What is a Project Based Business and how is it different?
Most businesses can be categorised by the type of goods or services they provide to their customers or by the industry sector which they relate to.
Project based businesses manage their primary business activities through projects.
They are sometimes called Project-Centric or Project-Driven businesses. These companies operate in industries such as Engineering, Architecture, Facilities and Construction. They can include Engineered to Order (ETO) Manufacturing, and Professional Services.
Project Businesses span many traditional industries but they have the same fundamental business practice. They deliver goods and services via projects, for their customers. They are driven by projects.
If we consider projects as a type of business model, we can compare it to other industry sectors, such as manufacturing, retail or distribution.
The Retail Business is about reselling goods to its customers. It doesn’t matter what goods they sell be it clothes, cars, hardware or food. Whatever it is, if you sell it to the public, you are a Retail Business (e.g. Primark).
The Manufacturing Business is about producing products and selling those products to a distributor or retailer (e.g. Greencore). It doesn’t matter what products you make, be it mobile phones, beds or furniture. Whatever it is, if you manufacture it you are a Manufacturing Business.
A Project Business is the same. It is about running projects as your business. It doesn’t matter what the end product or service is. It could be roads, software, wind farms, engineering and architectural designs, electrical and mechanical installations, water conservation upgrades or flood relief schemes. Whatever it is, if you produce it by running and delivering projects to your customer, then you are a Project Based Business.
Project businesses are becoming a significant portion of all businesses worldwide. About 20-25% of businesses worldwide are Project Businesses. This is significant, and comparable to the other sectors such as Retail, Education and Distribution.
One of the reasons for this trend is the increasing use of Project Management as a means to assist businesses become more efficient and realise an increase in their ROI.
Although we can compare Project Businesses to Retail, Manufacturing or Education there are some major characteristics unique to Project Businesses that make them significantly different from the more traditional industries and highlight its complexity.
Projects are temporary and unique to each customer. In contrast, Manufacturing, Retail and Hospitality companies produce or sell the same goods repeatedly. This consistency allows these companies to take advantage of standardised processes and KPIs, automation, and economies of scale much more easily than Project Businesses. As a result, these traditional businesses are more predictable and replicable than their Project Business counterparts.
So why is it important?
To have an impact on your Project Business and improve productivity, it’s essential to think of your business as a Project Business in the first place just like you might with say Retail or Manufacturing. Once you do that, you can start to standardise the process, learn lessons, improve, expand and profit as a Project Based Business.
If you want to know more about Project Based business and how to increase project success in your business contact us for a free consultation.
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