The economy is “finally back in gear,” according to a recent article in Fortune. This should mean that projects that were sidelined for the past year or two can come off the bench, and there might be more money to go around. As a project manager, are you confident that you will be able to put the right people on these projects? Not only that, but how can you be smart about spending this money?
Successful project execution requires quality data on who is available and qualified to do the work, when specific tasks will be completed, which projects are in danger, and why. Without this data, project managers are often scrambling to keep tabs on everything and address problems before it is too late. Here are a few tips on how to get the data you need and put it to good use in your organization.
Choosing Profitable Projects
Does your management team know which of your past projects were successful and which were not? Do they know how many people worked on these projects or how much time was invested? Can you pinpoint which of your clients are profitable and which ones are not? Without this information, you cannot ensure success.
The only way to understand project profitability is to understand true project cost, which mainly comes from the cost of labor. Tracking time to projects and tasks is therefore an inescapable requirement for measuring ROI.
When you know how much employee time you are investing in a particular client or project, you will be able to determine true ROI with accuracy. (Be sure to add labor rates to the data, since one employee’s time is more expensive than that of another.) In order to improve your calculations even further, you can also come up with a process for allocating indirect costs such as rent, electricity, legal fees, etc.
For example, let’s say that a company had 100 projects in progress before the recession. Its budget was US$1 million, but in 2009, it was cut in half, forcing the company to shelve half of those projects. With the recovery, it is given the green light to resume half of the projects that were cut (or a quarter of the overall projects planned before the recession).
Which projects does it choose? It might look at which ones are someone’s “pet projects” or which ones would cause the least amount of stress to the project manager, but are those really the right criteria?
Optimally, the team members were tracking their time on these projects before they were postponed. If so, project managers can see right away which projects were on schedule and budget, and which ones were not. If the projects had not yet been started, perhaps the project manager could look at past projects that were similar in scope, budget or other factors. Which projects have the best chance of bringing in the right ROI?
If, however, team members were not tracking their time, it is never too late to start. After all, it can help you avoid getting into this situation the next time around.
Once you understand your company’s profitability level on a per-customer and per-project basis, you know exactly where your profits are coming from and you’ll be able to focus resources more effectively. Don’t waste time and money on projects that are just not profitable enough!
Assigning the Right Resources to the Right Tasks
After you decide which projects are important enough to schedule, you need to be sure to execute them successfully, which requires, among other things, effective resource management.
First, project managers must have constant visibility into resource allocation — projects cannot succeed unless the right people are available to work on them. Allocation data enables project managers to make informed decisions and prevent worker burnout. Project managers must also be able to search for resources by skill, location and other variables. Projects require specific types of workers for each task, and having insight into not only who is available, but also what they can offer is crucial for project managers.
Remember the company in the previous example? Let’s say that the project manager has isolated the 25 most profitable projects and is ready to schedule them. A look at resource availability, however, shows that while Project A requires 10 developers, many of them are already allocated to other projects or are out on vacation. In reality, there are only three developers available to work on Project A at this time. Can Project A succeed on time and on budget? Of course not. If the project manager had forged ahead with Project A without this knowledge, assigning tasks to 10 developers without understanding their availability, it would have been a complete failure.
Keeping Tabs on Project Status
As mentioned before, once assigned to a project, team members must track their time by task. This provides actuals that help project managers to understand costs and estimate future projects with increased accuracy. It also gives them the advantage of identifying problems early on and addressing them in a timely fashion.
Think about it: Project managers are responsible for keeping scope, budget and schedules on track. Yet how can they achieve this if they do not know how many hours it takes to accomplish a task, or how many hours remain in the project? Not only that, but the management team is constantly asking project managers for status reports and accurate information on projects so they can make critical decisions. This is extremely important because according to experts, this economic recovery will take time.
“Most financial experts at Wharton and elsewhere insist that the much-talked about recovery is not here yet, despite some of the first hopeful data in months — and they remain concerned that the recovery will be weaker and take longer to gain momentum than past slowdowns,” observes a recent article published by the Wharton School at the University of Pennsylvania. In other words, things are looking up, but it is still crucial for businesses to stay on top of their game and use hard data in calculating the best strategy.
Imagine that the company mentioned earlier starts to move ahead with the 25 projects it has chosen to work on. While managing and tracking Project B, the PM realizes that 10 percent of the allocated budget has been spent and only 5 percent of the project work has been completed. This is a big problem that is only going to get bigger unless the project manager finds out why and fixes it.
Yet the project manager whose team members are not tracking time by task does not have the information necessary to take advantage of early warning signs. It will only become evident much later on that a project is over budget. This is just one example of how real-time data enables project managers to fix problems before they start and ensure a good return on investment.
The Time Is Now
Project failure is expensive and can end in disaster in both good times and bad. Just because the recession is over does not mean it is now the time to take a deep breath and relax.
Even if the economy does not bounce back as strongly as predicted, these tactics can still be used to help your business stay strong. Be sure to take this opportunity to weed out the unprofitable work and improve your project management processes for increased profits and success.
Curt Finch is CEO of Journyx, a provider of Web-based time-tracking and project accounting software designed to guide customers to per-person, per-project profitability. An avid speaker and author, Finch recently published All Your Money Won’t Another Minute Buy: Valuing Time as a Business Resource. He authors a project management blog, and you can follow Curt Finch on Twitter.