Project Business in the Case Study Companies

The case study companies sell and deliver industrial goods. The scope of the delivery varies from delivery of a single machine to delivery of a whole industrial plant, such as a power plant. As the product and the delivery process have to be customized according to requirements set by the customer and environment, the product delivery process takes the form of a project. Although the case companies can be considered as project companies, they have their roots in machining workshops and equipment deliveries rather than in traditional project business. The companies have manufacturing units that are responsible for the production of the core products of the project. Previously, the companies concentrated on selling and manufacturing investment goods rather than delivering projects. The projects were seen as an inevitable means to carry out the delivery of the goods sold.

Over the years the case study companies have gained significant knowledge in certain application areas, which has enabled growth and globalization in their narrow market niches. The scope of an average delivery has become wider as the companies do not deliver a single product but a whole solution including the main product with several additional products and services. As the scope of a typical delivery has increased from the delivery of a single machine to even a delivery of a turnkey project, such as a paper mill or power plant, the whole business paradigm has changed. Good project management has become crucial, as companies are responsible for coordinating not just the production of their own products, but also the purchasing of several external services and components, and the delivering of the final end product composed of many complex parts and activities with responsibilities in many different organizational units. Delivering turnkey projects requires different know-how, infrastructure, and processes than delivering customized products.

The different nature of project business in three case study companies is analyzed in the following. A detailed analysis of these and a few other companies is reported in the book of the FIT-PRO research (Meklin et al. 1999).

Case Study Company 1: A Telecommunications Supplier

The first case study company is a telecommunications supplier. The size and the scope of its projects have expanded recently. In the present business environment the company could not concentrate only on the deliveries of network equipment, but it also had to be able to manage tasks from network planning to management of entire turnkey deliveries of telecommunication networks. The new situation was caused by a change in the customer base. Previously, customers had been state-controlled operators that had in-house knowledge of network planning and implementation. These companies ordered only the required equipment from the case study company. The de-regulation of the telecom markets brought along customers that adopted more a role of a financier and these new customer companies had selected a strategy of outsourcing the planning and implementation of the telecommunication network. These new customers wanted to buy an operating network solution. Thus, the telecom supplier company had to be able to manage the whole rollout process of an entire telecommunication network. Because of the various backgrounds of the customers, the case company had to offer service packages to satisfy the needs of these different customers. These service packages included those tasks that were needed to construct and implement a telecommunication network, and also additional tasks that the customer required to be carried out by the supplier.

At the time of the empirical study, the company had approximately 150 projects per year and twenty of these projects could be classified as large projects. New operators were in a hurry to get to the markets before the existing operators got all the potential subscribers. The most challenging projects were those that included the project management of the entire rollout process. In these delivery packages the company had to manage the complex entirety formed by the numerous geographically distributed sites.

Case Study Company 2: A Paper Machinery Supplier

The second case study company is a paper machinery supplier. The size of a project in the company varied from 2 to 200 million dollars with a more typical range of 10 to 100 million. There were three different scopes for the projects: delivery of an entire production line, delivery of one or several machines for the production line, and renewals of old production lines. The common characteristic of the different deliveries was that they required the cooperation of three to fifteen units inside the case study company to carry out the project. In addition to these units, the contribution of numerous subcontractors and consultants was also required.

Compared to the challenge in the telecom supplier company's projects, which was the management of the entirety formed by geographically distributed sites, the paper machinery supplier had one single complex site that it needed to manage. The demand for deliveries of entire production lines was forecasted to increase further. These deliveries required special efforts in the management and cooperation between different units. As the demand was expected to increase, the importance and need for developing management practices was emphasized.

Case Study Company 3: An Azimuthing Thruster and Deck Machinery Supplier

The third case study company is an azimuthing thruster and deck machinery supplier. It carries out approximately 100 projects per year. The size of the projects varied from 0.5 to five million dollars with an average duration of six months. The projects had a repetitive, make-to-order nature. This had been enabled by the development of pre-designed product architectures that were the basis for each delivered product. Only some parts of the products needed to be designed specifically to meet the individual customer's requirements. However, some of the larger deliveries include products that require special designing and development. These could be, for example, thrusters of new size and performance capabilities.