Project managers work hard to make sure your customers are happy. The first step is to ensure 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 — which was supposed to deliver a lot of profit to the business — ended up making much less money than expected.
Service-based businesses sometimes forget the importance of measuring profitability on a project-to-project basis. Rather than looking at financials across the entire department or company, focus on getting a handle on profitability at the project level — and then the business performance will follow.
Complexity of the operation
If the overwhelming majority of individual projects are completed predictably on time and on budget, that feeds into increased profitability. 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. This 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 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. As a result, 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. Alternatively, 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. However, pushing difficult elements out to the end can compound the problems.
4. Vital information such as hours worked is not captured effectively
Professional services 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. They 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. When 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. Professional services organizations must consider investing in PSA to mitigate some of these common challenges and ensure the business can maintain their project margins.
Kimble Applications helps professional service organizations run their project-based businesses better. Global leaders in consulting, software, and hi-tech such as NTT Data, Sage, and Canon use Kimble to optimize resource utilization, profitability, and business scalability. Kimble is the only leading software vendor that focuses exclusively on professional services automation (PSA), putting all its energy into innovating features and easy-to-use functionality that improve team collaboration and efficiency around the key services processes. Built to work seamlessly with CRM, Kimble drives a forward-looking focus and more timely decision making with intelligent insights and guidance.