Establishing Objects and Gaining Conceptual Agreement with the Client

I’m taking a little turn from purely project management concepts and thinking more in terms of the IT Consultant in general. Afterall, many of us working as project managers are at any given time part of a professional services organization that thinks of us basically as consultants to THEIR clients.

Establishing objectives is the starting point of any consulting project. It’s impossible to do anything else until and unless you know the desired ending point. Below are some specific questions to discuss with the client in order to elicit some outcome-based business objectives. Take them with you whenever you sit down with a client or potential client as you work through that initial meeting both selling your services and diving deeper into their need and expected results.

• How would conditions ideally improve as a result of this project?
• Ideally, what would you (the client) like to accomplish?
• What would be the difference in the organization if the project is successful?
• How would your customer (the client’s customer) be better served by this project?
• What is the impact you seek on return on investment/equity/sales/assets?
• What is the impact you seek on shareholder value?
• What is the market share/profitability/productivity improvement expected?
• How will you (the client) be evaluated in terms of the results of the project?
• How would your (the client’s) boss recognize the improvement?
• How would employees notice the difference?
• What precise aspects are most troubling to you – what keeps you up at night?
• What are the top three priorities to be accomplished?

In establishing conceptual agreement about the objectives of the project you are about to undertake together, you – as the consultant – are trying to ensure the following:

• The client is not expecting anything that you cannot deliver to them.
• The client is not expecting anything that is unreasonable under the circumstances and is not within the culture and environment that the project will be performed in.
• There will be no misunderstanding later about why additional work wasn’t performed. The limits and goals of the project will be understood and agreed upon.
• The client is maximizing your contribution and talents on the project so that the project is as effective as possible for the client and as lucrative as possible for you.

If you begin with carefully constructed objectives, you can then create a framework within which the project can be launched. From that, the project can progress toward the agreed upon goals and final solution and draw to a close. Boundaries can be derived from clear objectives. While it seems that a never-ending project is lucrative for you, it actually is not. If the end is never reached, then success is possibly never really understood and realized. Setting clear goals and reaching them is what leads to future work with the same client, not a seemingly ongoing project that drains their financial resources.

Earned Value Reporting – Intro Part 2

In the previous Intro Part 1 article we began to look at Earned Value Reporting as described in Newell and Grashina’s book “The Project Management Question and Answer Book.” In this Intro Part 2 article, we’ll exam Cumulative Variance Reports before diving deepr into other EVR concepts and reporting mechanisms.

Cumulative Variance Reporting

Sometimes in very large projects there is a problem with representing the project plan and the other earned value factors on a cumulative basis. When the project budget is very large, the vertical scale of the report is so small that minor but important variations cannot be seen well. In this situation a variance reporting method can be used.

To plot the earned values on a variance chart as shown in Figure 2 we simply plot a horizontal line and label it zero. Now, instead of plotting the actual values of the BCWS, BCWP, and ACWP we plot the differences between the BCWS and the other two earned value reporting factors. When we do this, the vertical scale that we need is greatly reduced in size since we are concerned only with plotting the difference between the earned value factors and not the entire budget of the project.

FIGURE 2

The next one, the ACWP or AC, is pretty simple too. This stands for the actual cost of work performed. Like the BCWS it is a plot over time of expenditures. This time, instead of plotting the project’s planned expenditures we are plotting the project’s real expenditures over time. At the end of each reporting period, we take the total amount of money that was spent on the project during that period and plot it as an addition to the total amount of money that had been spent as of the last reporting period.

It is important that every expenditure that is made on the project be collected and be collected in a timely way. The timing of the collection of the actual cost of work performed must match the anticipated timing of the expenditures that were planned and plotted as the BCWS. This is terribly important since, if expenditures are collected early or late in the project in relation to the project plan, the earned value report will show a positive or negative variance when there may really be none.

The ACWP plot is a cumulative plot as well. If the project expenditures are actually what they were planned to be, then the ACWP and the BCWS lines will plot one on top of the other. If the lines do not coincide, there is something different from the plan taking place in the project. We are either spending too much or too fast or we are not spending enough or fast enough to meet our plan.

The next factor is the BCWP or EV. This is the only one that is a little tricky. BCWP stands for the budgeted cost of work performed. It is sometimes called the earned value as well. This is where we get the name of the earned value report. Like the BCWS and the ACWP, the BCWP is a plot of money over time. If you recall, we said earlier that each of the project tasks has a budget and schedule associated with it. The BCWP is a plot of the work that was actually accomplished. If we complete a task that had a budget of $1,000, then the BCWP for that task when it is completed is $1,000. We plot this on a cumulative basis as well. It does not matter whether we spend $1,000 or $2,000 or any other amount to accomplish this task, we earn and plot only the budgeted amount in the BCWP.

Like the ACWP, the BCWP should plot right on top of the BCWS line. If the plot of the BCWP is above or below the BCWS line, it means that the number of tasks that are being completed is greater than or less than the plan. This tells us that we are ahead of or behind schedule. If we have done all of the tasks that were supposed to be done at this point in time, the cumulative value of the BCWP will be precisely equal to the BCWS.

When we put all three of these plots together, we have the earned value report. The plots should plot right on top of one another if the project is being done on time and in accord with the budgeted amount that was in the project plan.

Example:

Suppose a project is in progress and as of today the planned expenditures for the project were to have been $500,000. Suppose also that there were five tasks and the tasks had budgets of $30,000, $100,000, $250,000, $100,000, and $20,000, respectively. The actual cost of each of the tasks that were worked on was $11,000, $120,000, $230,000, $105,000, and $20,000. Tasks 1, 2, 3, and 4 are complete.

What are the BCWS, ACWP, and BCWP (PV, AC, and EV)?

• BCWS is $500,000
• ACWP is $486,000
• BCWP is $480,000

From these figures we can see that the accomplishments of the project as of today are somewhat less than what was planned for. This is the difference between the earned value and the planned value to date. The planned value is the BCWS and the earned value is the BCWP. This means that we are $20,000 behind schedule.

We can also see that the actual cost is $14,000 less than the planned expenditures to date. This means that we are somewhat under budget. Unfortunately we are $14,000 under budget but also $20,000 behind schedule. If we add the $20,000 of work that should have been completed but was not, we find ourselves projecting a $6,000 over budget condition. It could be that things are actually worse than they appear at first glance. If the performance to date continues, the amount over budget will probably be even higher at the end of the project. This is usually considered a bad situation.

The Project Resource Request

Here is yet another template that I am digging out of my archives to provide here.  As you can easily guess, this document is designed for requesting resources at the beginning of your project based on information in your statement of work (SOW) and the estimates of resource requirements that either you or Sales put together in the pre-engagement process.  It is also helpful for requesting additional resources during the project.

How useful this is to anyone depends on the organization they work in.  If you have a mature PMO with processes in place, then I would guess that you already have a standard form or spreadsheet to use to request resource for your project.  However, if you’re one of just a few PMs or personnel acting in a PM role in your organization or you’re in the process of building some PM processes for a newer organization or even setting up a new PMO, then any template may be better than nothing.

As with all of these documents, if you want the original Word doc file, just email me if you think this will be useful or helpful.  And please, provide your own example if you wish.  We’re looking to learn and share information so I’m happy to use and post whatever you would like to provide to the readers of PM Tips.

PROJECT RESOURCE REQUEST

[Save file name as: client name RESOURCE REQUEST yyyymmdd]

PROJECT DESCRIPTION

Provide a brief description of the project objectives and overall performance of the work to be performed.

WORK DESCRIPTION AND ROLE

Describe the work to be performed on the project by the resource(s) and what role the individual(s) will play on the project team.

DESIRED SKILLS

Describe the technical, business or professional skills needed by the resource(s) to successfully meet the needs of the project.

DELIVERABLES

Describe the deliverables the resource(s) will be responsible to complete as a result of their work on the project.

DATES REQUESTED

Starting: mm/dd/yyyy Ending: mm/dd/yyyy

HOURS OR % FTE

Provide the estimated number of hours or the percent of time the individual(s) will be need to be allocated to work on the project.

WORK LOCATION

Describe all of the locations the resource(s) will be expected to be located – if multiple locations, provide dates as they are know at the time of the request.

REPORTING STRUCTURE

Describe the reporting structure for the project and how the individual(s) will be expected to operate within this structure.

The Quandary of Pricing for the Project Management Consultant

If you’re an independent consultant who is pricing yourself directly to a potential client or to a consulting firm in need of placing your type of skills somewhere, then you’ll understand this process. The client may suggest that he’s interested in your service but not happy with the rate you’ve priced yourself at. This is the million-dollar problem that happens whether you’re a consultant selling your expertise or a job-hunter being asked during an interview what your salary range is. It’s awkward any way you approach it. Unfortunately, this is always a normal part of the negotiating process.

To Negotiate or Not to Negotiate

In the Western culture it is not as clear as other cultures when negotiation is appropriate and when it is not. Therefore, many consultants find it very difficult to distinguish between a negative response from a potential client that truly is a flat-out rejection and one that is merely the beginnings of the negotiation process. You sometimes just have to trust your instincts.

Always remember, you are not required to negotiate your rate. If you’ve set your price well in line with market rates for your type of service and expertise level, then it is ok to stand your ground and state confidently that your rate is what you charge and there is no negotiation.

That said, you may want to consider the economy and your situation into that plan. If you need the work badly and you’d rather do it for less than not at all, you may want to go for it. I’ve had clients offer me more than I was even going to ask for, thus eliminating any need for negotiation or even price-setting. And I’ve also had clients negotiate hard and get an extremely favorable rate from me, but I was willing to do the work for less because I knew I would be working almost exclusively in a telecommuting role with no travel or driving expenses and could schedule when I wanted to do most of the work leaving me free for other consulting.

Dealing with Rate Objections

One way to deal with client objections to your rate is to remind them what that rate will buy them. Explain that rate is for actual productive work performed per hour, not the diluted effort they are getting from employees at 60-70% of productivity. Also explain you expertise in their particular area of need meaning you can perform the work much more efficiently and quickly, thus saving them time and mostly likely money and re-work over an employee or a less experienced and lower-priced consultant. To add to that, explain that you may be re-using code or existing templates that you’ve already developed thus utilizing proven tools and saving even more time and money.

Another approach is to explain that the your consulting services come with no overhead price built-in that would be realized when utilizing their own employees. Those overhead costs on their employees is in addition to the salaries they are already paying, but are none existent when using your services.

The Jealousy Factor

One thing to be careful of, however, is that the client you’re dealing with may be wrongfully looking at a $80 rate and thinking that translates easily into a $160,000 salary which may be much higher than the hiring manager you’re talking to. This can challenge their ego and put them on the defensive. If necessary, explain that the rate must cover professional overhead including insurance, professional fees, hardware and software – expenses that employees often do not experience. This can go a long way to alleviating the objection if it does stem from envy or feelings of inferiority.

If you still can’t get past the rate issue, and you don’t feel that it is in your best interest for this particular opportunity to price yourself lower, then it may be best to just walk away. You can try to evangelize the client all you want on why your rate is appropriate, but they just may never get it or they may not be able to afford it. It’s far better to know that up front than to get left without a payment later on – which is always a danger for consultants in nearly every industry.

Project Management from a Distance – Intro

In this upcoming six-part series we’re going to look at and discuss everything about being a remote project manager. For the most part, it will likely apply to other members of the project team. I’ve made little secret of the fact that I believe remote project management is good, is practical for many situations, is green, and can be very rewarding. However, it must be done by the right individual with the right intentions, under the right conditions and for the right reasons.

The Six-Part Series Overview

Over the course of six articles, I intend to cover the following topics (however, I make no guarantees that I won’t shift course, remove parts or add parts depending on how the discussion is progressing):

Part 1 – Why remote?

Part 2 – Will it work for you?

Part 3 – What type of job enables remote PM?

Part 4 – What setup do you need?

Part 5 – Negotiating when it’s not an obvious move

Part 6 – Staying the course

Recognizing that remote work is not in everyone’s interest level and it’s not for everyone, I’d like to cover these topics in order and get feedback from readers on their own thoughts and experiences. It’s not a secret that this economy lends well to creativity in the workplace – it’s often necessary to stay employed and for companies to keep as many employees as possible.

In the coming articles, we’ll examine why you should work remotely (both from the employee viewpoint and from the employer), what type of individual and mindset it takes to successfully work remotely, what type of projects work well in a remote management situation, what do you need to setup shop to work remotely, how to go about negotiating a remote situation when it’s not an obvious option, and staying on course and remaining both happy in this type environment as well as relevant in the workplace and to your employer or clients.

Some Interesting Data

Before move any further in the discussion of remote project management – here are some interesting numbers on remote IT workers (source in parentheses):

• 70% said they would rather get their work done on a secure connection even if it meant their work would be late (CIO.com)
• 78% say their IT dept. has provided them with the technology to work remotely on their own PC rather than needing to rely on a company-issued laptop (I personally don’t see this as a good thing) (CIO.com)
• 43% of downloaded personal pictures, videos, or software for their own use on company-issued laptops (CIO.com)
• 25% admitted they’ve visited blacklisted of inappropriate websites on their company-issued laptops (CIO.com)
• 74% said they can’t get their work down without the internet (CIO.com)
• 65% said it would be easier to live without their car for a week than live without the internet for a week (CIO.com)
• 12% admit hacking a neighbor’s wireless connection when necessary (Cisco study)
• 21% allow friends and family to access the internet on their work-supplied computer (unknown source)

These figures weren’t meant to scare anyone away from remote work but rather to inform you of what’s going on in and out of the workplace. Whether you use your own equipment or company-supplied equipment, be aware that you’re responsible for critical data and for the timelines of the projects you manage – be prudent in the way you handle yourself and the resources you utilize.