The PM's Role in Project Profitability - Part 1

Who has overall responsibility for the profitability of a project? Sales? The VP of Marketing? The CEO? The project manager? The project team? Sales is responsible for making a deal on the project that is targeted to make money for the company. The VP of Marketing is responsible for staffing sales and account managers and business development to go out and find new sales opportunities and to create new business for the organization. The CEO has overall responsibility for the organization and it’s profitability. If it flounders for an extended period of time, it will be the CEO who resigns. But in terms of overall responsibility for the budget and profitability of the project….that’s the project manager.

So we’ve established that it’s the PM’s role to maintain the project budget and guard the overall profitability of the engagement. How does that happen? What can the project manager do to ensure project profitability? What actions can he take to help guide the project to an on budget delivery that means it met its financial goals and ultimately ended on a profitable note?

Meticulously manage scope

Most any project manager would tell you that a project’s financial health begins and ends with scope management. And the project manager who performs scope management the best wins…period. Much is said about scope creep, requirements definition and documentation, and ongoing management of new work on the project. But unless that line in the sand is drawn and the project manager adheres to it and gets his team to adhere to it, profits will be lost, unplanned work will happen to make a customer happy, and the project will mysteriously pull into the finish line 20% over budget.

It’s easy when our very skilled developers are working closely with subject matter experts on the customer side for them to incorporate ‘nice-to-haves’ that come up during meetings. The problem is, these ‘nice-to-haves’ aren’t actually part of the documented project requirements that the end solution is being built against. It is the project manager’s responsibility to educate his project team about the dangers of such activity. Five extra hours here, ten extra hours there, more testing time and suddenly you find the project several thousand dollars off the mark budget wise.

Only perform work that is documented by requirements and ensure that all other requested work is turned into change orders that are priced for the customer to review and decide whether or not to pay for. Change orders make the project more profitable by allowing the delivery organization to get paid for that work and they make the customer happy by getting work that they want added on actually documented, completed, tested, and part of the final solution.

Frequent and purposeful revision of the project schedule

If the project gets out of hand, profitability will likely go with it. Many project managers in matrix environments are managing several projects at once. With so much going on, it’s very easy to lose track of what tasks are happening when – also making it very difficult to keep the project team in check and hold them accountable to their project tasks that they are responsible for.

It’s definitely not enough to put the project schedule together and leave it alone. On some projects, PMs start with a detailed schedule produced from project management software and then they put it on a shelf. That can’t happen - it must be a living, breathing part of the project and it – along with the weekly status report – should drive the weekly formal project status meeting with the customer. A regularly distributed, up-to-date project schedule lets each team member know what tasks they should be working on and keeps the team focused on the work that should be happening. Meaning your time, effort and dollars are being spent on the important work – and helping to keep the project profitable.

In Part 2 of this two-part series, we’ll examine three more ways the project manager can help keep the project on track and profitable throughout it’s lifecycle.

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Take Your Project to the CEO

As project managers, we often wish there was a way to ‘get our way’ on our projects. Get the resources we want, secure the proper equipment for testing, and maybe increase the project budget to get the entire team onsite for a project milestone celebration with the customer. But, alas, we’re so busy with the day-to-day management of our project – and it may be one of several projects that we’re leading at any given time – that we don’t have the time or energy to make too much noise about it. If only there was a way to make things easier to get what we ‘need’ for our projects – and to sometimes just get the things we ‘want’, too.

What we find often is that in order to get things accomplished for our projects and on our projects and to gain the visibility we need to get there, there are some steps we need to take on our own. We essentially must ‘market’ our product to get the things we need for it to help ensure its success and to help ensure the overall satisfaction of our customer on the engagement. And there’s no better person or persons in power to market your project to than the CEO or top-level senior leadership within your company. The three proactive actions that I’ve found to work best for me are discussed below.

Send your project status report to senior management

A very easy first step is to include your CEO or senior management on your regularly weekly status report distribution. As long as they have your status report on a regular basis then they know who you are, who your customer is, and what’s going on with your project on a weekly basis. That’s probably 100% more visibility than most of the projects in the organization.

If your CEO knows your project and knows your needs, then you’re more likely to get their attention when issues arise – like resource availability or technology needs. You’ll be seen as proactive and on top of your project and you’ll be surprised how quickly help will be on its way when needed.

Have the CEO or other senior management attend a status meeting

Invite the CEO – or some level of senior management – to your next status meeting. Think of a reason – any reason – that will get them there. Maybe an important issue is being discussed that requires a key decision and you’d like to have them hear about it and be involved.

By getting the CEO involved in your status call with the customer you will be serving two purposes that will help your project from this point forward. 1) Your CEO or senior leadership will be even more aware of you and your project further entrenching their interest in your project’s well-being. And 2) the customer’s satisfaction level will immediately rise because now they think their project is important enough to your organization to warrant this type of personal involvement from the top. Not many projects get that – but then not many project managers go to this level of effort to make it happen.

Invite the customer to your site

One more thing you can do is to invite the customer to your site if they are not local or if this is not already a common occurrence. Invite them for a tour, or a face-to-face meeting with your leadership, or possibly even a disaster recovery demonstration by your IT staff if that’s relevant to what you’re doing for them on this engagement.

Bringing the customer onsite can definitely boost the profile of your project within the organization because there will be some specific preparation that will have to happen and likely some post-visit follow-up and communication between the customer and your senior leadership.

Summary

I’m certain there are many more ways you can make your project more visible – these are just three. However, gaining the attention and involvement of senior leaders in the company in your project – in a good way rather just when disaster strikes – can bring instant visibility to your project. And once that happens, it’s far easier to gain help with resource and technology acquisition, project funding, and the general knocking down of those annoying roadblocks that often get in the way of our project and a successful end solution.

Managing Projects Through Uncertainty

These are definitely uncertain times. The economy is still tanked in the US. In some US cities one out of every seven house sit empty, real unemployment rates are running as high nearly 30% (After adjustments), and there are approximately five unemployed applicants for every one open job. Uncertainty and chaos at its best.

So it should be of no surprise when we experience uncertainty in our projects and with our project customers. After all, the very same uncertainties I've already mentioned are affecting our companies, our client companies, and nearly every single financial decision being made. How can anything be stable? How can we be certain that our project won't be halted or completely shut down tomorrow? How can we be certain that our project management jobs will be relevant and needed next week? How can we know for sure that our project teams that our customers are counting on won't be disassembled due to layoffs or needs on more important projects next month right in the middle of critical tasks? The answer is we can't. We can never be certain. Even in good times we can't be certain of these things as managing projects is really all about managing change, isn't it? I've had most or all of these things happen to my projects and teams in good times and bad due to forces and conditions that are often beyond my control or influence.

We don't take on the role of project manager because it feels safe. Project managers generally know things can change or happen during the course of any engagement that can greatly affect the outcome if we aren't prepared for it. It's called risk planning and risk management. We just have to be aware during very uncertain times that there are additional risks that may need to be considered and planned for.

So, do we really do things differently when we're managing in uncertain times? And by uncertain times I mean with our jobs, our company's status, our client's stability, or our projects financial or technical viability. Do we do things differently? In my opinion, yes, at least a little.

When I'm managing a project during what I would consider unstable or uncertain times or circumstances here's what I focus on:

Solid documentation

Document, document, document. It's a tedious task unless it's for deliverables that are already built into the contract and we're getting paid for them. But during uncertain project times it becomes even more critical. The more documentation that's available, the easier you can onboard new team members if your project team is unstable. And, more documentation means you have yourself well covered if customer questions arise concerning your team's performance on the project.

Thorough risk management

We all perform issue management - it's hard not too when issues arise. But really performing risk management and doing it right is something we often overlook or gloss over. Not only is risk management and planning critical, it's even more so when times are uncertain. Different things need to be planned for such as work stoppages, technology solution changes, or sudden project resource losses.

Effective communication

Communication is job #1 for the project manager and it's never more evident than when you're dealing with unstable project situations. It's extremely important to keep your project team and the customer well informed of project status, project schedule, and all issues at all times - especially when your project is running through turbulent waters.

Customer satisfaction

There's not really any one thing you can do in terms of customer satisfaction. There's not one thing you can specifically do to guarantee it. But rather it's a cumulative process of maintaining best practices and good communication and checking in frequently with the customer to make sure that their needs are being met. Don't assume your customer is happy...ask them.

Frequent upward reporting within the organization

Finally, keep your senior management well informed on your project. Especially if the uncertainty lies within your own organization. The loudest project manager is usually not the one who gets the ax first. It's the quiet one because they seem more expendable even though they may be the ones who are just the best at taking the ball and running with it. So if you're more independent and good at taking off with a project with little to no senior direction, that's great. But if your company is laying people off, start making some noise. Make sure your senior leadership knows who you are, who your project team members are, and what's happening on your project.

Summary

I realize that these are things we should - and hopefully do - focus on anyway during our projects. But during uncertain times they are definitely key processes that we can't afford to skip or cut back on. If anything, they need increased attention and focus and that's where I generally put in some extra effort. I can't say it's always what keeps things afloat in uncertain project times, but I can guarantee that it has never hurt the project.