4 Ways to Increase your Projects Profitability
Project Managers are always under pressure to do more, with less, and this is one of the major pain points when delivering a project. If they are new they need to on-board fast and learn everything they need to quickly.
The successful delivery of projects is the lifeblood of service-based businesses, but unfortunately, there’s no guarantee of profitability even with projects that meet the client’s expectations and are delivered on time. The trouble is that there are just so many different key factors in project profitability, many of which can be planned for, but some of which come completely out of the blue.
So, let’s take a look at the four key factors in project profitability.
1. Be prepared to say No!
In business, as in life, it’s essential you have the ability to say no. This is probably the most important technique we’re going to discuss in this blog. All too often, particularly when working with big clients, smaller consultancies can be made to jump through hoops to keep them happy. All customers and clients want something for less, but everything in this world has a price, and you cannot constantly add to your initial offering without taking a hit to your profitability. It’s essential you can:- Say no to the customer when necessary;
- Stand firm in your belief of the essential tasks (you are the expert after all);
- Stick to the prices quoted and your estimates of the work involved.
2. Create accurate project estimates
Undoubtedly the single biggest cause of delivering unprofitable projects is failing to cost them properly in the first place. The first step to costing new projects is estimating the time it will take to complete the work and, more often than not, this is based on someone’s best guess. To deliver a profitable project, you need to be able to accurately forecast the amount of work required to complete the project.3. Outline your process for approving and billing extra services.
Scope creep is another leading factor in project profitability. Extra work that is added to the project can really sink a budget, but going back to the client to ask for more payment after the work has been completed is difficult to justify. Instead, you need to clearly define the process by which additional work will be approved and billed from the outset. It’s essential everyone in the project team understands how requests for additional work should be tracked to ensure any work outside of the original scope does not impact on profitability.4. Understand your costs
To deliver profitable professional services projects you must have a firm grasp of your costs of doing business. It’s far too easy to underestimate the costs associated with delivering a project, and this is a common cause of a lack of profitability. Make sure you factor in all your overheads, from the cost of travel and accommodation, to supplies, telephone calls and everything in-between. Once you have an accurate idea of your costs of doing business, you can then start to put together a profitable quote.How can Hydra help you deliver profitable projects?
To discover more about delivering profitable projects why not view our Execution Management presentation or download our infographic.
Find out how Hydra Execution Management has helped our Clients by reading some of the Case Studies.;
