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Improving Operational Efficiency Requires More Than Just Numbers

5 min read

In far too many companies, efforts to measure the ROI of projects fall short. Wellingtone’s 2019 annual survey estimates that 56% do not have access to real-time project KPIs and 43% spending 1 or more days manually collating project reports.

Organizations have come to a point where they are overflowing with data, scattered all over the place, not aligned, and not reliable because of lacking connection to how things progress in real time.

In this mess, even the most stolid and watchful operation manager may get lost.

 

Challenges in measuring operational efficiency

While you may collect data for the best of reasons and understand the importance of doing so, it often gets broken or irrelevant. More specifically, we’ve noticed that leaders trying to quantify the value of their investments often let data slide when teams start working on tasks and fail to turn it into actionable real-time insights. Despite the intentions to keep data clean by tidying it up in a spreadsheet, they eventually lose the battle with an obsolete and ineffective process. 

Lacking visibility and transparency into how processes evolve, operation managers end up down the rabbit hole gathering bits and pieces of data and looking where to optimize. They can’t discern how it relates to roles or specific milestones. For all their trouble, they rarely emerge with numbers they can trust.

At the same time, the future belongs to companies that lead the competition and champion in operational efficiency and innovation as they go. How do they actually know if their projects are financially viable, operations cost-effective, and businesses profitable right now, at this point? How do they measure that? Let’s investigate.

Removing barriers in structuring data

Dodgy data across project management, operations management, and finance will only grow if you continue using that color-coded spreadsheet as a single source of truth. It’s often a hassle that slows you and your team down in a way that requires unnecessary administrative work of filling in a spreadsheet that is only used for payroll. Using a spreadsheet for resource management, tracking key operational efficiency metrics, or time registrations, for example, won’t get your company very far, simply because it isn’t cut out for setting this data in motion.

 how to improve operational efficiency


Another difficult aspect of using spreadsheets to solve management problems is that separate spreadsheets are not always kept up-to-date. Not on purpose, but because people forget about them, or simply just don’t have the time to fill them in. Often you don’t realize that the changes you make might influence the work of a handful of others.

Think for a moment, can spreadsheets answer questions like ‘what’s the current status of the project?’ ‘what’s the operating margin?’ or ‘how profitable are the projects? They can’t, because there are only a few things a spreadsheet can automate. Thus, when a spreadsheet becomes your barrier to getting things done or moving to the heart of the problem quickly, you should think of another way to do work through which your personal KPIs as an operations director could be improved.

Automating work-intensive processes

Logically, a more centralized approach, in the sense that your data, communication, and assets are collected and managed from the same interface across the organization, is needed. There are a bunch of tools that solve this problem very well. They learned how to keep everything in one system, but still weren’t able to connect various data points, provide an operational efficiency formula, and give you informed answers without the need to comb through every detail again in a back-and-forth process. 

Even when you’ve managed to gather the numbers, you can’t track how they relate to the actual operation. That is, each operation turns up to be a black box: inputs go in, outputs come out, and little analytical attention is paid to the inner workings of the transformation process. 

A logical conclusion is that the numbers you actually need to improve operational efficiency are:

  1. real-time
  2. self-winding
  3. traceable

There’s one intelligent platform that puts data to good use and does the math for you in exactly this way – Forecast. Forecast’s powerful automation tools not only replace administrative time-consuming work we’ll explain further, but also provide you with actionable real-time data through and through. What tells Forecast apart from other solutions is that it’s built in a way that numbers never lose the reference to roles responsible for getting work done. Each operation is able to be followed on its course or to its origin. Numbers can be demystified. 

Now the question remains – how can I get those numbers? Let’s focus on what kind of data literacy you need to ensure this level of confidence.

Re-learning how to do things

We know that it takes time to become comfortable with data and re-learn how to do things. However, this is what eventually helps to unfreeze your organization and increase operational efficiency ratio. Fortunately, there’s not much you need to change. Regardless of the system you use, there are just a few things you need in order to produce numbers you can trust:

  1. Tasks are estimated.
  2. Rate cards are filled with correct information.
  3. The internal hourly cost is specified for each team member.
  4. Now, when the above is covered, the only thing left is to make sure your team registers time as they go, preferably on the task level. 

If those four rules are followed in each project your run, the data is set in motion to fill in various reports and operational efficiency metrics. Feeding this data into systems like Forecast, you ensure high fidelity forecasting of cost, revenue, profit, and operating margin of the project or the company as a whole.

Estimating each task is a time-consuming process, you will say. Right you are, we’ve been there. That’s why we’ve automated it. Scoping out a project with a list of milestones and tasks, you can hit the Auto Schedule button and our AI-powered algorithms will do the dirty work for you. Auto Schedule turns a list of tasks into a solid project plan with estimations, resources assigned, and deadlines. Not only you’ll be able to predict the end date for the project with resources available. Auto Schedule will give project managers the opportunity to create profitable project plans in an instant by learning from your team's skills and competencies. 

Because Auto Schedule trains on your actual results from past projects, it is immune to the human tendency to underestimate timelines and prevents costly overruns. With deadlines perfectly tailored to individuals, Forecast will present you with the realistic picture of what’s feasible with your team.

When you embrace change and revisit the way you organize and track operations, on the other hand, you come to see trends in the projects that help you capture opportunities for your organization to grow. Only after seeing what projects or processes are earning or burning money, and being able to discern the differences by disassembling the numbers, can you finally start making decisions supported by arguments.

Connecting each number with responsible roles, you see where optimization is key and get the idea of how resources can be reallocated to drive more profit to the organization and improve operational efficiency.

 

improving operational efficiency

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