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CLIENT CASE STUDY


Voltas: Leaping forward to operational excellence and sustainable growth

Embedding leading processes and practices into Voltas’ operations

Overview


Voltas is a large Indian air conditioning company and one of the world's premier engineering solutions providers and project specialists. Its Projects group provides heating, ventilation, and air conditioning (HVAC); refrigeration; and electro-mechanical services across buildings, healthcare, hospitality, urban infrastructure and industrial segments.

The Domestic Projects Group’s (DPG) growth and profitability prospects were hampered by several factors causing significant cost variance and schedule overruns in projects, thereby increasing material, service and overhead costs. A sustainable program for continuous improvement in key performance metrics would not only help enhance the DPG’s systems and processes, but also boost profitability and competitiveness.

Accenture Strategy collaborated with Voltas to develop an operational excellence program focused on cost reduction, schedule variance minimization, estimation accuracy enhancement and a robust contract management system to address and streamline all stages of the project lifecycle from estimation to handover to the customer.

Voltas has already achieved a 7.6 percent cost reduction over the addressed cost base, 700 basis point improvement in gross margin, and an eight-fold improvement in schedule adherence. It has institutionalized leading processes and practices in project management, procurement, estimation and contracts and claims management into its operations, positioning it for sustainable growth and competitiveness.

Opportunity

In the highly-competitive sector in which Voltas operates, its Domestic Projects Group’s (DPG) growth and profitability prospects were hampered by several factors which caused both significant cost variance and schedule overruns in projects thereby increasing material, service and overhead costs.

These factors included increased competition, limited control over efficiencies in a 700-plus multi-project environment, a high degree of complexity, a large dependency on availability of work fronts and timely payments from customers, and a need for greater focus on contract and working capital management.

Voltas’ leaders believed a sustainable program for continuous improvement in key performance metrics would not only help enhance the DPG’s systems and processes, but also boost profitability and competitiveness.

To help bring this vision to life and spur growth, Voltas engaged Accenture Strategy. They selected Accenture Strategy because of its strong capabilities and experience in the EPC sector, its outcome orientation and rigorous, proven change management approach.

Outcomes

Accenture Strategy collaborated with Voltas to develop an operational excellence program to significantly improve its profitability.

The program focused on cost reduction, schedule variance minimization, estimation accuracy enhancement and a robust contract management system, addressing and streamlining all stages of the project lifecycle from estimation to handover to the customer.

In the diagnostic phase, Accenture Strategy conducted project site visits and stakeholder interviews as well as analyzing projects to identify the root causes of project delays and cost overruns.

Based on these findings, the team identified a number of targeted interventions across several functions to mitigate project delays and reduce costs. These were then formulated into a strategy, roadmap, process guidelines, tools and templates to guide the team over the remainder of the engagement.

To address the constraints imposed by a multi-project environment, Accenture Strategy instituted a robust, integrated project planning and control mechanism. A category-led central procurement organization was established to help develop category expertise and drive cost reduction.

The new strategy helped Voltas leverage strategic sourcing techniques such as demand aggregation, zero-based budgeting, rate contracts, e-auctions, value engineering, and alternate vendor introduction to achieve significant cost reduction.

An end-to-end contractor management process including strategy, database, selection, monitoring and rating was designed and implemented along with development of productivity norms and a resource planning tool.

Through its close collaboration with Accenture Strategy, Voltas has already achieved a 7.6 percent cost reduction over the addressed cost base, 700 basis point improvement in gross margin, and an eight-fold improvement in schedule adherence.

Voltas has also institutionalized leading processes and practices in project management, procurement, estimation and contracts and claims management into its operations thereby positioning Voltas for sustainable growth and competitiveness.