The following blog will dive into the challenges and potential solutions associated with process at a project-based organization. These project management mistakes are procedural, and completely avoidable.
The Three Most Common Process Mistakes
1. Writing Bad SOWs
It is imperative for all project-based organizations to have a formal process for writing a statement of work. There is a common misconception that proposals are SOWs—they are not. SOWs are meant to be a lot more detailed and set expectations between a services firm and client. Too often this is either skipped altogether, or a project manager uses templates or cookie cutter documents for SOWs. If you aren’t customizing them in detail, it could be as bad as not having one.
2. Bulk Resource Scheduling
This is the idea that a resource manager distributes hours to the team, and individuals are responsible for tracking those hours in a system, due at the end of the month. For example, a resource is given 40 hours on a project, by the end of the month they probably don’t remember if they actually spent 40 hours on that task. Maybe they spent 30. Or, maybe they spent 50. But, it is likely that the resource will enter in 40 because that’s what they were assigned. There can be some serious margin leakage here. Not to mention, this may be a red flag that work is being consistently under-budgeted.
3. Failure to Track the Cost of New Business
Often the best and brightest at service organizations spend a lot of their time winning new business. Either new clients, or new projects with existing clients. Rarely are there systems in place that manage this process—how much time, and therefore money, is being spent on generating new business? How does that compare to the piece of new business just won? How are the costs impacting the firm’s net margins?
The Solution: Establish Process Standards
Services organizations, which are incredibly complex in nature, can only fly for so long before it becomes a necessity to establish standard operating processes. Without the right processes in place, regardless of the stage of business, it will hit a ceiling. That’s why experiencing growth is often the catalyst to get more organized.
So, where to start? The quickest solution is to establish a simple process immediately— set aside one day to review the previous month’s closed work. Some businesses call these retrospectives and they provide a moment of reflection for the team to share the challenges and successes of the project as a whole.
Ask the following questions following each and every project:
- How much did it cost to win the business?
- Which pieces were profitable? Which were not?
- What were the delivery challenges?
- Is the client happy? Is the team? The project manager?
Repeat for the next three months—it will be enlightening. Teams often don’t leave enough time for reflection on their work. The real power in business is having this level of insight in real-time—but this is a good starting point. As an organization, begin to grow from here.
Running a service organization in today’s economy is both exciting and challenging at the same time. Many service leaders struggle to keep up with project management best practices, and client expectations are constantly shifting and getting more complex by the day. To successfully, and simultaneously, manage people, profits, and processes at a service organization, leaders must stay away from the 10 most common mistakes of project management.
It is more important now, than ever, to learn the most common challenges associated with billable work…and how to avoid them. Luckily, our most recent ebook covers all 10 of the most common project management mistakes. Download your free ebook below!