Ever lost money on a project, even one that you managed to complete? Well, you’re not alone.
In their 2018 Pulse of the Profession report, PMI estimates that 9.9% of every dollar is wasted due to poor project performance.
For every $1 billion invested, that’s a massive loss of $99 million.
Scale that up to include global capital investments and we get losses of $1 million lost every 20 seconds.
That’s $2 trillion wasted every year.
PMI breaks down the common causes of all this wasted money further, with these two glaring issues in particular catching my eye:
The two issues above typically go hand in hand:
And it’s all downhill from there.
Maybe a small business doesn’t have to worry about losses in the millions and trillions just yet, but wasting 9.9% of every dollar you spend on a project, no matter how big or small, is still a big problem.
Fortunately, it’s a problem that can be remedied, as long as you keep your project budget under control and stick to your schedule.
Here are a few tips on how to do just that.
1. Keep Your Scope In Check
Project scope directly affects your budget and schedule. To keep the latter two from ballooning uncontrollably, you need to keep the former in check.
The first and arguably most important step here is to make sure that you and your client agree on the project’s scope and deliverables.
These include not just the final product–like a website, for example—but everything you need to do to get to that final deliverable, from getting a domain name and hosting to creating or buying any plugins the website may need.
When a client comes to you for a project, don’t just say “OK” and start working. Say “OK, here’s how we’re going to do this and what we need to complete it.”
This should also be done for any changes or additions to a project. Before you go implement the changes, make sure your client understands exactly how it will affect the project overall.
Let’s say you’re building a house. You’ve broken ground, poured in the foundations, put up the walls, and you’re just a couple of days away from turning it over to your client.
Your client rings you up one day with a request to add solar panels to the house’s roof. He just watched a documentary and wants to do his part for the environment. And he wants it done before the turnover.
The client may think that all you need to do is buy the panels and have your in-house electrician install it over the afternoon, but that’s where he’s wrong.
Even before you go out and buy the panels themselves, you need to get a permit. Aside from the additional costs, that could take a couple of weeks, plus there’s always the chance the inspection doesn’t go your way.
And when you do get the proper permits, you need to find a certified installer to actually install the solar panels. That’s more time and money spent.
You need to communicate all these little details to a client whenever there’s a change in scope so you can manage their expectations.
Sure, it’s all very doable, but if the client really wants to use those solar panels their first night in the house, they’re going to have to push back their moving in date.
Or they can move in as scheduled, but they’ll have to connect to the local grid for a couple of weeks before the panels can be installed.
Once you’ve locked things down with the client, it’s time to get your team up to speed. Here’s where a Gantt chart can prove very useful.
A Gantt chart, which is essentially a big visual timeline that illustrates the project’s flow, lets you:
Your project’s Gantt chart should basically be your team’s bible. Every single step in there should be followed to the letter.
And if there’s ever a change in the project’s scope, deliverables, or even the people assigned to it, you can quickly make those changes on the Gantt chart itself and automatically notify your team.
2. Keep Everyone on the Same Page
Clear lines of communication between you and your team are essential to keeping everybody on the same page and making sure that you’re sticking to your project’s scope.
This is easier to do for teams that are physically in the same office. If you need to give an update to Phil, you can just walk over to his cubicle and talk to him.
A lot of small businesses, however, are now distributed. One of your developers could be in Oregon and the other in Japan, while your project manager is actually in Wales.
This is where chat apps come in handy. These let you communicate project goals, updates, expectations, and feedback with your team wherever they may be.
Slack is an office favorite, and so is Zoom. That old Microsoft standard, Skype, is another commonly used office communication app.
Just like email chains, however, chat logs can quickly end up cluttered and confusing, especially if you’re on a channel with multiple people.
Sifting through hundreds and even thousands of lines just to find info relevant to you and your tasks can be a challenge.
Internally, we use WORKetc CRM’s discussions tool to turn this issue moot. WIth it, you can create and attach any forum-style discussion threads from and to just about any item in WORKetc, plus you can:
This helps keep the chat and email clutter at bay, plus it adds another layer of visibility and accountability to your projects.
So that’s internal communications crossed of our list. There’s just one more factor that needs to be included here: the client.
You can do this in WORKetc CRM via the customer portal, a branded space that lets you collaborate more closely with your clients.
Through the customer portal, your clients can see email correspondence between them and your company. They can also view and follow up on any support tickets they’ve sent in.
You can even give them access to whatever project you’re doing for them so they can track your progress without having to bombard you with dozens of emails asking for updates.
3. Keep An Eye on Your Budget
You’ve got the scope locked in. All stakeholders are on the same page. Now all you need is to stick to your budget.
Easier said than done, but with preparation, it’s very possible to pull this off.
It all starts with your quote.
A simple ballpark guess of the costs involved might work for the first couple of projects you ever do, but as you get more, bigger projects you need to make your cost estimations as accurate as possible.
In order to do that, the often unfairly maligned practice of time tracking helps greatly.
When you keep close track of the time (and costs) you spend on every single project, you collect information crucial not only to giving your clients more accurate invoices, but to helping you streamline and improve your processes as well.
The biggest issue here is that it can take a while to collect this information and you need to be almost borderline obsessive about tracking your time.
But once you have that data, you can slice and dice it (we do this in WORKetc CRM using smartlists) to pinpoint improvements or bottlenecks in your current processes and adjust your cost estimations as needed.
And when your quotes are more accurate, it also becomes easier to estimate how much of a contingency fund you and the client would need to ensure successful project completion.
More accurate quotes mean more accurate budgets, with enough room for any sudden changes that may affect the project’s scope and schedule.
And with the budget covered, we’ve come full circle back to managing a project’s scope, which brings us to the next piece of the puzzle: tracking everything else.
Timesheets, task progress, project updates, what’s left of the money and what’s been spent—you need to keep a close eye on all of these in order to combat scope creep, which in turn can quickly cause your project to start hemorrhaging money.
It’s doable on a simple spreadsheet, but even that can quickly become not-so-simple and turn into a massive, unwieldy, and nigh-impenetrable jumble of information.
You can simplify the process with WORKetc CRM’s built-in project management module, which lets you:
Armed with these tips and a little preparation, you can help make sure your small business doesn’t end up wasting almost 10% of the money you spend on a given project. Alter all, that’s money you can spend on growing your business even further instead.