1. Ensuring continued access to real-time data
Project profitability always suffers when businesses lack real-time information. If essential data is held and managed by separate departments, it results in bottlenecks even within the simplest processes. For Finance, lack of real-time data means that the impact on profitability isn’t clear quickly enough i.e. when decisions are being made by the project delivery team. To protect the profitability of a project, it's essential that all information remains visible to all parties, and that it is updated in real-time (which is, of course, only possible with up-to-date and accessible project management software).
2. Optimised resource scheduling
Having complete control of your project isn’t just about having the right resources; it’s about utilising them in the most efficient way. That could mean selecting by location, skill or even charge rates. With an integrated software scheduler, you can see all your resources and deploy them by the criteria you choose. You can also keep track of what you are expecting to spend on each resource, keeping tabs on spend versus budget at every stage of your project. With a central pool of real-time calendars, you can consolidate your data so that you see everything – from person to project – on one screen.
3. Accurate time and expense management
Using technology to help capture time and expense information is the quickest and easiest way to manage time and expenses accurately. Giving employees a simple, accessible system that allows them to record their activities quickly and easily will be much preferred to manual timesheets or clunky spreadsheets; the results will be more accurate too as rekeying is no longer necessary.
4. Timely and accurate billing
Billing must be both fast and accurate to protect cashflow. Traditional admin-heavy processes slow projects down, creating bottlenecks and resulting in errors in billing that are at best an embarrassment, and at worst a loss of valuable income. This is especially true when the billing process relies on multiple systems and separate departments with a lack of software integration and cross-department visibility. Manually updating separate spreadsheets can lead to errors too. Software should help streamline and contain billing, but also have the flexibility to change according to the type of billing and the level of approval required. Software that measures projected costs against actual costs – and regularly compares both – can often flag a serious issue before it becomes a problem.
5. Anticipating complications and variations
As part of the scope of work, it is important to anticipate potential complications and create a plan for what to do in each case, including the financial impact of various factors or scenarios. Once the project is underway, it is then vital to keep track of progress against the scope of work as well as identified milestones and Key Performance Indicators (KPIs). If you are constantly measuring the project’s current status, you’re more likely to catch mistakes early on, or identify situations before they become a problem that impacts the bottom line.
6. Learn from past experience
Finance are well-placed to rigorously assess the factors in place for previously profitable projects in order to create a ‘blueprint’. This kind of project profitability analysis can make clear what has been successful before - such as targeting particular sectors or adopting certain pricing models. It can also highlight where profitability has been negatively impacted such as a tendency to over-serve clients for example. Use this exercise to find out true cost of every project and therefore avoid making the same mistakes.
7. Ensure the right team is in place
Profitable projects always have good managers, backed up by robust systems. Together, this winning combination can get the planning (and pre-planning) right, as well as making sure to pin down the scope from day one and keep on top of variances as they occur.
However, when less experienced team members are left to do specialist work, through no fault of their own, activities can subsequently need to be redone and costs written off. This will of course impact project profitability. It makes sense to ensure that the best person for the task is always assigned - that way it's more likely to be completed on time and to the right standard.
8. Make it easy for your people to keep track and report back
Data entry should be intuitive, especially for non-finance users, as this encourages regular usage, even when employees are busy. Consider systems that remember regular inputs such as timesheets which automatically load frequently used project codes or information from resource planning tools. Having user-friendly functionality available on whatever device is to hand – PC, smartphone or tablet – supports today’s mobile workforce. And with direct cost capture, rekeying is not required and it’s possible to view timely data to enable instant WIP reporting.
9. One version of the truth
Best practice for profitable projects should be to create one single source of the truth. This applies equally to project finance systems and project management / job systems: with both, you should be seeing the same data. For example, at Access we utilise a single solution that allows us to track time, expenses, procurement and all the key areas that finance and project managers need to keep track of. This information flows through our business workflows before posting into the core finance system – so, whether you are a project manager or a Finance Director, whichever system you are working in, the data is the same.
10. Take advantage of automation and alerts
Whether flagging that a project is about to go over budget, or reminding project participants that a key deadline is nearing; automated notifications are proven to eliminate inefficiencies. Automated contracts and invoices can also save internal time and resources in the Finance team. Examples include generating a notification or alert though to invoice creation if services go over contractual costs.
What else to look out for
The project management landscape is constantly evolving, and as businesses continue to put project profit margin to the top of the priority list, it’s useful to stay abreast of the key trends that look set to drive profitability.
Firstly, collaboration tools look set to become second nature. These make it easy for teams to keep up-to-date and to communicate with each other – particularly when they’re not all based at the same site.
It also makes it easier for the project team and the client team to work closer together as well. Not losing momentum between meetings is important. Being able to log on and see the current status on projects, ask and answer questions, and move projects along, makes for a much more productive (and potentially more profitable) environment.
Secondly, with more people working remotely than ever before, as well as having the right tools to successfully carry out their work, your employees need to access their data from wherever they’re located. Integrated project management tools reduce the need to chase people for information (which can hold the project up). And considering that working remotely is essential for many who are in project management, productivity and costs need to be efficiently managed at all times.
Agile methodology has been popular in software development for quite some time and is now beginning to impact project management. Being agile allows for an iterative process, combining speed without the loss of quality. However, do bear in mind that adopting an agile approach also increases the need to stay on top of key financial data relating to agile projects – especially as many will focus work on a time and materials basis.
And finally, strategic project management continues to be a key focus. Having a more entrepreneurial (or rather intrapreneurial) take on project management delivers business benefits, regardless of the type of project environment, as it allows opportunities to adapt with the needs of the project and still ensure that contracts remain profitable and on target.
For more support on the specific issues facing Finance right now, visit our finance page. We have a host of ways to make life a whole lot easier for your staff and your business.