Clients - ITM Platform | Projects Programs Portfolio

A professional business is only as successful as the projects they do for their clients. Whether they are short or long term, making clients happy is the focus of the company. If projects fail, the business can lose their source of revenue. This, in turn, can end the business.

As your company continues to grow, the risks that come with not managing it effectively do as well. Right now is when you need to focus on avoiding three deadly project management mistakes that managers continue to make!

1. Failing to effectively communicate with clients

According to the results found in a recent study conducted by Accelo, communicating with clients is one of the most important influences that determine whether a project will be successful or not. Over 90% of the participants believed that e-mail is one of the top communication methods to be used while working on projects. The reason this may be the case is because many companies don’t have access to project management tools or softwares that provide them with alternative options. Therefore, they are left with less effective choices such as e-mail.

Solely relying on e-mail is stifles productivity because it creates silos between teammates. Project members have more difficulty quickly communicating with one another because e-mail is built for communication amongst only a few individuals, making it hard to share important information without creating long chains of communication.

As your team begins to grow and you have more work and projects in your hands, it will become increasingly problematic to try and keep track of all of the information being passed around and ensure everyone is aware of even the smallest project details. The solution isn’t to completely replace e-mailing. You should integrate a project management software that will work side-by-side with e-mailing by providing teammates with an alternative platform they can use for immediate communication and collaboration, saving e-mail for less urgent work.

2. Ineffectively tracking your budget

While the logical choice would be to connect a timesheet with your project management software to prevent this from occurring, only 30% of managers choose to do so. That’s right, once again Accelo found that approximately 69% of companies are left in the dark by manually calculating the time and budget needed to complete a project. This can easily lead to long delays and financial catastrophic failures for projects.

Even though this may seem to only impact individual projects, it has the potential to do damage to the entire firm in the future. Projects will need to be consistently monitored with the help of a project management tool. It’s important to understand how your budgets are impacting project success and whether or not the project is profitable. Knowing this information will be extremely beneficial when planning sales approaches for future projects.

Since payroll is one of the biggest expenses for most companies, losing track or creating an inaccurate picture of employee resources and time can be catastrophic. As a project manager, you have to make sure you do not take on any new projects or clients without knowing how much staff you have. Employees can easily end up overworked and stretched to their limits, missing deadlines and exceeding budgets.

3. 3. Not managing all projects- even the short ones

For the most part, professional services have relatively short projects that need to be done. The majority can often be completed in under 3 months. However, this creates a common misconception that short-lived projects require less effort and have a small impact on the company if they fail. In return, over 27% of service projects end up going over budget. And since Accelo found that the average profit margin of firms is approximately 15% per project, this would mean that failing at a single project could wipe out all revenue and profitability for that company for an entire year. All in all, the business would need to then have two successful projects in order to make up for the money lost in the unsuccessful one.

All growing businesses need to take a step back and re-evaluate their project management team. See if any changes need to be made and consider implementing new technology into the business to help ensure success in the long run.

Related blogs on ITM Platform:

The Monte Carlo Method in Project Management

Extra Extra Extra!

Three disastrous project management failures

The project in the face of adversity: what should a project manager do?

What is the Virtual Sock Management or Periodical Online Management?

Isidora Roskic-Blogger ITM Platform

Receive the latest blogs directly into your inbox

The success of projects is key to any company, but even more so to those where the outturn account depends on projects. Programming, design, construction and consultancy companies and, generally-speaking, any company that undertakes projects for its clients must pay significant attention to the profitability of each project.

This article offers an analysis of the main factors influencing project profitability. This is a complicated topic and no sweeping generalizations should be made. Hence, these factors must be adapted to the specific circumstances surrounding each organization, sector and client.

Zoom into your projects while maintaining a global vision of your entire project portfolio with ITM Platform, try now for free!

1.- Define the scope

The first and major issue affecting project profitability is linked to discrepancies between what should be included or excluded from the scope of a project. Clients tend to consider a broader scope than project leaders and this difference in perception often leads to problems and conflicts that eventually affect project profitability.

Spending the necessary time to define and share the scope of a project is a key factor in project profitability.

2.- Estimate the effort

There can occasionally be little time to provide a client with a commercial offer for the project. This can lead to hasty estimations based on similarities between the project in question and others carried out in the past. As a result, the risk of mistakes is very high and should be reduced by breaking down the tasks involved and producing a bottom-up estimation to confirm that the overall estimation is in line with the work that needs to be done.

This estimate should include as much detail as possible on the profiles needed for each activity.

A good estimate will avoid project cost deviations.

3.- Plan slowly

The break-down of tasks and their estimation should be undertaken as part of careful planning of the work to be done. The organization of activities and their inter-relationships may result in the need for additional tasks or certain tasks being completed after others, which can lead to additional project costs.

Optimistic planning will mean the client has hard-to-meet expectations about the delivery date and this will eventually affect the cost.

4.- Choose the right team

The project team is a key piece of the puzzle in transforming project estimates and planning into reality, thereby meeting client expectations and maintaining the appropriate level of quality. Scrimping on resources may be more expensive in the long run. Using under-qualified personnel with no experience or little motivation may be cheaper to begin with but this can very easily become a negative factor for profitability when having to do the same work more than once, wasting time on ensuring people are clear on what needs to be done or learning how they need to do it.

High-productivity teams are capable of significantly increasing project profitability.

5.- Identify risks

All projects have some sort of risk that must be analyzed and assessed. Some risks may be unlikely while others may have a minimal impact on the project, meaning that highly significant corrective actions to counteract such risks would be unnecessary.
Those risks with the greatest exposure, i.e. those whose impact and likelihood are average or high, should be managed and may require specific actions to guarantee project profitability.

It might even be necessary to establish a safety margin in the cost to be paid by the client depending on the degree of uncertainty and the risk posed by the project.

6. Analyze profitability at the start

While considering all the aforementioned factors, project profitability should be analyzed before the project begins. It is possible that, for commercial reasons, projects with little initial profitability will sometimes need to be undertaken in the hope that the client will contract other services in the future. At any event, this fact and the level of profitability to be expected from the project should be ascertained.

Only by ascertaining the expected profitability will we be able to manage it.

7.- Foster communication by the team and with the client

Communication within the team and communication with the client are key to project profitability.

If the team communicates quickly and smoothly, it will be possible to identify any problems in time and any confusion or misunderstanding that could ruin a project will be avoided.

Communication with the client will enable expectations to be properly managed and the client to understand and collaborate on any stumbling block that may arise.

8.- Record data and manage them

Data are key to project management. Feelings and anecdotes in management may provide a comfortable or negative sensation of progress and advancement, but only objective and recorded data will be able to provide the information needed for efficient management. Recording data may lead to conflict with the project team, the members of which tend to focus on activities they consider to be productive.

It is essential for the team to understand the importance of tracking information and undertaking data entry on a regular basis and without unnecessary effort.

9.- Track profitability at all times

Tracking project profitability is not an issue that should be left until the end, once the project has finished: it should be undertaken constantly, regularly checking project status to date and taking any necessary steps when unforeseen deviations or circumstances are identified.

If they are identified quickly and a timely response is given, we will be able to correct any problems and return to maximum profitability.

10.- Project deviations

Small deviations at the start of a project tend not to be considered seriously in the hope that the project will get back on track as time goes by. However, recovery from such initial deviations is usually a very complex task that is hard to achieve.

Furthermore, these deviations are often the symptom of a larger problem, meaning it is important to project them into the future and gain a clear picture of the situation.

The Earned Value technique is a very useful tool for making project status projections.

11.- Learn from mistakes and successes

If we properly record the most relevant data from our projects, we will be able to analyze what really happened and what the specific factors were that meant certain projects achieved greater profitability than others.

We should learn from both our mistakes and our successes, being able to identify those we should correct and improve upon as well as those we can repeat and encourage.

12.- Use the right tools

For all these reasons, it is important to use the right tools (without generating a high cost for the project) that will enable swift and efficient project management, help estimate and plan, record and analyze data, and allow the team to work comfortably from anywhere.