3 Keys to Increasing Project Profits. Part 2

We are now on to Part 2 of this three part series on ways to increase or protect the profitability of the projects we manage. In Part 1 we examined the obvious area of budget management and ways we can handle the project budget, analysis and forecast to protect and possibly even increase the project’s profitability. In this Part 2, I’m going to discuss resource management and ways we can best manage our resource to keep our projects as profitable as possible.

In Part 2 of this three-part series on increasing project profitability, we’ll examine the role of effective resource management in keeping project budgets on track. Equipment, third party vendors, and data center charges – among other things – get expensed to our project budgets. But far and away the biggest drain on project dollars is the efforts of project team members being charged against the project budget. These are the individuals charging probably anywhere from 20% to 100% of their time on a daily basis to our projects and they aren’t likely billing at cheap rates. Mostly likely they are dinging the project budget for anywhere between $100 and $200 per hour or more so every hour accurately charged counts toward project costs and – depending on how the project is billed – revenue. Inaccurate time charges and unproductive time can really kill the project budget and profitability fast when you’re working with those numbers. So, anything the PM can wisely do to manage those resources and costs will definitely help the project’s financial health in the long run.

To keep the project financials as healthy as possible in terms of resource usage and management, I’ve concluded that the PM should follow these three concepts…

Bring resources onboard only when needed.

Avoid bringing resources onboard just to hoard them. Plan well for when the resources are needed and plan their tasks well to keep them as fully utilized as possible. But the key is to avoid bringing them on just because they are available and you don’t want to lose them. Most resources in professional services organizations are required to charge their time somewhere. If you have idle resource assigned to your project you can be assured that some of their ‘down’ time is directly hitting your precious project budget.

When the project manager and business analyst are working closely with the customer team to finalize project requirements during the planning phase, there’s no need to have the technical lead already assigned to the project with little, if any, need for work. Plan out when resources will come on the project and look for ‘down’ times when they can be released for other work. That way you can both maximize their productivity on your project tasks and minimize needless charges to your project budget.

Use the right software to manage tasks.

We’re going to be using some sort of software to manage the projects and the tasks that we’re delegating to the project team members. But it’s more than just that task management issue. The information needs to go well beyond just the project manager’s eyes. The customer will want to see it as well, but if the project team also has constant insight into the overall project view and tasks as well as how and where their efforts fit in, they’ll have more ownership of those tasks. Keep them informed and focused on their tasks, give them revised schedules every week showing current assignments and task completion percentages, and hold them accountable to that information as part of your weekly status reporting and meetings. Team members who see where they fit into the overall plan and are consistently aware of your expectations of them will be more focused and more productive.

Use internal meetings to connect with the team.

We meet with the customer regularly – hopefully weekly. But just having adhoc meetings and communications with our team members is not enough. It, too, needs to be consistent – and regular weekly internal project team meetings are the way to go. Why? Two key reasons…

• It’s a chance for the project manager to get the latest and greatest status information in preparation for a formal status meeting with the customer
• It’s an opportunity for status checks on tasks that have been assigned to the project team.

Accountability is critical as most project team members are likely assigned to other concurrent projects in the organization. These internal discussions keep the team focused on your project’s priorities and help keep everyone productive. And productive team members who are being held to a high level of accountability for their efforts will help your project budget stay on track.

In Part 3 of this series, we’ll examine the role that change control and change management can play in the project’s revenue stream and profitability.

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