Thursday, February 3, 2022

If I Write a Book ? I will Title it " Moron's Guide to Surviving Projects and Making Money "



There are literally hundreds of authors and thousands of wanna be authors in Singapore. This is just a guesstimate and everyone from the top civil servants, journalists, someone who has made his money in the corporate world, ex forex traders, motivational speakers and the like have written about their experiences.

I think, sooner or later I wish to throw my hat into this small ring. Why ? Self expression is very high up my list on the bucket list and what better way to express myself in the form which I am most accustomed to, and I think I do it in a unique and straightforward way.

I have had my essays (in English) read out many times from Secondary to post secondary school so I hazard that my writing skills are pretty good.

My writings can sometimes be about the mundane (rain dance in my open air shower) to the rather complex (Theory of Relativity). Strangers have commented that they like some of the information there, and I have managed to connect with at least half a dozen people  from my father's era (NUSS society) to mine (2 friends who are residing in Sydney and US respectively) as well as my son's friends have made comments and we have connected thus by the more established Whatsapp and other social media.

My book, when I get around to starting it (hopefully by middle of this year) will be about the trials and tribulations of an SME owner. Yes, the 'orphans' and long neglected entities who comprise about 90% of the companies in Singapore.

Many are sole propreitorships, partnerships or Pte Ltd companies with revenue of way below one hundred thousand dollars annually. When they do try to scale up by undertaking projects, they are normally shunned, unless they have people who have proven track records to handle the mega projects. My company was fortunate enough to be awarded 2 such projects in Singapore and both, in my humble opinion, were especially fraught with many uncertainties, stress points and multiple challenges on the technical, communication, logistic and financial standpoints.

Our company weathered all the storms and matured tremendously (me for one) as a director. I have learned hard truths about large projects. Here are a few life experiences which I have learned.

a) during the Request for Quotation stage ; there is a lot of research into what theses companies want. However, many a times, the demands or requirements sought by these esteemed companies MAY NOT be realistically developed or delivered within the time frame allotted for it. 

1.Always do a complete Risk Analysis for the technical competencies which your company is prepared to take. Sometimes it is a Bridge Too Far and if your company falls short of the technical deliverables, you the vendor are liable for Liquidated Damages for the non or partial compliance of the specifications. This drawn out battle for the completion and ultimate handover of the project can mean the difference of your company making it or going bankrupt. So be very careful ! If the risk is too great, always step back and consider multiple times before taking on the project. 

Better to walk away with your shirt on your back than to appear like the BIG BOY and walk away with no shirt.

We always overestimate our abilities 99% of the time. It is human nature.

Thats why only 1% succeed in life, and 99% think they can do but ultimately fail when put to the test. 

Be very careful for promising the unreachable. If it is something way out of the ordinary and your manufacturer / supplier says they can do it, CHECK the background for the supplier to see if they truly walk the talk.

My Motto : Undercommittment to the tender specification (that is, only go for tenders which your company can do 80 - 90% of the time with ease. The last 10% will be pushing the upper limit of the business technicality which I think can be surmounted with technical competency for most companies. 

Overdeliver to the equipment delivered. 

2. The people who do the request for  quotes are normally the Vanguard of the company (the front reconnaisance). Many times, the project is delivered on site and then in comes certain people who will be the turbulent gamechangers and drag the project handover till way over the due date. They raise many unfair requests after the equipment is delivered and drag payment unnecessarily

Who loses ? the small guys SME because they do not have the financial muscle to weather the "unreasonable" requests. We are facing one such issue now. Luckily we have collected 80% of the project costs, so the delay while major, is not affecting our main cashflow but the end profit. Nonetheless, it is important to collect as much as possible and as quickly as possible without ensuring or enduring long and costly legal battles. Only the lawyers benefit if that happens. 

Lesson Here : Collect as Much money upfront. 50 or 70% of the total project costs we aim to collect from customers. It is very tough especially from Government companies, so we must have very high profit margins  given the uniqueness of the project, the long unforseen commission times and the turbulent or chaos which will ultimately ensue if certain performance criterion are not met. 

An ironic situation was one which we encountered some five years ago, a big Government project was tendered and we were the final selected company. During the tender award process, our small company insisted that we needed 50% downpayment for the costs to pay supplier and other contractors etc. The Govt company indicated that we could get 50% downpayment only on condition if our company put up a Banker's Guarantee of that same 50%. The irony of it all, and I told the client, if we could ourselves put up 50% Banker's Guarantee (which is essentially a bank who will guarantee the 50% amount in the event of a default by our company) we would not have needed to ask for the downpayment !

Hence big projects and large tenders favour big companies with their strong balance sheets, huge corporate facilities and inhouse legal teams. Our small SMEs only have technical competancy, passion for doing the project and some get up gung ho !

We are definately at the disadvantage !

High Margin, Collect as Much as possible upfront, if not do a realist cost benefit analysis to see if indeed you are able to swallow payments of up to 50% of the project costs and waiting for over 1 year to collect back the costs once the project is finally signed off.

If the Risk is too High, Walk Away. It is easier to make money from low hanging fruits from regular paying customers than from one off big projects which only look good but do not fully pay the bills. Many companies go bust when they are doing fine, because of one of 3 factors:

a) Venture into totally new markets and get manipulated owing to political and Governmental change in rulings

b) Venture in totally unfamiliar industries in the name of Business Development

c) Stay stuck in the old 20th century way of doing things while most other more nimble companies have pivoted and gone into Digital Marketing and cast their nets worldwide.  

In Summary ; for jobs requiring Project Management :

1. Undercommit and Overdeliver to the Project. That means if your team can (safely) deliver and handover the project in 9 months, add another 25% to 30% lead time, so prooffer 12 months delivery and handover time. This eases pressure off your project team and you as the team lead.

2.  Be wary of the Hidden Turbulent Factor which may come in the form of a very finicky scientist, end user or senior management who will never show up in the discussion phase but will show up after everything is delivered and always make life difficult and downright distressing during the commissioning phase with his or her endless requirements for the 'perfect' equipment which they will never use 95% to 99% of the time. The 'just in case' specification is always the main contention point between the big client and small supplier. 

We as small vendors or suppliers want to quickly commission and handover the project so that we can collect all the sales revenue and move on to the next project. They, on the other hand have other things on their minds.....

3. Collect as Much Money Upfront - cover the cost of the equipment and then some. Whatever is 'stuck' is usually the tail end of the profit. 

Cashflow is No. 1 priority for companies to exist. 

Profitability is next. 

However collecting cash with no profit or loss making will run your ship aground. Be warned !

4. Complete the Handover as Quickly as Possible 

5. Have a Fine Balance of chasing High Profit and Good Cashflow from multiple customers - if that is possible.

Find such customers and stick to them like glue. A top customer is so hard to find ! 

6. Do a Risk Check every year and See if Storms are approaching.  

Sometimes, the boats in the harbour are spared the worst of the storm. 







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