While recurring revenue is an increasingly important part of MSP business models, this doesn’t mean you can take your eye off the profitability of your project-based work. Projects like rolling out a new desktop environment or doing low voltage wiring upgrades often still account for a large part of a provider’s revenues. So, how confident are you that your current projects are profitable?
When you don’t manage projects closely, it’s very hard to tell if you’re making or losing money. Even scarier, delays and missed milestones damage customer loyalty and open the door to competition.
It’s worth spending some extra time reviewing your project processes. A provider doing 15 projects/year at $100k per project, for example, could save as much as $150k year by reducing overages by as little as 10%. It’s not magic, though. These project overages are reduced by doing what Henry Ford did when he started making cars. Ford revolutionized the automotive industry and made a killing doing so because he understood that repeatable processes combined with automation lead to consistent results and a more cost-effective delivery of goods.
Profitable technology services projects require the same mindset. Even though each project has unique business outcomes and associated challenges, they should be approached and executed in the same methodical way.
The 5 Fundamentals of Profitable Project Management
According to the Project Management Institute, there are five phases to successful project management. These phases are widely used across industries and were developed initially as the PMBOK guide by the Project Management Institute. PMBOK is recognized by the American National Standards Institute (ANSI) as being a legit way to manage projects. So, let’s take a closer look at the five fundamental stages of project management that PMBOK recommends.
Project Management Stage 1: Initiation Phase
In the initiation phase, you’re going to define what the project outcomes and deliverables are. This is also the phase where stakeholders are identified (customer contacts who will benefit from the business outcomes being tabled). Sometimes that will be one person who will be “the sponsor;” for larger projects that affect more departments, a sponsor-team may be required.
A project lead from your organization will have to be assigned as well, and they will work with the stakeholders to start building an initial scope that provides a rough estimate of what project costs could be. The key here is the word “initial,” because a true SOW (scope of work) and project budget can only come once the next phase is authorized to proceed and be completed.
Project Management Stage 2: Planning Phase
If the customer has given you approval to continue, it’s time to start building a solid project plan. The sponsor and the project lead can now roll up their sleeves and start defining deliverables and business outcomes. For each deliverable or outcome, specific tasks will be documented.
It’s not enough to just document these tasks. Each one will need a start date, a completion date, and a task owner. Some tasks will be owned by your organization; others will be owned by the sponsor at the company you’re doing the project for. Be clear on this so there’s no confusion as to who is doing what.
By the end of this phase, you should have a well-documented project plan that includes necessary resources, financing and any material goods required. It should also detail any risks and potential obstacles to project success, so your customer is prepared for the potential to pivot and adapt if required.
Project Management Stage 3: Execution Phase
Once the planning phase has led to an agreed upon SOW, tasks, timelines, and budgets, it’s time to start delivering! It is important in this phase to carefully coordinate all the necessary stakeholders, sponsors, and related material. All the tasks, task owners, and timelines for deliverables depend on an incredible amount of coordination in this phase.
If you stick to all the items agreed upon in the project planning phase and you keep all responsible parties accountable for doing what they are supposed to do by the agreed-upon time, you’ll shine!
Project Management Stage 4: Monitoring and Control Phase
This phase of project management is often lumped in with the execution phase because they happen at the same time. This is the phase where most failure occurs, however, because the complexity of monitoring and managing so many moving parts manually can lead to a lot of timeline misses.
The solution? Do what Henry Ford did: Automate as many monitoring and management aspects of the project delivery as possible. The world has come a long way since the model-T when it comes to automation. Purpose-built business management platforms like Tigerpaw One will allow you to schedule tasks, assign owners, set up alerts and notifications, and reduce time and cost overages, BIG time.
In the example at the beginning of this piece we talked about the profitability impact of even being 10% more efficient at project management and delivery. Imagine if you used elements of a business automation platform to drive 20%, 30%, or even more in efficiency gains!
Project Management Stage 5: Closure Phase
Congratulations! If all went well in the first four stages, you could get agreement from stakeholders that what you promised has been fulfilled. This isn’t the time to put your feet up and celebrate, however.
While it’s still fresh, the closure phase is a good time to document any areas you could improve for the next project. Look to see if there are additional ways to automate more parts of the process to drive greater efficiency and profit. Could resources such as technicians be utilized more effectively? Can stakeholder notifications and tasks be managed with fewer misses? Do we need to better manage inventory and stock levels, so they don’t hold up task owners? The more questions you ask, the more your streamline for the next project, the more profit you make, the more you’ll start loving project work instead of dreading it!
We hope this guide has been helpful and encourage you to continue your learning with a focus on growing your business. You can visit the Tigerpaw blog or get in touch with one of our Tigers to help you discover the benefits of the latest version of Tigerpaw One to help you make all your projects and contracts more profitable.