'We Increase Project Speed and Project Completion Rates': Sanjeev Gupta
Sanjeev, your company, Realization, has an impressive track record in improving delivery of projects. How does that translate into $7 Billion of bottom-line benefit that you claim to have provided to your customers?
Let me start by thanking you for interviewing me. I hope your readers will find something new and useful in our conversation.
Now about the $7 Bn impact. That is from three major improvements we cause in project delivery. The first is faster projects. For many of our customers, the faster they finish their projects, the faster they start making money. Whether it’s building power plants, factories, toll roads, commercial buildings or even developing new products, the impact on profits is between $50,000 and $1,000,000 for every extra day of revenue.
The second major impact is from projects being delivered with fewer resources. Which can mean a cost reduction of 3-5% in construction, about 10% for equipment and machinery manufacturers, and 25% in new product development. Finally, for many customers the value is from less cash and fewer assets tied up in execution. Because we increase project speed as well as project completion rates, typically our customers can free up 50% of their cash and assets.
I would be remiss if I didn’t point out that $7B actually understates the impact we have had. All our customers share the operational improvements but, for obvious reasons, fewer than 10% share the financial impact. The seven billion dollars is just from those 10% of our customers.
With so many projects management software and PMC services providers already in India, why did Realization enter this market?
Do those software and consultancies cause projects to be delivered faster, or even on time? It’s actually tragic that worldwide about ten billion dollars are spent on project management software, and much more on services, but projects continue to be delivered as late and over budget, over and over again. All these software and PMC’s are about producing post facto reports. They do an excellent job of feeding the project management bureaucracy but don’t cause projects to be delivered faster.
On the other hand, our software and services are about project delivery, about doing projects 20% to 50% faster, with 5% to 25% less cost. So we see a big opportunity to deliver value to the Indian market.
Can you really improve project delivery with so many real-world constraints and imperfections that plague projects?
Great question. Uncertainties, variability, unreliable vendors, difficult customers, funding constraints, resource shortages etc. are an undeniable reality of projects. But isn’t that the point? You cannot improve project delivery without a way to keep your projects flowing even with those imperfections and constraints. Just giving you post facto reports about why projects are late doesn’t help anyone. Our solutions are about improving the flow of projects in the real world, a world which is much less than ideal. They tap into principles of flow management and Dr. Goldratt”s proven theory of constraints.
But can Realization’s solution be effective in India given a severe shortage of project managers?
Let me ask, when do you need more managers: when the projects are flowing largely on their own, or when someone has to continually be pushing them forward? So, with our software, we actually reduce the burden of managing. It reduces the number of people you need in project management.
What is your offering in the Indian market?
We provide education, consulting and software around the principles of flow management. We charge premium prices (think business class vs economy class on an airline) for our consulting and software, but 50% to 75% of our fees are tied to actual improvements our customers achieve.
Which sectors is Realization focusing on in India, and why?
Our focus is very much on the engineering and construction value chain. At this moment in India’s ruse, engineering and construction are key to her growth and prosperity. Whether it’s roads and bridges, urban infrastructure, housing, private CAPEX projects, or equipment and machinery, we are here to help.
Shifting to your personal background, what’s your association with Eliyahu M. Goldratt?
I met Goldratt after I had already started my first software company for factory scheduling based on his seminal book, The Goal. All in all, I consider it the privilege of my life to have worked closely with Dr Goldratt for almost 20 years before he passed away. He was a very charismatic man, a genius in many ways, and had a major influence on me.
