Organizations primarily prefer activities, which provide a Direct Gain, followed by those that accrue some Indirect Advantage. To be commercially viable that is to be a profitable entity, all work which does not translate into a Direct Gain or Indirect Advantage, is avoided.
Organizations have three basic forms, Production, Service and Advise. And commercially deliver a product, renders a service, or formulates a concept. These Deliverables are in the form of products, projects, reports, plan of actions, advisory, solution, jobs, assignment, order, commission, etc. The deliverable entity may result from the organization or its distinct departments.
1 Deliver an entity to an External Client, who can compensate the organization for the goods supplied, services rendered, or the concept formed.
2 Serve a deliberately created (planned) entity to an Internal person, Department, or an External agency, but for which no definite compensation may be available.
3 Entities proliferate within the organization (including its sites and at clients’ places) without any particular strategy. These entities when properly monitored and exploited improve the working of the organization, its image in the market and core-competence in the field. Such entities could be in the form of products, procedures, styles, judgements, experience, confirmation, rejections, or assurance that every thing operates at desired or predefined level.
The Emergent Deliverables of the organization often go to an External User, who may not be a paying beneficiary, but is expected to support the organization in some other context. Emergent Deliverables going to Internal users do not have sharply defined form, quantum or schedule. In both cases the cost or value of the deliverable is abstract, so billing is a difficult proposition.
Yet Organizations audit their work periodically, to see if an activity is providing a gain or advantage, or is neutral. Organizations have a formal or informal set up to continuously evolve their domain of actions. Where for any reason this cannot be carried out impartially, external experts, advisors, evaluators, or auditors are called in.
The evaluation results:
● Deliverables are recognized, neatly categorized and reclassified, to match the quality of the client (paying now, rendering an indirect advantage, non paying -departmental, or neutral).
Designers charge payable-extra fees for drawing documents, site visits and other consultants’ costs, and not include it in the basic design fee. Doctors charge consulting and surgical fees, but charges for an operation theatre and medicines are payable-extra. Manufacturers often charge extra for delivery, site installation, test-run and the warrantee. These all are attempts to classify the costs as ‘compulsorily payable and negotiable’. A professional may provide a free counselling to a friend, but may charge for the services rendered and goods delivered.
● Clients are recognized as internal or external, and also their paying capacity (paying now, rendering an indirect advantage, non paying or neutral).
Client definition helps an organization to identify internal departments, their inter-dependency and external bearings. Departments when realize the true value, decide whether to source their needs from within the organization, or out-source them on the basis of cost-benefit ratios.
● Clients are forced or encouraged to move to certain category with assurance of linked advantages (e.g. legal ownership, guarantee / warrantee) and satisfaction (service and operational support).
TV and car manufacturers provide a cost-less guarantee or extended warrantee for their products to achieve brand faithfulness. Doctors and other estate developers etc. often provide free advice, ideas, consultancy etc. to know a client, but soon enough, the client becomes a recipient of charged product or service.
● An audit of activities taking place in the organization identifies departments with high public exposure (that offer too many freebies), These are reorganized either by moving them to the internal zones or as separate entities.
Production organizations do not offer direct deliveries, but prefer independent sales agencies. Professionals offer their services through project consultants or such intermediaries. There are many architects and interior designers who work on exclusive basis with builders, estate developers, etc. Service agencies may not take individual jobs but prefer to work for clients as retained agents.
● Internal users of the organization often in-source their demands irresponsibly. Internal auditing can help tag such transactions. This ultimately helps in determination and recovery of the realistic costs.
In design organizations technical talents like drafts-persons, model makers, site supervisors, messengers, etc. form a common pool, which is sourced by different project teams, but at a cost to be accounted for. In manufacturing units the use of a plant, equipment, tool and human resources are accounted into the component or project.