Understanding how project-based work moves through the business | Part 1 of 3
A business may describe itself as a manufacturer, engineering firm, contractor, or service provider. That industry description is useful shorthand, but it does not necessarily explain how work is quoted, planned, delivered, costed, and invoiced.
The most useful question is not simply what industry the business belongs to, but: How does work move from the customer requirement through to completion?
Many businesses in manufacturing, engineering, fabrication, building products, and construction supply combine several operating models. A single customer requirement may involve custom design, production, procurement, subcontracting, installation, commissioning, and staged invoicing. As these activities become more interconnected, maintaining a clear commercial view becomes more demanding.
The challenge often becomes more noticeable as businesses grow. Increasing volumes of work, longer delivery cycles, additional staff, subcontractors, and supplier relationships can make informal coordination harder to sustain. As a result, information that was once known only to a small number of experienced people now needs to become visible across the business.
Understanding that flow should come before changing processes, reporting structures, or business systems. The way work is initiated and delivered determines what the business needs to plan, capture, connect, and review.
The repeat manufacturing model
In repeat manufacturing, established products are produced using defined bills of materials, routings, and production activities. Planning and costing are centred on the product, with performance commonly assessed through production efficiency, material usage, throughput, inventory movements, and product costs.
Because the output and production method are relatively consistent, the business can establish standards and compare actual performance against those standards. Forecast demand can inform purchasing and production planning, while completed goods can be produced for inventory or against customer orders.
This model provides a useful reference point, but it does not fully describe businesses whose work is less predictable or more customer-specific. Once the product, delivery method, commercial arrangement, or required resources change from one order to the next, the business needs to manage more than repeat production performance.
The jobbing model
Jobbing businesses respond to a specific customer requirement rather than repeatedly producing the same item for inventory. Each job may begin with a quote, estimate, or customer order, progress through labour and material capture, and conclude when the work is completed and invoiced.
This approach is common in repairs, servicing, maintenance, fabrication, workshop engineering, custom manufacturing, and short-duration installation work. The sequence may be straightforward, but the materials, effort, and time required may not be fully known when work begins.
That uncertainty affects both pricing and performance management. Maintaining visibility of both cost and recoverable value becomes increasingly important as work proceeds.
Some jobs are completed for a fixed quoted value, which means profitability depends on how efficiently the work is delivered. Others are charged on a time-and-materials basis, with labour, materials, and other recoverable costs accumulated as work progresses. Changes in scope may require a variation, revised approval, or additional invoice.
Because jobs differ, the business often needs to assess performance at job level rather than relying only on product or departmental results. Management needs to know whether costs were captured accurately, how labour and material usage compared with expectations, whether the work performed has been invoiced, and whether the intended commercial outcome was achieved.
Labour is particularly important in many jobbing environments. A relatively small difference between estimated and actual effort can materially affect margin, especially where skilled labour is a significant part of the job cost.
The manufacturing jobber
Some businesses sit between repeat manufacturing and project delivery. At Abel, we use the term manufacturing jobber to describe a business that manufactures customer-specific items while managing each piece of work commercially as a job or project.
These businesses may use bills of materials, purchasing processes, production schedules, manufacturing operations, and assembly activities. However, the output is not necessarily repeated in exactly the same form or produced for inventory. Existing designs and material structures may provide a starting point, but they are adapted for the customer requirement.
Traditional manufacturing is generally organised around products, while project delivery is organised around customer deliverables. Manufacturing jobbers often need to manage both perspectives at the same time, moving work through manufacturing processes while managing it commercially as a job or project.
A manufacturing jobber might produce a customer-specific building product, fabricated structure, specialist component, conveyor system, processing line, or customised machine. Materials may be purchased specifically for the job, and labour may accumulate across design, procurement, fabrication, assembly, installation, and commissioning.
The commercial arrangement often reflects the longer delivery cycle. Invoicing may be linked to a deposit, agreed stages, progress claims, time and materials, final delivery, or a combination of these methods. Customer-requested changes, revised specifications, additional materials, and altered installation requirements can all affect expected cost and margin.
Management therefore needs visibility into two connected perspectives. It must understand both the manufacturing activity required to produce the item and the commercial performance of the overall job. Product cost alone does not show whether progress, purchasing, variations, invoicing, and the expected job outcome remain aligned.
Project delivery and contract-based billing
Project-based businesses often coordinate work across longer delivery cycles and a wider range of activities. Unlike a short-duration job or a single production activity, a project may continue for weeks or months and bring together design, procurement, manufacturing, external processing, assembly, delivery, installation, commissioning, customer variations, and follow-up service.
As work becomes larger and more complex, decisions need to be made before the final result is known. Materials may already be ordered, subcontractors engaged, labour allocated, and customer milestones agreed. Management needs to understand how those commitments affect the expected outcome while there is still an opportunity to respond.
The key question shifts from: What did the work cost? to How is the work performing while it is still underway?
Answering that question requires current information about cost, resource usage, purchasing commitments, work in progress, stage completion, scope changes, invoicing, and the expected commercial outcome. The longer the project continues, the less useful it becomes to wait for the final invoice or completed project cost before assessing performance.
Contract-based billing adds a further commercial layer. Costs may be captured by phase, work package, or activity, while billing is governed by the contract, approved variations, progress claims, and retentions. The work completed, the cost incurred, and the amount that can be claimed are related, but they may not move at the same rate.
A business may appear to be carrying significant cost even when work is progressing as planned. Conversely, the position may appear commercially sound while unresolved variations and future commitments create risk. Understanding the position requires operational and commercial information to be considered together.
Many businesses combine elements of several models
Businesses do not always fit neatly into one category. A business may manufacture custom products, manage long-running projects, coordinate subcontractors, perform onsite installation, provide maintenance services, and invoice customers through deposits or staged payments.
Consider work that begins with a customer quote, adapts a bill of materials for a specific requirement, purchases materials for the contract, captures labour through production, manages variations, completes an onsite installation, and invoices at several stages. Is it manufacturing, jobbing, project delivery, or construction? The practical answer may be that it contains elements of all four.
Businesses within the same industry often require different approaches to managing the work. In addition, different divisions, work types, customer contracts, and service offerings within the same business may require different structures and controls.
It is important to identify the operating model that applies to each type of work: how work is initiated, whether the output is standard or customer-specific, how labour and materials are planned, where costs and commitments occur, how scope changes are managed, when the customer can be invoiced, and how performance will be assessed. These questions reveal more about the best approach to managing the work than an industry label alone.
Understand the operating model before changing the system
When businesses are reviewing their systems and processes, it is important to first understand how different types of work move through the business. Systems are most effective when they reflect the processes and information structures required to manage the work.
A repeat manufacturer may need product-centred planning and costing. A repair business needs rapid labour and material capture against individual jobs. Customer-specific manufacturing may require job-specific materials, purchasing, production, and staged billing. Larger projects introduce phases, commitments, progress measurement, variations, progress claims, and retentions.
These differences carry important implications. They affect the information the business must create and maintain from the initial customer commitment through to delivery and invoicing.
Few businesses operate according to one model alone. Understanding how each type of work moves from customer requirement to completion provides the foundation for making informed decisions about systems and processes. The operating model should guide those decisions so that systems and processes support the way the work needs to move through the business.
Continue the series
In Part 2, we examine what management needs to see to understand performance while work is underway.
Explore how Abel supports different industries and operating environments:
- Building Products & Job-Based Manufacturing
- Engineering & Industrial Manufacturing
- Other Industries Supported by Abel ERP
Talk to Abel about how different types of work move through your business and how systems, processes, and information can better support the way work is managed.
