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As with life, when you’re running a business the majority of the lessons you learn come from the mistakes you make. Making mistakes and learning from them is a key part of becoming an experienced leader.
However, to be successful, you actually have to learn from them! Making mistakes is one thing, but repeating the same mistake over and over is quite another.
Unfortunately, when it comes to project profitability, most companies tend to repeat the same mistakes time after time after time.
We’ve lost count of the amount of people who’ve told us they “know” how much a certain type of project costs, only to find that if we collect and analyze timesheet data, what they “know” is often wrong and they’re repeatedly under quoting.
Typically, under quoting or over delivering on a small scale doesn’t inflict substantial damage. The real threat is when they occur over and over, seriously eroding profits, sometimes to the point of rendering a business unsustainable.
The good news is that it’s actually pretty easy to learn from your mistakes and correct them going forward—by conducting project reviews.
Sadly, most people don’t do them. Instead, they dive from one project into the next without taking the time to review what happened on the one they’ve just finished.
This is one of those classic examples of being so busy working in the business that you don’t spend enough time working on the business.
However, if you get strict with yourself and implement a process of reviewing projects when they’re done, you’ll quickly reap the rewards.
If you’re looking for a “hack” to improve project profitability, project reviews are right up there with the best of them.
So, how do you do it? Read on…
Project Reviews are a combination of qualitative and quantitative elements. In other words, we need to both analyze some performance data, and also assess the project in subjective terms e.g. what we think went well, what went badly, etc.
It’s important that the review doesn’t solely rely on people’s memories and opinions. We need data, too. No matter how happy the client might have been with the output of the project, you can’t credibly say it was successful if it cost you twice as much to deliver it as you got paid.
Step 1 is to ensure you’ve documented your budget—ideally broken down by deliverables, role and days/hours.
Step 2 is to then gather key financial data, namely timesheets, expenses and any external costs we incurred from third parties.
With this data, you’ll be able to comparing your “budget” with your “actuals” to determine if the project was delivered profitably. Of course, if you’re using CMap, this is done for you automatically in the “Budget vs. Actual” area.
Another element people often overlook is the timeframe of the project, namely comparing how long the project actually took to complete, against how long we thought it would take.
Analyzing whether or not the project was delivered profitably is a great first step, but you should also look at the project from a subjective perspective. Questions to ask include:
· What went well?
· What went badly?
· What lessons can we learn?—this should cover both the subjective and the quantitative data
· What, if any, actions should we take to improve things in future?—e.g. changes to the project delivery process and, changes to how we quote, etc.
If you conduct the Budget vs. Actual analysis and then gather subjective data about how the project went and where you have room for improvement, that would yield enormous benefits in and of itself … But there are some bonus gains to be made...
As we’re sure you already know—especially if you’ve read our work on “referenceability”— when you’re trying to win a new client, they’re much more likely to be sold by what other clients say about you than by what you say yourself, which is why client references and case studies—also known as “social proof”—are so powerful.
Unfortunately, case studies often end up on the back burner because thinking about them tends to be a separate exercise that no-one ever gets around to.
However, a great way to build a strong library of case studies is to discuss it during your project reviews. Did the project go well? Is the client happy? If so, would this project make for a good case study?
It will only add a couple of minutes to the project review meeting, but identifying which clients/projects to feature in case studies is half the battle. So, we highly recommend you add this to your project review meetings.
In fact, as you’re writing down the things that went well during the project, that could very well form the outline of the case stud itself.
Doing this can give you invaluable material for your marketing efforts going forward—resulting in more work in the future!
Naturally, you want to do this consistently across all your projects—ideally in the same way.
As such, you should template the review process and record the data in a way that makes it easy to compare across multiple projects. That way, you can spot patterns and readily identify areas and issues that need to be addressed.
For example, here’s the form outlining the data we capture when reviewing our onboarding projects:
If we were to look across multiple reviews and find that our “Actual Durations” were consistently exceeding our “Planned Durations”, we could then adjust our timelines for future projects to ensure they don’t run over.
Similarly, if you’re finding that projects consistently go over budget, you can investigate why. If, for example, it turns out they tend to go over by a similar percentage, you could opt to increase how much you quote for those projects by that amount. This is where a solution like CMap, which has Fee Estimator templates functionality, can be swiftly adjusted ready to make sure future projects are quoted at the updated price.
Don’t just do reviews for the sake of it. If there are lessons to be learned—good or bad—implement them and improvements will follow. Remember, when you follow through on the lessons learned from project reviews, they help you achieve improved profitability, raise the quality of your services, enable your people to develop and progress … we could go on.
Implement the lessons from project reviews and positive things will happen.