how professionals manage client projects
TRANSCRIPT
Blind Sweat and TearsA Study into Client Project Management by
Professionals
What we'll cover
★ The Economics of an Agency★ Time Is Money★ Projects★ Costs of Growth
What We'll Cover
1. The *Average* Project 2. How They're Managed
3. Tracking Time & Money 4. Communication Disconnection
Background
★ Founded Internetrix in 2000 in Australia★ Grew to a multi-million dollar agency;
clients included Prime Minister & Cabinet★ Became increasingly frustrated with how
hard it was to run the business★ Created AffinityLive to make it easier to
run a growing professional service business - building on hard-won lessons in agency land
★ AffinityLive launched 3 years ago - venture backed and HQ in San Francisco
Blind Sweat & Tears
★ Research study on time tracking across hundreds of agencies in early 2015.
★ Professional service firms make the vast majority of their revenue through 'projects'.
★ Study found the following:○ 80% of projects are <6mths; 60%
<3mths○ The most common projects are the
worst managed (75% using nothing at all)
○ The most common projects use manual or budget tracking at all (70%)
○ Communication is most significant determinant of success, but dominated by email, meetings and calls.
Agency Economics
The *Average* Economic Model
Wages, Salaries, Benefits & Contractor Costs:
$60K - $65K
Sales, Marketing, General & Administrative:
$20K - $25K
Profit: $15K (EBITDA)
Sources: Spire Research & SPI Research
Where does the money go? For every $100K of revenue:
The *Average* Profitability Model
Costs are mostly fixed based on time/hours
People are a fixed "sticky-up" cost
Other overheads are mostly fixed too Revenue earned by
doing work for clients
But Revenue is variable
The *Average* Project
★ 80% of projects are <6 months; 60% are <3 months - average length 2 months.★ Profit margin for the year = 2 months; these projects are definitely big enough to be
dangerous.
Mismanagement of the most common
★ Longer projects are better managed, but most common projects very poorly managed.
Mismanagement of the most common
★ The 2nd most common category (1 week to 1 month) were the worst managed (75% nothing)
Study: Blind Sweat & Tears
Tracking Budgets - Two Thirds Run Blind
★ Almost 70% use manual or no budget tracking at all (over 26%)★ Project profitability isn't something managers can see without manual effort & calcs (if at
all)
Mismanagement of the most common
★ In the most common category only 1 in 5 used project tracking software (running blind)
Schedules - Manual Cat Herding
★ Handling (frequent) changes in project scope, deadlines and even personnel is commonplace but most professionals aren't able to respond quickly and easily - causing stress & conflict.
Solution: Track Budgets & Profitability
Solution: Automated Scheduling
See a list of all projects, tasksand retainers
Drag and drop work onto individual user schedules (pushes to calendar)
Workloads auto adjust as tasks are completed or deadlines change.
See where you have unallocated work to schedule
Cash Costs of Growth
Communication - Critical but Manual
★ Effective Communication by far the most important part of running success client projects.
Communication - Critical but Manual
★ Email is by far the most important, followed by meetings & calls.★ Only a quarter of respondents communicate/collaborate within project management
software.
Solution: Bring emails into projects
Clients & Partners
Staff & Contractors
Cash Costs of Growth
Cash Costs of Growth
★ Professional service businesses have a distinct disadvantage - you can't use vendor credit terms to fund growth (since costs are payroll).
★ At the same time, many clients expect you (as their vendor) to extend credit on their terms.
★ The consequence - you have to rely on retained profits to fund operations.
★ Growth makes this problem more acute (up-front costs of recruiting, onboarding time) and the "big win" can actually be a death knell.
★ Deposits are critical to successful growth & then bill for work done, not milestones met.