Think about your firm. You have talented individuals who are highly motivated and excel in their roles. They are detail oriented and analytical. They are meticulous and take “calculated” risks; they identify problems and come up with innovative solutions. They are tech savvy and understand how things work. They place real value on data and know the importance of meeting deadlines and staying on budget.
But how do you create a culture of project profitability? How do you prepare them to grow the business and focus on the bigger picture of increased profitability, improved cash flow and overall resource management?
The Talent Management Dilemma
A common practice within professional services and consulting firms is to promote project managers into management positions. Individuals are often promoted, not because they exhibit business management potential, but because they demonstrate exceptional creativity or technical expertise in their area of practice. Although these skills are important, they are not necessarily the skills that will help project managers drive successful projects and firm profitability.
Day to day priorities change for staff when they take on more responsibilities. They spend a great deal more time coordinating activities with other parts of the organization, negotiating contracts with clients, proposing budgets for projects and determining staff and resource needs. In addition to continuing to do innovative work, they must now oversee the work of others, set schedules and manage project performance and profitability. This transition to project management requires a completely different skillset and new set of challenges.
Balancing Project and Profitability Management
Project managers are responsible for managing the scope, schedule and budget of a firm’s projects, which means project success and profitability are up to them. A big part of this is to ensure all work outlined in a project’s statement of work is completed on time and meets client expectations. Anything outside of the contract should be renegotiated to preserve firm profit and new revenue opportunities. They must strive for excellence in project delivery, but avoid over servicing accounts. Over servicing accounts will set client expectations (for future work) and as a result could erode long term firm profitability.
To manage for project profitability, project managers must have access to information they need. They must have clear visibility into the firm’s pipeline to plan and manage staff utilization.
They must have access to historical data to understand which clients and types of projects are most profitable for the firm. This information will help them bid on projects and negotiate terms in a way that will be profitable for the firm.
Mastering the Economics of Project Management
A culture of project profitability is all about accurate and proactive planning, and making the right decisions at all levels of the business. It’s about empowering your project managers and others involved in project delivery with access to accurate, timely information when they need it. Timely information that will help them precisely plan and efficiently navigate projects through completion. It’s about having integrated processes and connected workflows that increase the efficiency and collaboration of your project teams.
When your project managers can’t access information in a timely way or don’t have confidence in the integrity of the data they are getting, your business will suffer. Let’s face it, no one likes it when the only answers they can get to quickly are based on outdated, inconsistent or incomplete data. In addition, if processes aren’t integrated and streamlined, collaboration will be inefficient – increasing the risk of late projects and budget overruns.
Technology can be a powerful tool to help overcome these challenges and promote a culture of project profitability within an organization. Project-based software provides a framework for project managers to implement consistent processes and best practices across the organization. It provides those involved in project delivery access to the right data when they need it, ensuring better business decisions through improved visibility, insight and control.
Project-Based ERP: Focus on Business Priorities
Choosing the right tool when embarking on cultural change is critical. Would you run a marathon in high heels or use a hammer to pound screws when building a house? Of course not. Professional services firms need tools specifically designed for integrated project, resource and financial management.
Read more: 6 Ways Deltek Vision Helps You Focus on Business Priorities
Project-based businesses have needs that are very different than other organizations. Each project is different and project managers need tools designed to manage and track information at the project level. Project-based ERP systems adapt to the way project-based firms work and are able to accurately track time, resources and expenses and attribute them to the appropriate project.
