Project and Portfolio Optimization for a Specialty Chemicals Manufacturer
Specialty chemicals manufacturer · Microsoft Project Server · Two-phase engagement
Overview
A specialty chemicals manufacturer asked EPMA to find out why its project portfolio was running late. EPMA analysed project performance across the division’s active portfolio first, using the organization’s own project data, and built the business case before any delivery work began. The analysis found 36 active projects worked by around 80 people, roughly $100 million of active portfolio spend, and an average delay of six to nine months. EPMA then delivered two phases: a pilot across four major projects, followed by expansion across the wider R&D portfolio, with Microsoft Project Server implemented to carry the project data and the reporting built on it. Performance was tracked against the business case throughout.
$4.9M
in accelerated gross margin and $3.3M in cost savings in year one, across the two phases delivered
The key issues
- 36 active projects were being worked by an estimated 80 personnel, against roughly $100 million of active portfolio spend.
- Those projects were running an average of six to nine months late, with 7.5 months the mean.
- The delays cost around $4 million in team extensions, as project teams stayed on projects longer than planned.
- Late completion pushed back plant start-ups and the revenue behind them, putting roughly $6 million of gross margin outside its planned year.
- Multi-month delays were producing cost overruns through risk realization and scope creep. A conservative 5% overrun across the portfolio accounted for at least $5 million.
- Project data existed but was not being used for management oversight, so delay and overrun surfaced after the fact rather than while they could still be acted on.
Our solutions
- A project performance analysis of the active portfolio first, built on the organization’s own project data, before any recommendation was made.
- Phase one. A project management pilot across four major projects, upskilling project managers on delivery, scope management and risk.
- Phase two. The same enhancements expanded across the wider R&D portfolio.
- Microsoft Project Server implemented to hold the project data and produce reporting the business could manage from.
- Management oversight rebuilt on project data and reporting rather than on status narrative, so portfolio visibility could support prioritization and resource decisions.
- The business case built phase by phase, with each phase’s return modeled and agreed before that phase was approved.
Value added
- A 34% improvement in on-time delivery, worth $1.4 million in avoided team extension costs across the portfolio.
- $2.3 million of gross margin pulled forward across the portfolio by reducing delay.
- A 25% reduction in cost overruns, worth $760,000 across the portfolio on the pilot’s basis.
- Portfolio visibility sufficient to support a 4% increase in project throughput, worth a further $2.4 million of accelerated gross margin against a portfolio planned to generate $57.5 million of gross margin in its first full year.
- Across the two phases delivered, $4.9 million in accelerated gross margin and $3.3 million in cost savings in year one.
- Payback measured in months rather than years.
EPMA built the business case before any delivery work began and tracked delivery against it. The figures above are the tracked outcomes, which came in 16% below the modeled case.
