In the construction industry, the main product is the project undertaken for a specific client, the project owner. To award a project; the contractor has to study the project and submit his quotation. In most cases, the client selects the lowest bidder to execute the project.
Due to the nature of the contracting business, contracting companies cannot expect to award every project they have studied, and the winning ratio is most likely 20% to 30% from the overall tenders in which they have participated. That means contractors may lose more bids than awarded, which is quite alarming. Experts in this industry know this very well.
The main idea of writing this article is to introduce a new approach to contracting organization that can enable the contractors to increase the percentages of awarded projects and reduce the associated risks and cost impact, but before that, let us understand the current process and its drawbacks.
Most contracting companies use fixed estimation teams with some support from technical functions or outsourcing some services if needed, as shown in the conventional estimation process flow (Figure 1).
Figure 1. The conventional estimation process | Illustration by the author
This model seems to be ineffective for many reasons, including but not limited to the following:
A fixed estimation team may lack essential experience in a particular type of project.
Estimators’ work becomes routine without creativity. Whether they are awarded a new project or not, they will get paid every month.
Continual loss of projects by the same estimators will demotivate them and eventually lead to losing their passion. Instead, they will try to find excuses or justifications rather than improve the process.
Awarding a project doesn’t mean that it will be profitable. Contractors can award a project because they are the lowest bidder; however, hidden losses will emerge during the project’s progress.
A misalignment between the bidding prices and the project budget prepared by the cost control team can lead to a significant loss even before the project starts.
The main objectives of the new approach are to make the estimation process more dynamic, profitable, and efficient. To achieve these objectives, I have developed a new process flow for the estimation process (Figure 2) to enable the company to increase its chances of awarding projects.
Figure 2: a new estimation process | Illustration by the author
Steps of the new process
The company should reduce the number of fixed estimators to the lowest possible level.
After identifying the new opportunities, the company will know more details about the project type and engineering characteristics of the project. Based on that, the company will hire a qualified project manager with previous experience in similar projects. It is the same thing for senior engineers in civil, electrical, and mechanical disciplines and professional procurement engineers who are familiar with the type of construction material used in that project.
If necessary, this team will study the project in conjunction with the estimation team, other support functions, and the partner company.
If the company awarded the project, this would prove the idea from the first round. If not, the company will give the team a chance to learn from this failure and enhance their experience to perform better in the next bid.
If the project is awarded, the same team who studied the project and calculated its budget will be mobilized to execute the project, and the company will hire a new team instead, and so on.
The company has to decide on a certain number of trials for this team and then make a decision to replace them if the failure is repeated. I would suggest five trials within six months according to a conditional contract.
The advantages of the new estimation process
It is more dynamic than the old routine process.
The team who studied the project and calculated the budget is the same team who will execute the project.
Encouraging the project team to put their best effort into awarding a project within a six-month timeframe.
When the winning ratio is increased, it will save huge costs if we compare the (overhead cost of the new approach vs. sales) with the (overhead cost of the old process vs. sales).
Increasing profitability by increasing the number of awarded projects
Increasing efficiency and productivity through better use of company resources and workforce
The challenges of the new process
How fast the company hires a competent project team every six months could be an issue, and it requires a professional recruitment team to achieve this successfully.
Not everyone can accept the six-month conditional contract, but professional recruiters who are excellent negotiators can clearly explain the benefits to the candidates. It is a win-win agreement. This exercise will spot incompetent people before recruiting them, but the confident project managers and engineers will accept the challenge because they know they can.
Change resistance to shift from the old process to the new process. Some people know they are losing but still believe the old process is the best way to award projects.
Undoubtedly, getting an accurate estimate from experienced engineers is invaluable to the company; this is why the team you choose to study your bids should be able to furnish an accurate cost estimate that is precise enough to increase your opportunities of awarding projects. The new process helps the company to enhance the accountability of the project team with clear ownership of the project execution within budget, scope, and specification with full understanding and involvement from day one. The new process can be tested in a pilot project to ensure its effectiveness and then implemented on a large scale.
About the author
Mr. Ihab Ibrahim Alsakkti is the chief strategy officer of Alkifah Holding Company. He is consistently focused on the organization’s future direction and aligns his team to actualize that vision. He established the company’s Innovation lab, which serves as the hub employing the methods of agile management and innovation strategy to devise novel ideas that can either disrupt or complement the overall company. He supported senior management with strategy formulation and execution workshops and the development of short-term and long-term strategic plans. He also coached and mentored junior staff through ongoing extensive self-development sessions and training programs, specifically in project management for new initiatives, performance management, KPI selection, balancing, and activation.
Robot restaurants in technologically advanced countries like Japan and USA are considered solutions to labor shortages and growing customer demand as on-premise dining starts to pick up.Yelp Economic Average reports that searches for reservations increased by 107% in the first quarter of 2022 compared to the same period in 2021.
Digitalization has become the key to service improvements in restaurants, and one of these advancements is robotics. Different processes can be automated by using robots. While such automation can impact the performance of a restaurant, applying robotics also comes with challenges.
Improvements
Approximately 82% of restaurant jobs could be replaced by robots in the future, according to a report published by Aaron Allen & Associates. Robots are used to help humans in the kitchen perform repetitive tasks, such as slicing or mixing ingredients. Robots can also:
welcome guests
take and deliver orders
manage payments
According to articles from ResearchGate, the Turkish Business Journal, and Elsevier, robotics decreases the efforts of individual waiters, reducesinvestments in human labor, simplifies food orders, supports restaurant services, decreases human-induced service failures, reduces work hours, and improves service quality.
Hospitality & Catering News states that an average human server can serve 200 meals daily, while a robot server can serve 300-400 meals. If waiters serve more tables in the same period, they can serve the dishes faster, contributing to an increase in the restaurant’s overall productivity.
Recent research on digital responses to COVID-19 highlights that if the waiting times per table increase, the time spent at a table increases. This means that the table will be occupied for a long time, negatively affecting customer satisfaction and total revenues for the restaurant since they have a limited number of tables. The waiting time per table can be decreased by implementing electronic menus so that the cooks do not have to read the order notes from waiters. This is a process that slows them down and increases the risk of mixing up orders.
An IEEE article explains how robots and electronic menus cut down on wait times per table. When a customer orders something using an electronic menu, the order and the table number appear on the cook’s screen. When the chef has finished cooking, the order is transferred to the robot, which will have the table number of that specific order so it can deliver it to the customer. Digital tools help visualize orders and provide systematic overviews.
As stated in a 2020 Atlantis Press article, digital tools simplify the process of choosing the desired dishes. These digital platforms also enable keeping statistics of ordered dishes so that the restaurant can determine what foods are most popular and when (during particular times of the day or seasons), as well as which foods to leave off their menu. Additionally, by offering discounts in their ordering application, restaurants will increase customer loyalty.
Challenges
There are two types of challenges that emerge from using robots in restaurants. The first kind results from the complexity and technical limitations of the machine (see Figure 1):
Consumer acceptance is another challenge for digitalizing restaurant services. Studies have revealed that some people feel uncomfortable interacting with a robot. Before bringing autonomous robots into restaurants, owners should assess socioeconomic implications, such as the balance between operational efficiency and customer expectations and robot costs.
Process automation will increase productivity in the restaurant industry, but this will also make it difficult for restaurant workers to find new employment.
Digitalization of the restaurant business is inevitable. Initially, the new system may cause chaos because every restaurant owner will be eager to implement such technologies. This enthusiasm can result in impulsive investments to keep up with the competition, leading to unnecessary risks and, ultimately, no added value for that business. But, if safely adopted, robotics may improve performance, increase productivity, and decrease overall costs. Even though the goal may be to digitalize the whole restaurant, these robots will only partially operate by themselves so soon.
Airlines are progressively pushing for enhanced operational effectiveness and performance. In today’s market, airlines must constantly change and strengthen their performance to remain competitive and satisfy their passengers’ expectations. Due to liberalization and growing global competition, meeting consumer demands is no longer enough to keep passengers loyal to an airline. On-time performance (OTP) has been seen as an advantage, particularly among airlines targeting business travelers, according to the data and aviation analytics solutions provider Cirium.
Optimizing operations is recognized as a profit driver since it reduces costs and allows the introduction of service differentiators, which increase revenue. Airlines concentrated on maximizing revenue in a high-growth climate before the pandemic. They focus on operational efficiency to save money and navigate an unpredictable environment. Aviation is considered one of the most dynamic industries; thus, an appropriate assessment and performance measurement system should be in place.
The decisions made by airlines regarding their fleet of aircraft, the number of seats on each aircraft or the well-handled luggage, the routes they fly, the customer segments they prioritize, and the interest in protecting the environment have a significant impact on how well they perform. The quality of airline services and passenger satisfaction boosts overall customer loyalty.
All of these aspects may be evaluated using performance metrics, which provide airlines with useful information for enhancing their operations. Information Design, an aviation technology company, reveals in an article from 2020 the main operational aspects in aviation that are measured with KPIs (see Figure 1).
Qatar Airways’ performance
Qatar Airways is categorized under the elite group of airlines in the world with a five-star rating and a recipient of the “Best Airline Award” and “Best Business Class” awards in July 2021, based on an annual airline customer satisfaction survey from transport rating organization platformSkytrax.
Qatar Airways, owned by the Government of Qatar, became the first global airline to achieve the prestigious 5-Star COVID-19 Airline Safety Rating, which includes a thorough examination of procedural efficiency checks and safety standards at all stages of the passenger journey.
The Qatar Airways Annual Report 2021-2022 showed that the airline never stopped flying throughout the pandemic and is still making upgrades and expanding its services. As a result, the share of Revenue Passenger Kilometers increased by 3.1% from 2019 to 2021, from 4.4% to 7.5%.
The report indicates that the revenue and other income of the company almost doubled in 2021-2022 compared to 2020-2021, reaching a value of 52.305 QAR million. A lot of areas in the company improved, including the number of aircraft (from 250 to 257), the number of employees (from 36.707 to 41.026), and the number of available seats (from 93.385 to 159.947 million). Meanwhile, the number of passengers carried more than tripled (from 5.8 million to 18.5 million). In addition, the number of routes expanded, with six destinations in Australia, Africa, and Asia reaching to transport 4.89% of global international passenger traffic in April 2021.
For the best management of its KPIs, QAS developed its Integrated Operations Center (IOC), which is responsible for preserving schedule integrity and ensuring that all flights operate safely and securely. Travel restrictions have changed continuously over the past year as a result of governments adding and removing criteria in response to the pandemic.
For IOC, managing these adjustments evolved into a standard procedure. Through investments in technology, the center will continue its mission of forecasting and managing disruption. In addition, the center will also upgrade its operations system and strengthen its flight planning software this year. The IOC has established additional Safety Management System-based procedures in the form of internal Safety Risk Assessments in compliance with industry standards and corporate safety policies. Therefore, the IOC management team is better able to quickly adapt to vulnerability factors in the operational environment.
The most important achievements that QAS managed to accomplish in 2021 were serving more than 20 million passengers per year, handling approximately 179.000 flights in 2021, and delivering an on-time performance rate of 99.51%. In the same period, the organization handled more than 17 million pieces of baggage, proving an extremely low mishandling rate of 0.08 per 1000 passengers. These indisputable results made the difference, and QAS Group announced in a press release that it recorded the highest profit in the global airline industry for 2021-2022. Its passenger revenue increased by 210% over the last year, and the number of passengers carried grew by 218&, maintaining its leading position in the industry.
To align with the United Nations’ Sustainable Development Goals (SGD), QAS developed a corporate sustainability strategy monitored by environmental KPIs. It puts the best standards in environmental protection, noise, and air quality into practice by declaring its commitment to becoming the first net-zero carbon emission airline by 2050. The company’s website shows the interest of QAS in measuring the performance of environmental sustainability, assessing it in fields such as climate and energy, waste and water, noise, air, and wildlife protection.
The airline industry is a domain of continuous innovation and improvement. The pandemic wasn’t the single challenge to overcome because airlines have to face everyday issues like the global economic environment, internal infrastructure, technological advancements, passenger satisfaction, climate change, and fuel efficiency. Measuring performance can help airlines to reduce these negative impacts by identifying their strengths and weaknesses and opportunities for improvement.
Lean management is a popular practice in manufacturing, but the concept is being adopted by other industries to help them cope with the ever-changing business landscape. One industry that could benefit from applying lean management methods is hospitality, which is estimated to become a $4.5 billion industry by the end of 2022, according to the Hospitality Global Market Report 2022. Ensuring continued growth while facing multiple global crises and new customer demands brought about by the pandemic will not be easy for an industry that is mainly about servicing customers.
A survey conducted by the American Customer Satisfaction Index (ACSI) found that customer satisfaction among 6,000 travelers fell to 2.7% over the course of 2021-2022. In addition, ACSI score has steadily decreased over the past decade, with 71 in 2022. Adopting lean principles can help hotels stay on top of shifting customer expectations.
What Is lean management?
Lean, according to the paper “Lean management in hospitality: methods, applications and future directions” published in the International. Journal of Services and Operations Management, is “a bundle of principles, methods and actions for the effective and efficient configuration and examination of the whole supply chain.”
The study pointed out that creating value without generating waste is the goal of lean management and that value is any action or process that customers would be “willing to pay for.” The researchers stressed that lean management tools help identify and eliminate waste of resources, and as waste is eliminated, quality improves while production time and costs are reduced.
Meanwhile, authors of the study “Lean management in hotels: Where we are and where we might go” published in the International Journal of Hospitality Management, explained that anything that buyers consider non-value adding to a product or service is a cause of losses.
The comprehensive framework developed by Malin Malmbrandt and Pär Åhlströmto and published in the paper “An instrument for assessing lean service adoption” for International Journal of Operations & Production Management shows how to apply and maximize lean benefits. It points out that lean service is enabled by employee training, management commitment and appreciation, infrastructure, and resources.
Customer identification value, customer involvement, waste identification, workplace design flow, alignment of organizational processes, standardization, continuous improvement, result visualization, and multi-functional teams are all important lean practices.
Evaluating lean methods
Not all lean principles are applicable to the hospitality industry. The 2016 paper “Lean Hospitality – Application of Lean Management Methods in the Hotel Sector” from Procedia CIRP examined the relevance of lean management methods to the needs of the hospitality industry. The methods evaluated are based on their performance using the following criteria:
Effort and costs for implementation: Ideally, resources should be used efficiently and at a low cost to ensure a short amortization period.
Time to visibility: Lean often fails due to missed results in the short term, so this criteria stresses the short-term visibility of positive effects.
Impact on performance KPIs: A company’s management makes decisions based on performance KPIs. Performance results from the lean method need to be “measurable and convincing.”
Sustainability of outcome and application: Lean-thinking aims for the long-term benefits of the organization. It takes time for people to change their mindsets. As a result, this criterion has also been incorporated into the validation model.
Using the evaluation process, the researchers came up with the top 20 lean hospitality methods (see Figure 1).
Successful lean practices
The hospitality industry has undoubtedly discovered the benefits of the lean phenomenon. In the hotel sector, Marriott in the U.K. conducted workshops on lean thinking and captured higher customer satisfaction rates in the post-implementation phase of lean. Sally Toister, the former senior director of operational excellence for Marriot Hotel, said in an interview with the CX Network podcast theatre that one of the ways they implemented lean strategies in their hotels was to refine food menus for guests who stayed five or more days.
Many guests staying at Marriot for longer periods usually dined outside, and since the hotel provided only standardized similar meals, they realized they were losing out their sales to other restaurants. Sally and other executives mobilized their experienced chefs to tailor different food offerings to cater to their customers’ needs but optimized costs by using the same ingredients for standard food meals. To track the performance of the project, they used a loyalty metric like the composite score (likelihood to recommend). They did not only boost sales in their menu but also drove up customer satisfaction.
Yukai resort in Japan is cited in the 2016 study mentioned above as a model for successful lean application. The establishment aims to eradicate wastes while not compromising quality of services. The resort provides half the standard market price of lodging services with the same industry-standard quality and less staff. Dinner, for instance, is served in a buffet manner to cut staffing costs, while receptionists work in areas that need assistance in their free time. Moreover, all the lodging duties are divided among all the employees. Training on Kaizen (continuous improvement) is conducted weekly and monthly by the managers.
Editor’s Note: “Fraud in the Travel Industry: Is Digital Footprinting the Solution?” is originally published in the latest edition of PERFORMANCE Magazine – Printed Edition. This article is written by Gergo Varga, Senior Content Manager / Evangelist at SEON.
Businesses in the travel and ticketing industry are seeing more and more customers buying travel tickets online rather than in person. With this convenience come some risks, creating the need to mitigate against established and emerging types of digital fraud alike.
Of course, fraud is not just an issue for ticketing companies but any industry that focuses on card-not-present transactions and services to streamline customer payments. However, there are different touchpoints and pain points in each sector, and you can only mitigate it if you know what kinds of fraud can hit your business and how you can deploy the right strategies to stop cybercriminals in their tracks.
According to Condor Ferries, online travel bookings now exceed $817 billion around the world in total worth, with an estimated 148.3 million individual bookings completed annually. Following this rise closely,travel and ticketing fraud has become an increasing problem for companies, with fraudsters usually targeting the online ticketing process itself.
Different Kinds of Fraud in Travel and Ticketing
Carding is one of the main types of fraud faced by companies. Carding involves the illegal acquisition of debit and credit card credentials and their use by fraudsters pretending to be the legitimate cardholder.
Tactics employed by fraudsters to gain this information from their victims include card cloning, RFID skimming, phishing, spyware, data breaches and BIN attacks, for instance. In the case of RFID skimming, for example, the public has been so concerned about this in recent years that companies like Duo have had to create guides explaining RFID blockers and similar devices to inform their customers. Fraudsters using a cloned card or stolen card information can then create an account on a website and attempt to buy tickets using it.
But why does this matter to companies selling travel and other types of tickets online? One concern is chargebacks. When the legitimate cardholder realizes a criminal has used their funds, they will ask the card-issuing bank for their money back. In these cases, the merchant ends up losing both the money and the ticket issued, as well as incurring certain admin fees to the bank.
Sometimes, fraudsters use ticketing websites to do testing – to test if the cards they’ve acquired illegally are still “live,” meaning that they haven’t already been frozen or canceled. This entails attempting a payment with each card number, usually small in value, before marking the live ones still in use and moving on to larger, more ambitious schemes with them.
Even when the money the ticketing service loses is small, this can have a knock-on effect because card-issuers keep track of what’s called a chargeback ratio, or how often a merchant incurs chargebacks. If it’s too often, they increase the standard processing fees the merchant pays for each payment — legitimate or not – and, in some cases, even ban merchants from using their networks outright. This means you can no longer serve customers paying with specific types of cards, such as Mastercard or Visa.
Criminals can also try to make a profit by reselling certain types of tickets (usually last-minute flight offers) on dark web marketplaces or via encrypted social media, such as Telegram, as explained in an article on the dark web on Peraton.
Other tactics that cybercriminals use on airline sites include booking a flight using card details that they’ve stolen and then cancelling them. This is so that their account can still be credited with any adjacent bonuses and miles, even if they have canceled the flight, which they will use for other fraud moving forward. Although not as common as they once were, bonus miles and other extras are advertised by airlines and other companies, such as United, as an incentive for travelers to choose them over competitors.
Ticket scalping is another pain point for travel as well as other types of ticketing websites. This occurs when fraudsters use bots to bulk buy tickets from ticketing or travel companies online, causing the flight or event to sell out.
First, they might use an auto refresher to spot when tickets have gone on sale. Then, they’ll employ scripts to automatically fill out forms and details during the transaction process. Fraudsters might also use pre-bots to create multiple fake accounts across many different websites. If a site requires customer identification, then fraudsters might attempt to provide this in the form of stolen or synthetic IDs.
Ticket scalping is a form of arbitrage, as they then resell tickets to customers for a marked-up price, generating a profit. This is also known as ticket touting or ticket reselling and doesn’t just affect travel companies but also music, entertainment, and sporting events.
One prominent case of ticket scalping in the travel industry was during the height of the COVID-19 pandemic, at the start of which airports canceled flights in the face of impending lockdowns. In a report, CNN describes how scalpers seized an opportunity to sell air tickets on the black market to Chinese students looking to travel from the US to China to join their families. With rumors of airlines slashing seats and inbound flights, agents turned into scalpers by putting up a premium on these now highly desirable tickets.
The CNN reporter found a $300-450 booking was hiked up to the equivalent of $1,650 by agents acting as scalpers. According to the report, the Civil Aviation Administration of China claims that it has lost $70,000 to ticket scalpers and has since rolled out price control and outright bans on some ticket exchanges and proxies.
How Digital Footprinting Can Address Fraud
With the right fraud prevention and detection software in place, organizations can spot and prevent fraudulent accounts before they have a chance to target your transaction process.
Digital footprinting can be part of that process, helping assess the true intentions of any customer looking to transact. Imagine a fraudster who has acquired card details stolen during a data breach and is looking to register an account to buy tickets fraudulently and then resell them for a profit.
It’s at this sign-up touchpoint that digital footprinting techniques, such as reverse email and phone lookup, can help. The digital footprint module will check this new user’s email address or phone number to see if they have social media or other web histories.
Why does this matter? Because reverse lookup tools, as a form of data enrichment, tell you a lot about a user. Starting with information the customer submits, such as an email or phone number, digital footprint analysis sources hundreds of data points to create an accurate, real-time profile of the person who uses the address or phone number, from which we can evaluate their intentions – or even automatically ban or approve them.
For instance, when a customer provides a phone number as part of their check-out process, you can use the resulting data points to find out if this phone number is a disposable or VoIP number, as well as any associated names and addresses. As SEON’s guide to phone lookup explains, using reverse phone lookup, you can find out whether the phone number is valid, the country the carrier is based in (which you can combine with IP analysis), and any connected social media or instant messenger accounts, among other information.
Real people, even those who aren’t techies, almost always have some sort of online presence. But if a new user’s phone or email address is not linked up to any social media or online platforms – for instance, accounts on Airbnb, Skype or Facebook – you have good reason to be suspicious and thus request additional verification and proof of their identity. Furthermore, each country has its own mix of popular digital services, so a customer that deviates from the norm could also signal an anomaly that warrants closer inspection.
It’s incredibly difficult and complex for fraudsters to fake a legitimate digital footprint. The email address they create to defraud you will not have a digital presence, instead having been created recently just for this purpose. Scalpers use bots to bulk buy tickets, and these are typically in control of multiple accounts at a time (multi-accounting). All these accounts, of course, will have registered using new, not-before-seen-online email addresses. This is a huge red flag.
Digital footprinting can be a good low-friction fraud prevention and detection option, as it can help keep the transaction experience for your genuine customers efficient and enjoyable. With risk ratings, each individual looked at can be assigned a risk score on the basis of their profile, and a customer with no digital footprint will have a much higher risk score than a user with one. Such risk scoring can help introduce friction only where it is needed, in what’s called dynamic friction that changes based on the customer’s score.
Additional Considerations
Although digital footprinting is an excellent, cutting-edge tool for spotting fraudsters, it works most effectively when combined with other fraud prevention and detection tools. Device fingerprinting involves collecting information about a user’s device, while IP analysis looks at where in the world they connect from and how. These help in multitude ways. For example, it is suspicious if several different users use the exact same device and IP, so an extra check can be introduced.
Another consideration of fraud prevention is velocity checks, which examine customer actions through the lens of time. For example, if a customer has attempted to purchase multiple tickets from your website for events at various locations over the course of just a few hours, then this will be flagged by the velocity-checking process. While some customers may do this for legitimate, non-fraudulent reasons, it can also be a sign of fraud. Other kinds of behavioral analytics include looking at abnormal interactions and a user’s typing cadence.
By combining data points from digital footprinting, device fingerprinting, velocity checks and more, through sophisticated fraud prevention software, travel companies can be better protected.
Some vendors allow the merchant to fully customize each of these elements to match their risk appetite and past fraud events, while others promote a set-and-forget approach, often making use of blackbox (non-transparent) machine learning.
Digital footprinting is a great tool to stop fraudsters from hijacking your ticketing and other transaction systems. Thanks to data enrichment, it crucially involves scaling, which means that you can introduce as many or as few checks as you need, from 100 checks an hour to one check an hour.
By adopting strategies such as dynamic friction, suspicious accounts will need to provide more information, while customers proven to be trustworthy will enjoy frictionless check-out – all keeping you safe from instances of carding, account takeovers, and ticket scalping, as well as every other type of fraud.
About the author
Gergo Varga has been fighting online fraud since 2009 at various companies – even co-founding his own anti-fraud startup. He’s the author of the Fraud Prevention Guide for Dummies – SEON Special edition. He currently works as the Senior Content Manager / Evangelist at SEON, using his industry knowledge to keep marketing sharp, communicating between the different departments to understand what’s happening on the frontlines of fraud detection. He lives in Budapest, Hungary, and is an avid reader of philosophy and history.
Qatar Airways’ performance
