Opportunity research

Abstract

In the business world finding an opportunity at the right time might be the key to success. In the project management, an opportunity is an unexpected situation that will improve the quality of the project or the revenue, therefore, it is a key activity in the management level to be proactive and look constantly for opportunities. Opportunities might come from different ways and it is a manager's task to allocate and distribute resources into new targets .

For this case, an opportunity is considered a positive outcome of a project, program or portfolio development considering its uniqueness and attractiveness to customers. The overall of the opportunity is that it brings more value to the project by improving it. In the business world, an opportunity means something that helps you to "stand out from the crowd". In the project management sector, the idea is the same but usually there is no crowd. It is how to improve a project so it gives either better results or more profit.

This article is about the methodology of finding opportunities within the engineering/energy market. Project opportunities management is a set of techniques and tools to help a risk manager to identify and understand possible improvements to the project objectives . In following sections it will be explained how to asses different situations keeping in mind the opportunity research. Once identified the possible opportunities, how to estimate the profit and how to address resources to overtake competitors. Finally, it will be explained how opportunities can be converted into strengths.

Opportunities as Risks

Both opportunities and risks are included in the term uncertainties. The term uncertainty is defined as: "an unintelligible expression without a straightforward description" . In the project management sector, this means that a situation might affect either in a positive or negative way. Generally, uncertainty has negative connotation due to the fact that contractors, project managers and authorities want always that everything is clear and to control all the factors that might affect a project. Several authors claim that opportunities should be dealt same way as risks with the same processes, thus, it is suggested than an opportunity is a positive risk.

Following the action and reaction principle, an opportunity produces a threat and a threat produces an opportunity. The aim of the risk managers is to find the opportunity in a risk. In recent studies, it is shown that most risk managers focus much more their efforts in identifying and mitigating risks rather than in finding opportunities. That is the reason why opportunities are left often un-exploited, not because they were dismissed, but because no one saw them on time. This issue gets bigger in large projects, when, even identifying the opportunity, the difficulty that generates convince the stakeholders, change the project, change contracts makes unworthy.

Types of Opportunities

According to different authors , opportunities can be classified according to for whom they are and in which level they are. That is the reason why what can be an opportunity for some group of people, it might be a threat for another.

Operational opportunities

These are the lowest in a project scale and usually affect only the project, they affect the operation and daily activities of a project. These are the easiest to find and take advantage because they barely produce any risk or the risk is easily visible and avoidable. An example of these opportunities may be a variation of working plan. By re-arranging working schedules productivity can be improved. It is a task of project team and lower managers to identify them and apply them.

Strategic opportunities

Strategic opportunities might affect not only a project but also a whole program. They might have to be more with business and finance. Most times they are related to industry forces. A good analysis of the market, business models, key trends and direction of the market is crucial in order to identify them. An example of these opportunities might be the apparition of new machinery or IT software that can change the actual standards. On the other hand, it can be considered a threat if by not implementing changes, the program goes obsolete. It is task of the project managers to identify them and implement changes downwards. Since they imply more changes, these are often dismissed as the number of changes might be higher enough to consider the opportunity not worth it.

Contextual opportunities

These are the highest opportunities and the ones that might affect a whole portfolio. Affect organizations as a whole and entire groups of stakeholders might be in favor or against taking it. An example would be the merge of two different portfolios to save production costs. They are controlled by the top managers of an organization and they are not easy to perform as they include several risks related.

Opportunities according to the benefit

Opportunities in terms of cost

The changes if implemented may give result in form of economic savings. As discussed in further sections, lower economical value gives attractiveness to the project if the quality is maintained.

Opportunities in terms of time

"Time is gold" In this case, finishing a project before the deadline is always an incentive to pursue an opportunity, specially if there are some delays and the deadline cannot be postponed, e.g. Olympic Games.

Opportunities in terms of quality

This term is very broad and includes many topics not discussed in this article. Some authors classify quality as conformance to requirements (Crosby,1992) or fitness for use (Juran,1989). Following the norm ISO 9000;2000, quality is '‘the totality of characteristics of an entity that bear on its ability to satisfy stated and implied need’'.

Opportunities missed

In theory, opportunities are to be taken almost always, however, in practice, projects and project managers fail to identify them and take use of them. Project analysis show that the number of threats is between eight to ten times higher than the number of opportunities found . The reason of this, is because brainstorm usually focus more on how mitigate the risks and threats rather than in finding opportunities. This is due because every opportunity might come with more risks to mitigate and the present situation is assumed "favorable".

Missing opportunities due to stakeholders

Not taking profit of a localized opportunity might be due stakeholder's conflict. Specially, in larger projects, when there are more stakeholders, finding common solutions that do not prejudice others might be a big challenge. In order to find common solutions for everyone, the terms of value and benefit described by should be explained. Value is referred to economical profit whereas benefit includes non-economical rewards. This takes into account the socio-economic analysis and private economic. A project can be beneficial but not valuable. In order to consider an opportunity, it is to be set in advance the possible value and benefit of the opportunity. What makes it even more difficult is that for what some might be a beneficial alternative, for others might be a threat or a non beneficial. When changing a project, program or portfolio, all parts need to agree. There are three groups of stakeholders to be taken into account during a project: Contractor, client and users. Each of them have different interests that might differ and contradict from the others.

Contractor

The contractor is usually a private organization which primary interest is being profitable in economical terms. Due to this, the contractor will look for a beneficial opportunity.

Client

The one who finds the main need or opportunity that leads to the project. Aims that the project is both beneficial and valuable.

Users

Although having from little to none to say in the opportunity management, has a high concern on both benefit and valuable.

Steps to follow

In order to take advantage of an opportunity, there are four steps to be followed: Identify, analyze, plan and manage. This steps are carried out by different people according to in which level the opportunity is.

Identify

The most difficult step to achieve, as explained earlier, project managers are not able to manage risks and opportunities because whatever that can be manageable is not a risk . In order to identify opportunities, managers should have perfectly known current situation of both the project and external factors that produce risks or opportunities. The methodology is the same as for a risk, one must look with entrepreneur mentality the trends, political situation or legislation. Brainstorm is often performed to obtain proper results.

A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. – Winston Churchill.

Analyze

Once identified the opportunity, it is time to analyze it and quantify the gains. What profit would it give? What are the associated risks? How much is going to cost? If the answer to all those questions is positive, we shall go to the next step.

If you know yourself, but not the enemy, for every victory gained, you'll also suffer a defeat. -Sun Tzu.

Plan

Once analyzed and estimated the outcome of an opportunity, it has to be planned how to achieve the goals selected. A set of activities with all possibilities included to achieve the goal and minimizing the risks.

A goal without a plan is just a wish,-Antoine de Saint-Exupéry

Manage

Support staff in order that they are willing to achieve success. During this stage, they take actions to reduce risks or threats and to add simplicity to the task.