within the timeframe of the project, leading to a significant change in culture and attitudes. Planning and follow-up of deliverables as well as monitoring quality are now part of daily work, and the management of projects focuses much more on outcomes and results.

Background

The company, having set a goal to lower its costs by 40M SEK (€4.5M), managed to save 25M SEK on its own. Mantec was then hired to help it achieve the remaining reduction of 15M SEK (€1.7M).

Using techniques such as benchmarking, work studies and high level process mapping, Mantec identified substantial potential savings in purchasing methods and in service/ maintenance productivity.

Implementation

Based on the results of the initial analysis, Mantec and the client jointly started work on a programme of change which included the following subprojects:

• implementation of a new, better controlled purchasing process more closely aligned to market requirements;
• introduction of purchasing groups (decentralised purchasing departments) able to take a holistic view of purchases as well as obtaining the best possible prices;
• development of a handbook for the entire purchasing process, containing routines, templates and guides; and
• development of a management control system to better measure the effect of the work done in purchasing. This enabled management to follow up on negotiating results, and whether the organisation was using the established agreements, invoices etc.

It was important not only to focus on purchasing and the purchasing process, but also to take into account how these products and services were used throughout the organisation. For example, by optimising and basing resources and working methods on actual needs, service/maintenance productivity was also improved.

Result

The key benefit to the client was that the set goal of reducing costs by a further 15M SEK (€1.7M) was attained. The project ROI was 300%. Apart from the direct cost savings, the most significant achievement of the project was to institute behavioral change throughout the organisation:

• purchasing is today a management issue with clear goals and an appropriate reporting system;
• a systematic approach to working with purchasing has also created increased cost awareness within the organisation; and
• supplier groups which take a holistic view have the knowledge about the right price as well as driving an active dialogue with suppliers.

In summary, the overall outcome after working through the project is a more efficient organisation better adapted to the needs of the company.

Background

The company is one of Europe’s leading power corporations and the Swedish branch is one of the three big players in the Swedish energy market.

At one plant, which supplies remote hot water heating for both private and commercial houses, management instituted tough requirements to reduce cost to be more competitive, in spite of very good profitability. Mantec was brought in to help.

Analysis

Because big investments were planned in the plant, a key strategic area was maintenance, both at present and in the near future. Therefore the scope of the project was defined as improving the performance of the local maintenance department and one of the challenges was to clarify the customer–supplier relationship – ie between the maintenance department and the main supplier. This was complicated because the supplier is the outsourced operative part of the former in-house maintenance department, and in fact the supplier is also a part of the same corporation.

Implementation

The client had a very active role in the project, which was mainly driven by two sub-projects:

• customer–supplier relationship; and
• warehouse and spare parts.

Each sub-project team contained a ManTec consultant and a cross-organisational internal group to get a broad base for the development and implementation of the changes, tools and improvements.

Workshops were a closely integrated part of the project and were essential to set the base for the new organisational structure and working procedures.

Results

Some of the main achievements of the project were:

• implementation of a new process from actual reported need for a maintenance action until the closed order, approved invoice and updated history file;
• putting in place a new maintenance organisation with clarified roles and responsibilities;
• instituting an improved meeting structure to support the management operating system;
• setting basic local KPIs as a part of a corporate BSC project;
• clarifying the roles and responsibilities of the warehouse; and
• setting strategy for different types of spare parts.