How-To: Keep Project Costs Down
Before you can hope to keep project costs down, you must first
know how much they currently cost. You must have some history
of your project performance to compare to. If you don't have
that information, then you only have a gut feeling that the costs
are too high. How do you know? Maybe you see wasted time
or projects that never seems to end. Maybe your bottom line
margins are beginning to erode. Maybe your employees are
unfocused or suffering from low morale. Those would be signs
of high project costs. The ideas below may help.
Consider using Standard Time to track those costs.
Download Standard Time Now.
Track Your Costs
Before you can effectively lower project costs, you must have a
project costing tool to analyze them. Collect some history
that will show where the costs are spent. Normally, project
costs boil down to employee salaries. Salaries are the highest
cost for any organization. That is no earth shattering
discovery. But where are the salaries being spent? How
much is being spent on each portion of the project? How much
for administrative verses task work? How much for client
interaction verses heads-down internal work? That's what you
really need to know. You need a tool, like a microscope, that
will break it all down and show you the actual costs.
Project Phases and Tasks
To begin, break you projects down by phases or sub-projects.
This lets you collect project costs for each phase. You
may find that your pre-sales client meetings are eating more of the
profit than you first imagined. Or, you may find that the
quality assurance phases gobble up all the time. Your projects
will be unique to you, and only you can isolate the costs for each
phase.
Below the phase level is tasks. Create enough tasks to let
you track the breakdown of a phase, but not so many that employees
find them stifling. Standard Time can track costs for each
task and phase, and for the entire project. Assign a forecast
to each project task. The forecasted duration should be in
hours, and should roll up to the phase level, and ultimately to the
project level. That means you can see the total forecasted
hours for each phase and the entire project.
Timesheet
Once you have your project broken down by phases and tasks, start
tracking time in a timesheet. This lets you collect actual
hours. Actual hours are important for two reasons: 1. you will
compare them to your forecast. 2. Time translates into
dollars.
Compare Actual to Forecast
When you compare your actual project hours to your
forecasts, you may be surprised. You may find, as we
suggested earlier, that certain tasks or phases take much longer
than you originally thought. What percentage variance was the
forecast in this project to the actual hours? That's
where the learning really begins! If you already have some
project history to compare to, you can see the percentage of change
between them. In other words, did the project take more or
less time than the last one? And by what percentage?
Percentages are important. They let you eek out small
performance gains. Its rare that you will gain large
percentages like 50 - 100% improvement, so don't be afraid to fight
for the small gains. Many small gains, over a long period of
time, add up.
Employee Focus
Meet with your employees. Show them the actual-verses-forecast
numbers. Discuss the variances in a civilized way. The
meeting alone will tell your employees that you expect performance.
It's a subtle message, but they will get it. Simply seeing
numbers has a profound impact on people. If you don't beat
them up, they will usually try to improve the percentages
themselves.
Eliminate Waste
People sometimes spend a lot of time on meaningless things.
They sometimes become emotionally attached to a certain type of
work, and forget the priorities. Many times these low priority
tasks can be eliminated from the project completely, freeing up as
much as 25% of the project time! The project may suffer a
little, but cost significantly less. Try cutting
administrative and management tasks. How about bureaucratic
paperwork? Try to reduce the number of human interactions.
Why? Because each interaction causes delays. People often have
to wait for an answer from other coworkers. Each time they
wait, the project is delayed a little. Eliminate those delays
by reducing the times employees must wait for answers.
Tools
You already know Standard Time can help with these things. It
has project costing, project management, task management, and
timesheet tools to assist in the effort. If you haven't tried
it, the download is free. If you already own licenses,
schedule a training class with us to learn how to leverage the tool
for your maximum benefit. Good luck on your project!
Download Standard Time Now!
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