Top Challenges for Professional Services Firms with a Matrix Organizational Structure

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A large majority of engineering and architecture firms work in a matrix organizational structure, meaning that services are typically defined and managed by discipline as well as by market. This way, upper management can have greater visibility into which segments they should be focusing on as well as which department managers may require additional resources.

Challenge #1: Is my project really profitable?

When a project involves resources from different departments (or even companies!), it may be hard to see your true project profitability. You see what is being invoiced to the client, but without knowing your costs, you may not know whether it makes sense for the company as a whole to take on this kind of opportunity. If you do not have an interdepartmental markup setup, another department may be absorbing the costs and overhead for certain employees, which can cause lower overall company margins if these costs are not allocated to the appropriate project.

With the notion of interdepartmental staff lending, both the lending and invoicing department have a true view on the company’s profitability. As such, they can more closely manage the project if the margins are considered tight right from the beginning at the signing of the contract. To learn more about how interdepartmental staff lending can improve visibility on your projects, read this article on why you should track interdepartmental profitability.

Challenge #2: How can I ensure the time of staff members from other departments has been planned to take into account all their projects?

If your system does not provide visibility on the company’s entire project portfolio, sometimes a resource may be booked on multiple projects without the other project managers knowing this. If the employee’s overall booked time across all projects is not visible to other project managers, this conflict can become a regular occurrence. This can then cause friction across the different teams as priorities and deadlines must be managed in a less structured environment. This is why it becomes important to have a tool that can centralize and display the entire project portfolio.

Challenge #3: Do my employees have a high enough productivity rate?

When employees work in a matrix project structure, it may be hard for their direct supervisor to have visibility on the complete list of actual tasks they perform. If the employee is not filling out a single timesheet or if the supervisor does not have access to all tasks, it may be difficult for them to see whether that particular employee is hitting their productivity targets.

Why is this important? Organizations with mature project analysis practices should be able to not only differentiate an employee’s billable rate but also see if their tasks are productive. Read this article to learn more about what you should take into consideration when managing your employee’s productivity and profitability levels.

Challenge #4: Who should approve their timesheet?

If an employee is working on another project within another department or company, who should be approving their time? Should it be their direct manager or the project manager? Both have very different reasons for reviewing the timesheet: the direct manager wants to review the amount and type of hours being entered into the system, while the project manager (or project managers in some cases!) has to validate that the time is allocated to the appropriate tasks to track and follow up on the project budget more efficiently. A timesheet with dual approval levels helps prevent these situations while reducing the number of corrections required before invoicing the customer. For more information, read our article to find out how timesheets with different approval types can help your project-based business.

JOVACO Solutions offers a fully integrated project accounting solution to help improve and structure your project-based organization. With the right project management solution, you can overcome the daily challenges associated with projects managed in a matrix structure, while also reducing the time required to manage projects spanning over multiple departments and companies.


About JOVACO Solutions

JOVACO Solutions is a leading ERP and CRM solution provider operating in Quebec for over 35 years. As a specialist of Microsoft Dynamics business management solutions, we offer a wide range of products and services to meet all the needs of professional services firms and project-based organizations. We also offer specialized project management tools and timesheet add-ons fully integrated to Microsoft Dynamics solutions. Visit our website or contact us for more information.

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