Five Steps to Delivering Projects Predictably and Profitably
Project managers like you work hard to make sure your customers are happy, and the first step is to ensure that your skilled set of service professionals are set up for success with every client and engagement.
It’s inevitable that challenges will pop up across projects, and they won’t always go as smoothly as you’d hoped for. Despite constantly fire-fighting, sometimes projects just don’t have the positive financial impact you had initially planned for. While change is inevitable — especially when working directly with the customer — it is disappointing when you hear that a project you and your team worked hard on, and which was supposed to deliver a lot of profit to the business, ended up making much less money than expected.
Service-based businesses organizations sometimes get caught measuring profitability on a project-to-project basis, rather than looking at financials across the entire department or company. the larger department or company performance. Get the projects right and the business performance will follow.
If the overwhelming majority of individual projects are completed predictably on time and on budget, that feeds into increased profitability — and it also results in high customer satisfaction. Where this happens consistently, it builds trust. Customers have confidence that they will get the value they want in the expected time frame.
But as a services business grows, so does the complexity of the operation. There are simply more teams and departments involved in the life cycle of each project and that creates more opportunities for projects to be shifted or delayed.
If your business processes aren’t well designed or haven’t kept up with the development of the business, it makes the job of project manager that much harder. Using technology in ways that create transparency and support better decisions sooner is the key to helping project managers like you to deliver projects predictably and profitably.
Five Common Challenges
1. The project delivery gets off to a bad start
There are a number of reasons why the start of a project can be rocky. Perhaps the original proposal was flawed — the price and timeframe were unrealistic. Perhaps the delivery team didn’t know enough about what was coming towards them — they were not ready to catch the project ball when sales threw it over the wall.
This starts early in the cycle — the delivery team can’t easily see the status of the project or when it is likely to start. They are not alerted when the project is close to being confirmed. Perhaps they don’t know what business problem the customer is trying to solve or what benefits they are hoping to achieve. That makes it much more difficult to establish their status as expert advisors at kick-off.
2. Lack of transparency of commercial information
If the people who are managing and delivering the project don’t have the data they need to make informed decisions, that will affect project profitability. It may be, for example, that this project was sold at a low margin. This might have been for valid reasons, such as fighting for business in a competitive market. But if the project delivery manager can’t see this low baseline they may make decisions that end up reducing the profitability of the project.
If the technology isn’t in place to map the ongoing costs of the project against the milestones that are being completed, that makes it much harder to make decisions that maintain the margin. And if the profitability of the project is only assessed at the end of it, there is no chance to do something about it and try to get the project back on track.
3. Project risks are not managed effectively
Addressing risks before they become issues is a key part of running predictable projects. But too often, project managers aren’t in a position where they can be proactive about risk management. This might be because they’re worried about being blamed for emerging risks and try to work on them without escalating them, or it might be because they simply don’t have time. They’re too busy putting out fires elsewhere to think about fire prevention on projects that aren’t currently an issue.
Sometimes, the most straightforward of the project elements are tackled first to build client trust — but pushing difficult elements out to the end can compound the problems.
4. Vital information such as hours worked is not captured effectively
Professional organizations generally monitor the time and expenses that are being racked up during a project’s lifespan. But this information is not always captured entirely, or done in a timely manner. Some businesses only check that a full time week is being logged — they don’t try to capture all of the overtime that is being put in.Sometimes compliance is poor — perhaps service professionals don’t recognize the importance of time capture in creating more accurate proposals in the future, and simply feel they are being checked up on.
5. Customers have to ask — and wait — for information on how the project is progressing
Some organizations don’t routinely make progress visible to the client. The customer can’t see what stage their project is at — and if they realize the expected milestones have not been reached, they have to get in touch to ask what has gone wrong.
When the customer does ask a question, it may not be easy to provide an up to date answer, the customer may have to wait a day or two to find out. That might have been acceptable once — but customers today tend to want closer relationships with their service providers and they expect to be able to easily access information on the progress of engagements.
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How to Solve
1. Ensure a good start to the project.
Getting this stage right depends on sales and delivery working together to ensure a good experience for the customer. Good communication and a flow of information between different departments are key to ensuring a smooth handover and kick-off.
Professional services automation can make it easier for project managers to view the status of engagements. They can then be aware when projects move into the committed stage, see the start dates, and familiarize themselves with the business challenges this customer faces before they start.
2. Give project managers access to the information they need
Project managers are expected to ensure projects are delivered with high levels of customer satisfaction, but also so that they achieve the margin that the business needs and expects. In order to do that, they have to have access to up to date commercial information that can inform their decisions and help them to manage spend.
A PSA can help project managers to monitor and model the effect of different options on the bottom line. They can track and manage costs, purchase orders and resourcing changes.
3. Bring the riskiest aspects of the project to the front
When creating the project plan, foreground the most difficult aspects of the project and tackle them first. It is tempting to start with the easier tasks. But tackling the most difficult elements early gives more scope to deliver the project on time and on budget. It is more difficult to do that when you hit a knotty problem right at the end.
Don’t be afraid to raise issues as early as possible, rather than brushing them under the carpet. If this project can’t be delivered as planned, or if an unforeseen risk has arisen, it is best to take that to the client with a new plan or a mitigation as soon as possible. A good PSA gives project managers the ability to pre-configure and manage risks, assumptions and change orders
4. Capture time and expenses data more effectively
Keep a close eye on the hours people are putting in. This is not because you don’t trust your people, rather, this is where the first signs might start to appear that the project is not going to plan . Perhaps it is taking much more work, hours, or resources to achieve the milestones than was anticipated during the estimation phase.
Capturing that on an ongoing basis gives the heads up that you need to take account of what’s happening on the ground. It also helps ensure estimates are more accurate in future. It is hard to plan projects well if you don’t understand how much work they actually take.
A PSA which offers an intuitive and well-designed end-user experience makes it easier to drive high levels of compliance and adoption and to get more accurate measurements that can be used to manage both current and future projects more effectively.
5. Push information to the Customer
Don’t wait for the customer to ask for information about what is going on with their project. Technology such as PSA can help to ensure that this information is available and monitored by the project managers. If an aspect of the project isn’t going to plan, it is better if the professional services’ team points this out to the customer at an early stage along with a mitigation plan, rather than waiting for the customer to notice.
Once this is available, push it out to customers so that they can have 24-hour access to the progress that is being made. PSA can enable a portal so that the customer can see what is happening. This helps to build trust and establish the long term relationships which underpin successful services organizations.
Running every project smoothly, on time and on budget may seem like an unrealistic hope. But understanding what is happening with each individual project can build over time into that predictability which successful service organizations provide. Doing this well offers the possibility of reducing revenue leakage, reducing the amount of unbillable rescue work that is required, and building a reputation for reliability and customer satisfaction.