CASE STUDY / VALUE CREATION
Fixing the economics of delivery
Services revenue grew at a double-digit rate while margin and utilization improved after redesigning how work was estimated and governed.
THE SITUATION
Projects were sometimes being sold with fewer hours than Delivery believed were needed, creating pressure on consultants, delivery quality, client expectations, and project economics.
THE RESPONSE
Redesign estimating and governance using historical delivery data, clearer standards, stronger margin expectations, and Delivery-owned approval before proposals reached clients.
THE RESULT
Services revenue grew at a double-digit rate while gross margin and utilization both improved, alongside better conditions for consultants and clients.
WHERE THE ECONOMICS BROKE DOWN
The organization had capable people estimating and delivering the work. The problem was how commercial and delivery decisions came together before a project ever began.
The sales process naturally emphasized competitiveness and winning the work, while Delivery became accountable for successful execution once the contract was signed. Without clear governance between the two functions, estimates could be adjusted downward without fully accounting for the impact on delivery.
Once projects started, consultants were asked to deliver the promised scope within tighter constraints than the work required. Teams were stretched across too many projects, maintaining quality became harder, client expectations could diverge from what teams could reasonably deliver, and project economics came under pressure.
The margin problem was not simply a finance problem. It started with decisions being made before the work ever began.
Improving the economics required more than asking teams to work harder. The operating model had to create better alignment between what was sold and what could be delivered successfully.
HOW THE MODEL CHANGED
I redesigned the estimating and governance model to address the problem upstream.
Solutions Consulting remained responsible for developing the initial estimate, but my Delivery organization analyzed actual effort from prior projects and used that data to establish new estimating standards across project phases.
We also introduced a formal governance process. Delivery reviewed and approved estimates before they could be presented to clients, margin expectations increased, and estimates could no longer be changed without Delivery approval.
The changes created greater discipline around the commitments being made during the sales process while preserving collaboration between Sales, Solutions Consulting, and Delivery.
More realistic project hours also changed the experience once work began. Consultants had enough time to produce higher-quality work and could achieve utilization expectations while working across fewer simultaneous projects.
The business impact followed. Year over year, services revenue grew at a double-digit rate while gross margin and utilization both improved meaningfully. The changes also contributed to better conditions for consultants and a client experience that more closely matched what had been planned and promised.