The overwhelming consensus amongst AE experts is that today’s success-minded firms require a laser-like focus on strong project and financial management practices—the kind that can carry their long-term growth goals to fruition. The challenge moving forward is that the cost cutting party is over. Simply put, the days of firms cutting their way to profitability are over.
Over the past 5 years, the trend within AE firms has been to ‘cut the fat’ in order to match the high pressures of economic declines. While firms across the nation have been cutting their payroll and expenses, they have also competed with a higher emphasis on attractive price rather than increased value. Yet, as well intended as these strategies were, these initiatives have made it even more challenging for firms to deliver projects profitably.
Experts point to the importance of every single project contributing to firm-wide profitability. To achieve that, they recommend the following 5 top Project Management practices.
1. Financial Oversight of Project Results
Ensuring that the Project Managers are knowledgeable about a project’s finances can lead to a number of benefits across the
enterprise, including:
• The ability to price jobs better
• Identification of the areas of business that need improvement and what types of projects the company generates the most profit from
• Stronger Project Manager contribution to the overall profitability of the firm
2. Regular Percent Complete Calculations
This method of accounting is required for virtually all long-term contracts, and means that firms have to understand both what their project costs are at any given time, and what their total estimated costs are expected to be. Revenue and costs are then reported, based on how far along a firm is within their project.
3. Out of Scope Management
Out-of-scope management refers to the fact that projects can have many different phases, all of which are prone to widespread design changes. By setting expectations regarding the scope of the project up-front, Project Managers can effectively eliminate the potential for its firm to move into a ‘grey area’ when changes arise—wherein neither the firm nor the client is in agreement about strategy, timing or pricing.
4. Consistent Backlog, Reporting, Monitoring and Updating
Firms who are geared towards success in the upcoming years need to make it a priority to have a comprehensive staffing plan and strategy—one that will ensure they not only have enough people to service the work, but also that they have the right people to help grow the firm and remain ahead of the competition.
5. Project Management Training and Development
While firms have cut costs, they have also deemphasized Project Management training. By getting back to developing a culture of Project Management, AE firms ensure that their most important assets—their people resources—understand the underlying purpose, skills and profit-increasing techniques associated with good Project Management.
All Project Management best practices mean nothing without the strong financial control and understanding to keep your firm ahead of the competition. With this in mind, it’s important for goal-oriented AE firms to recognize where they should be hitting when it comes to key metrics. In other words, it’s all about knowing the numbers.
