By Oliver F. Lehmann
March 26, 2025
Over the decades that I’ve been involved in Project Business as a practitioner and trainer, there have been two complaints that I often heard and maybe raised myself too:
- Project managers:
“It’s our sales team’s fault: They sell projects that we can’t do, at least not in time and without making a loss.” - Business Development (= Sales):
“The problem is the stubbornness of our project managers. They are not sufficiently customer-oriented and don’t care what customers want or need.”
Let’s dig deeper into this conflict and see why it matters that the groups rise above it.
What is Project Business?
Project Business is the management and execution of projects as profit-driven business endeavors, often in cross-corporate settings where contractors, subcontractors, and others collaborate as suppliers and service providers to deliver outcomes for paying customers.
Unlike internal projects, where a company invests in internal improvements or strategic initiatives, Project Business operates in a marketplace where success is defined by financial performance, risk management, and stakeholder satisfaction. In industries such as defense, manufacturing, construction, and IT, contractors take on projects that must be delivered on time, within budget, and according to contract specifications—all while ensuring profitability and cash-flow stability.
The Critical Handover
On the contractor side, securing a project involves two critical phases: Business Development (BD) and Project Execution. Business Development, often led by sales teams or dedicated bid teams, focuses on acquiring project business through bids, proposals, pitches, negotiations, and contract agreements. Once a deal is won and the contract is inked, the responsibility shifts to the project management team, which must translate the agreed-upon terms into execution realities.
Figure 1: Business development ends with the signature of the contract.
It generates no income – income comes from the projects won by the vendor.
This handover process should ensure a seamless transition from contract acquisition to delivery. Key elements of the transition include:
- A thorough review of the contract scope, deliverables, and customer expectations.
- An assessment of risks, including commercial, technical, and operational challenges.
- An understanding of the cost and revenue structure to align project execution with financial goals.
- Internal alignment on project execution strategy, including resource allocation and stakeholder management.
The handover from Business Development (BD) to Project Management is critical because it determines whether the project will be executed in accordance with the customer’s promises, within budget, and on schedule. This transition directly affects project profitability, risk exposure, and customer satisfaction.
Here’s why this handover is so crucial:
- Prevention of Misalignment:
BD teams often focus on securing contracts, sometimes making aggressive commitments to win deals. If these commitments are not properly communicated and understood by the project team, execution may start under false assumptions, leading to cost overruns, scope creep, or operational inefficiencies. - Risk Mitigation:
Every project comes with financial, technical, legal, and operational risks. If these risks are not properly assessed and transferred from BD to Project Management, the execution team may discover them too late, leaving them with limited options to mitigate the impact. - Profitability Protection:
A project’s profitability depends on controlling costs, adhering to the agreed-upon scope, and ensuring efficient resource utilization. Poor handovers often lead to unforeseen costs, margin erosion, and potential contract disputes. - Cash Flow Management:
Many contractors experience financial strain due to poor cash-flow planning. If the handover does not properly align payment milestones with execution costs, the contractor may face working capital issues, delays in payments, and even financial losses. - Customer Relationship Management:
Customers expect seamless delivery once a contract is signed. If the handover is not thorough, misunderstandings can arise, leading to missed expectations, disputes, and reputational damage. - Readiness of the Project Team:
Project managers need time to mobilize teams, procure materials, and establish governance structures. A rushed or incomplete handover can delay these steps, resulting in a reactive rather than proactive project start. - Avoidance of Internal Conflict:
When project teams inherit projects without full context, they often push back on BD teams, leading to internal friction. A structured handover ensures mutual accountability and shared responsibility for project success.
Why Does the Handover Often Fail?
Despite its critical importance, the handover between Business Development and Project Management often breaks down due to several reasons:
- Incomplete Knowledge Transfer:
BD teams, focused on winning the contract, may overlook critical execution details or fail to document negotiation trade-offs. Information about risks, scope flexibility, customer expectations, or unwritten agreements may not be fully communicated to the execution team. As a result, project managers may encounter unexpected requirements, unrealistic assumptions, or missing resources, leading to confusion, delays, and increased costs. - Misaligned Incentives:
BD teams are often rewarded based on sales performance, emphasizing contract acquisition over execution feasibility and commercial attractiveness of the business. Meanwhile, project managers are measured on efficiency, cost control, and risk mitigation. This misalignment can lead to contracts that are written to win business at the expense of practicality, where commitments made in the sales phase are difficult or impossible to fulfill under real-world constraints. - Lack of Cross-Functional Involvement:
When project managers and operational teams are not engaged early in the bid phase, they may inherit unrealistic commitments made by BD teams without sufficient execution input. BD teams might promise aggressive timelines, minimal contingency buffers, or unverified technical solutions, assuming execution teams will “figure it out.” This lack of cross-functional collaboration leads to friction, rework, and sometimes contract renegotiations. - Time Pressure:
The urgency to finalize contracts and move quickly into execution can lead to rushed or skipped handover meetings. Project teams may not have enough time to properly analyze contract details, assess risks, or plan resource allocation. Without a structured handover, teams start projects with partial knowledge, making reactive decisions instead of executing a well-thought-out strategy. - Underestimation of Execution Complexity:
BD teams may promise aggressive timelines, tight budgets, or novel technical solutions without fully understanding the execution challenges. Factors like supply chain constraints, resource availability, regulatory compliance, or unforeseen technical hurdles can significantly impact feasibility. When these complexities are not properly assessed during contract acquisition, the execution team is left to deal with the fallout, often resulting in cost overruns, delays, and customer dissatisfaction.
Consequences of a Poor Handover
When the transition from Business Development to Project Management fails, the consequences can be severe, affecting both project execution and business performance. One of the most immediate issues is scope creep and contract disputes. Execution teams may discover that certain contract terms were ambiguously defined or over-promised during negotiations. This can lead to unplanned scope expansion, forcing teams to deliver additional work without proper compensation, ultimately straining resources and causing friction with the customer.
Another major consequence is budget overruns. Without a clear understanding of financial commitments and constraints from the outset, project teams may underestimate costs, leading to budget shortfalls. Overruns not only erode project profitability but can also jeopardize the contractor’s financial standing, especially when multiple projects face similar issues.
Poor handovers also contribute to delays and penalties. Inadequate planning increases the risk of schedule slippage, causing contractors to miss contractual deadlines. Many contracts include penalty clauses for late delivery, which can result in significant financial losses and reputational damage. Even if penalties are not enforced, delays can damage customer relationships, making future business opportunities less likely.
Additionally, misalignment between BD and project management often results in eroded cash flow. If payment terms and invoicing schedules are not well-structured to align with execution costs, contractors may face working capital challenges. This issue is further compounded when change orders or additional work requests are not properly negotiated, delaying revenue collection.
Beyond financial consequences, a poor handover can create internal conflict within the organization. When project managers inherit unclear, unrealistic, or impractical commitments, tensions arise between sales and execution teams. A blame culture can emerge, reducing morale, damaging teamwork, and further diminishing operational efficiency. Instead of focusing on delivering value to the customer, teams waste time and energy resolving internal disputes.
How Can Contractor Companies Improve the Internal BD-PM Interface?
To prevent these issues, contractor organizations must establish a robust and disciplined handover process. One of the most effective measures is implementing structured handover meetings, ensuring that all project details, risks, and execution plans are clearly communicated. These meetings serve as a formal checkpoint where Business Development and Project Management teams align on scope, risks, and resource requirements.
Another critical improvement is fostering joint ownership of project success. Instead of treating Business Development and Project Management as separate silos, organizations should align their incentives and responsibilities, ensuring both teams are jointly accountable for project profitability and smooth execution.
Engaging project managers early in the bid development phase is another key factor. Their involvement ensures that commitments made during contract negotiations are realistic and executable. This proactive approach reduces the risk of over-promising and builds a stronger foundation for delivery.
Moreover, companies should standardize handover documentation to include essential elements such as contracts, risk registers, financial forecasts, and execution strategies. A well-documented transition minimizes the chance of misinterpretations and surprises later in the project lifecycle.
Ensuring clear financial metrics is equally important. Both BD and PM teams need visibility into profitability models, cash-flow plans, and contingency funds to avoid financial surprises and cash-flow disruptions.
Lastly, fostering cross-functional training between Business Development and Project Management helps bridge the gap between these functions. When BD teams understand execution challenges and project managers appreciate sales strategies, the organization as a whole benefits from better collaboration and smoother project transitions.
Joint Responsibility for Profitability and Cash-Flow
For project profitability to be effectively managed, both BD and PM teams must share financial accountability. This requires:
- Aligned KPIs:
BD teams should not be measured solely on contract wins but also on execution feasibility. Similarly, PM teams should be evaluated on efficiency as well as financial outcomes, ensuring that project performance metrics reflect a balance between sales and delivery success. - Collaborative Risk Assessment:
A joint risk analysis before contract signing ensures that both teams fully understand the financial, technical, and operational risks. By proactively identifying potential pitfalls, companies can develop mitigation strategies that reduce costly surprises during execution. - Cash-Flow Visibility:
Payment milestones should be structured to align with project expenditures, ensuring that contractors maintain a positive cash flow throughout execution. Poorly structured contracts that frontload costs without early payments can strain financial resources and increase business risk. - Post-Project Reviews:
Capturing lessons learned and integrating them into BD processes can enhance future contract structuring and negotiation strategies. A feedback loop between project execution and BD teams allows for continuous improvement, reducing repeated mistakes and improving project profitability over time.
No more Finger-Pointing
The handover from Business Development to Project Management is a critical moment in Project Business that determines a customer project’s commercial success. When executed poorly, it leads to cost overruns, delays, and financial losses. Contractor organizations must invest in structured processes, shared accountability, and cross-functional collaboration to ensure projects remain profitable and cash-positive. Only by aligning BD and PM teams under a common goal can project businesses thrive in competitive markets.
I believe, they can no longer afford the finger-pointing.
Oliver F. Lehmann based in Munich, Germany, is a project management expert with over 30 years of experience. A pioneer in project business management, he helps organizations master cross-corporate collaborations under contract. Holding an MSc in Project Management from the University of Liverpool, he is a certified PMP, former President of the PMI Southern Germany Chapter, and founder of the Project Business Foundation. Through his books, workshops, and global consultancy, Oliver has inspired professionals to excel in inter-organizational projects and tackle complex challenges with actionable insights.
