Good Requirements vs. Rework

The post is made possible by the great people at Seavus, creators of online Project Management tools such as ProjectOffice.net, Project Viewer, and Project Planner.  Please visit their site for more information.

This article is based on information from Hooks and Farry’s book entitled, “Customer-Centered Products.”

“Better, cheaper, faster!” “I want it yesterday!”

Everyone out there has heard one or more of these – how and when you’ve heard them depends on your industry. But they translate into the same headaches for everyone. If you are a product development manager, you must develop and deliver higher quality products in less time and for less money than you have in the past. If you are in charge of procuring products for use in your company, you must procure a quality product faster and cheaper than ever before – especially in this economy. Otherwise, you may not be able to stay in business. Read more »

Running a Project on a Shoestring Budget

The post is made possible by the great people at Seavus, creators of online Project Management tools such as ProjectOffice.net, Project Viewer, and Project Planner.  Please visit their site for more information.

If you’re working in a large corporation with a very professional PMO already in place and a handsome budget set for the project you’ve just acquired, then this article is probably not for you.

Budget management is always important, but it’s highly likely that the amenities you need to manage your project with the high-paying customer that has been lined up are already built into the overhead of the project. The flights to the customer site are built in by Sales during the negotiation process, as are some additional equipment that may be needed specific to your project and implementation.

However, if that is not the type of project you’re running, then please read on as you might find something interesting or helpful from this information. I’ve been working mostly remotely as an IT project manager for the past 3+ years. Sometimes that has involved running large multi-million dollar projects for deep-pocketed clients meaning the little things and extras on a project definitely aren’t an issue. No concerns with cutting back because certain things are expected and are built in to the overall price of the project.

On the flipside, if you’re an independent consultant – as I am – and you have a mix of customers, then you’re likely to have a few clients that do not have deep pockets. These clients watch every dime they spend and that means of course that everything you do can and will be subject to their scrutiny. It also means that you have to watch how you do business carefully because you’ve likely not been able to price the project with a comfortable profit margin. It’s more likely that your margin is small and if something goes wrong causing extra work – and it’s your fault – you could be doing much of the work for free!

Here are some specific things that I do to reduce costs, keep things greener in terms of resource usage, etc. and keep the customer’s expectations steady in terms of on-going project costs:

• Bill the client a fixed price every two weeks or every month. This is basically like a retainer and if I’m doing this, I bill the work up front. It’s too risky in this economic climate to bill after the fact. Only do that if you really want (or need) this particular customer and they won’t budge at all on the upfront billing issue. Most will budge or meet you halfway letting you bill at the beginning of a two-week period and then pay you one week into it.
• Use video conferencing and teleconferencing whenever possible. This way you can avoid costly travel for the project and for your client. You can get video conferencing setups free at places like DimDim (www.dimdim.com) and you can get free conference calls at Freeconferencecall.com.
• Use free over-the-web fax services. Faxzero (www.faxzero.com) allows you to send faxes for free and Faxdigits (www.faxdigits.com) gives you a number to receive faxes with – they then come to you as a pdf file and you retrieve them online.
• Use a free pdf document converter. There are an increasing number of free pdf converters available now. It use to be that you had to have an expensive version of Adobe Acrobat to convert files to pdf format. Now you can download software like PrimoPDF (www.primopdf.com) and CutePDF (www.cutepdf.com), among others. I’ve tried several of these and the quality so far has been good on every one that I’ve tried.

Summary

There are a lot of options available these days to make the small vendor or independent consultant look bigger and many of them are free. The key is to start looking now, test out your different options and chose the best one. You definitely want to look professional and be ready when the need is there, so don’t procrastinate.

Estimating Project Effort and Cost

The post is made possible by the great people at Seavus, creators of online Project Management tools such as ProjectOffice.net, Project Viewer, and Project Planner.  Please visit their site for more information.

This article is based on information from “The Project Management Question and Answer Book,” by Michael Newell and Marina Grashina.

As part of your project management responsibilities, estimating the effort and cost on the project is going to be something you’ll have to do from time to time. Sometimes that will all be decided up front by sales and the customer and there won’t be much you can do about it. However, there will be times…hopefully…where you’ll get some solid input to the estimation process – especially on change orders.

In order to run the project you first need to know how long things take, how much they will cost, and what kind of resources will be required. The only way you can get this data is by doing good estimates. Without good estimates you really have no way of knowing where you are at any point in the project, and you have no way of predicting how much the project will cost or how long it is going to take to do it.

A project estimate is the determination of the effort it will take to achieve a desired result. There are two major things that we estimate in a project; one is the cost of the project or the money that will have to be spent to produce it. The second is the time that the project will take to be completed. Whenever we are doing project estimates, we will not only be estimating the cost of doing the work but also the time that it will take to complete it.

No one said project management is easy – and likewise there are many pitfalls in producing a good estimate for a project. The deliverables may not all be identified, key project supports change their minds, project team members may be optimistic or pessimistic, time may be limited, and so forth. If the project is poorly defined, there is not much of a possibility that the cost and schedule estimates are going to come out anywhere near what the actual cost and schedule time for the project will be.

Project management is about realistic expectations. Therefore, overly optimistic schedules can cause problems in estimating as well. Stakeholders or management frequently shorten schedules without adding budget to the project. Generally we can look for increases in cost when schedules are shortened. An inaccurate work breakdown structure causes work tasks to be missed. When the individual estimates for the tasks are added up to make a bottom-up estimate for the project, missed work tasks cause underestimation which can severely affect the budget. Understating risks underestimates our cost and schedule estimates as well. Risks that are not identified and identified risks that have the wrong value for their estimated probability or impact cause management reserves and contingency budgets to be misstated. Cost inflation and failure to include appropriate overheads cause erroneous estimates. It is important to recognize wage and price increases that will occur during the project and adjust estimates accordingly.

Summary

Project estimation is a skill that comes from experience. However, even the most inexperienced project manager can produce good estimates. Look to your skilled team resources and management to assist and make estimates with confidence. And don’t be afraid to adjust estimates as your project moves along and you gain more knowledge – your project budget will be healthier for it.

Knowing When to Start Billing

In this article, I am again looking at it more from the perspective of the IT Consultant rather than purely a project management situation. Ultimately, the two are often one in the same, but in this instance the IT Consultant/Project Manager is running the entire show themselves in an independent role and working through the perplexing situation of when to start billing, what to give away for free, and how much leeway to give the customer/client.

One thing you must understand when dealing with new clients is when it is proper to start the clock – when you should start charging the client for your problem-solving services. Both during the interview and afterward, new consultants are tempted to rush in and do their best to solve every problem that the client presents them with – long before they’ve gotten any real commitment from the client to pay them for these efforts. Although providing such free assistance may make the client very happy, it by no means ensures that the client will subsequently pay you for more work. In fact, quite often the opposite is true. As one consultant I discussed this with stated that giving away free advice usually leads to giving away more free advice. It’s hard to break that cycle with some clients.

Clients are human

This isn’t because clients are exploiters. It is just normal human instinct to see what we can get for free and only pay for what we absolutely have to. But because clients will gladly allow you to do work for them for free that they can’t bring themselves to pay for, successful consultants must pull off a delicate balancing act. They must suggest to clients that they can solve their problems, without actually solving these problems until the clients agree to pay for it.

Which is not to say that you won’t do some work for free. Almost all successful consultants accept that they have to give some work away for free periodically to clinch a deal with a client. Most consultants give clients a free initial consultation lasting anywhere from one to three hours and many invest more unpaid hours drawing up formal proposals for potential clients.

Set consultation limits

But successful consultants also know that they must set clear limits on how much unpaid time they will devote to the client. One consultant I’ve worked with explains it like this…”Generally, I don’t bill for the first meeting with a prospective client. But I don’t give any real advice in that initial meeting either. Once we’ve gotten past the first meeting and agreed to the terms of the contract, then all the work that I perform related to that client is billable.”

Another colleague of gives potential clients one or two hours of free time in which he explains his services and shows them how he might be able to help them. Then he explains that for any concrete and in-depth analysis, they’ll have to pay.

Though experienced consultants emphasize the need to set strict limits on the amount of free time they spend on any client, new consultants often fear that they can’t get away with this kind of behavior because of their lack of experience. They tend to think that giving away a free sample of their work might be a more effective way of landing a new client. But experienced consultants will likely agree that this is almost always a mistake. If you don’t act as if your time is valuable when confronting clients, then why should they? I guarantee you that they won’t place a higher value on your time than you do.

Set client expectations

It is important to make it clear that you expect to bill for your solutions. It is equally important to let the client know when the billing clock will start ticking. Many consultants state that their potential clients tend to stretch out that first meeting and start to ask for advice during that initial consultation. An easy way around this is to follow a strict policy that the first hour is free. After that, all time is at the normal billing rate. This does dictate that the rate be discussed and established as early as possible so you need to feel comfortable about that very early on. Establishing policies such as the one free hour stance lets the client know up front that you will not allow yourself to be taken advantage of.

How to Make Project Management Work in Your Company

I ran across the list below – which is actually a subset of the original list – while reviewing the book “The Fundamentals of Project Management” by James P. Lewis. This book was published in 1995 so thoughts and processes have changed a little. I’ve selected what I believe are the most relevant items from Mr. Lewis’ original list for inclusion in this article. I’ve made some changes and additions as well. Read on…

It is one thing to know how to manage projects effectively. It is another to get people actually to manage them that way. Running by the seat of the pants seems a lot easier than doing all that planning, scheduling, and monitoring. Even when people invest three or four days in project management seminars, you find that they soon forget what they have been taught and go back to the old ways.

I have struggled with this problem for over fifteen years, and I finally have some answers. Here are suggestions on how to make the principles of project management work in your company.

• Get top management involved in the process and the projects. They should be asking questions about how projects are doing. In other words, show an interest in the subject.
• Build into performance appraisals items that evaluate a project manager’s use of the tools of effective project management. Reward people for practicing the methods. But be careful. Be sure upper management is not keeping managers from practicing good methodology.
• It helps to have the entire team trained in project management basics.
• Senior management need to understand the company’s PM process and methodology to effectively set their expectations. One of the ten most common causes of project failures is unrealistic expectations on the part of senior managers.
• Practice a lot of MBWA (management by walking around – or at least very frequent communication) as the project progresses, but do it to be helpful, not in the blame-and-punishment mode. Give people strokes for letting you know about problems early, rather than after they have turned into disasters. Don’t be too quick to help, though. Give people time to solve the problems themselves. Just ask them to keep you informed, and tell them to let you know if they need help. Be a resource, not a policeman.
• Do audits to learn, and try to improve whenever possible. Verify that processes are being followed, status reports are being produced, customers are getting the info they are supposed to get, and project plans are being updated regularly. Make sure the processes that are in place are being followed.
• If you find you have a problem individual on your team, deal with that person as soon as possible. Don’t ignore the problem, as it can wreck your entire team.
• Be very pro-active, not reactive. Take the lead. Break roadblocks for your team members. Go to bat for them.
• Have team members make presentations to senior management on their part of the job or periodic presentations on their key projects. Give them credit for their contributions. Build ownership.
• If you are running a project to which people are temporarily assigned while still reporting to their own bosses (matrix organization), keep their managers informed about what they are doing. Try to build good relations with those managers. You may need their support to get the job done.
• You may find that you have to co-locate the people doing activities on the project’s critical path so that you don’t have them constantly pulled off to do other jobs. This method is being used more and more by major corporations for highly critical projects.
• It is also possible to appoint a project administrator to either do the project support or delegate it and to sit in on project review meetings and hold the team’s hands to walk members through planning, audits, and so forth. Naturally, you need to be running quite a few projects (at least ten to twenty) to justify creating this position, so this depends on the size of your organization.
• Benchmark other companies to find out what they do with project management.
• Have individuals take responsibility for championing various parts of the project management process. One person, for example, the earned-value champion, might go around the company trying to get everyone to use the method. Another might take responsibility for dealing with WBS notation, and so on.
• Read PM Tips and follow everything on here! (ok, just kidding, I added this one….)
• Look at managing projects as a challenge – keep it exciting. Stick to a process, but change things as needed to accommodate the project and the customer.