Once a budget has been approved, it can be quite hard to get it increased. An increase to the budget reduces the overall profitability of that project.
The reduction of the profits hurts the bottom line, and you can guess how the rest goes. So, the goal in the end would be to plan and complete projects as efficiently as possible so that the profitability margin stays as high as possible, and not go over budget.
This presents a challenge for project managers and resource planners, and the tools that they utilise. There are four general stages of planning, and determining which one your specific company falls into starts the process for a more efficient plan. Your project planning when done well, will continue that efficient effort.
Planning With Your Profit Margin in Mind
How you determine your profit margin plays a large role in how you apply your resources to that project. Whether you are using a fixed cost method or a variable cost method, it is more often noted in hindsight that a particular project was either highly profitable or barely profitable. The use of senior employees might have been too high, or the use of junior employees too low; or even perhaps the outsourcing to freelancers mitigated the profit margin positively or negatively.
Freelancers are generally thought of as an asset on an as needed basis. However, using them too often at too high a cost can be quite detrimental to your bottom line for a given project. They are great tools when used in moderation or when they display a very strong skillset that is not present in your company.
Using more of your junior employee resources might seem the likely alternative to having freelancers or a lot of dedicated senior employees on a project, however that may prove to be a faulty line of thinking as their lower initial cost per hour is compounded by the number of junior employees used.
Having too little or too many senior employees on a project can be problematic. Having too little senior employees on a project requires an increase in either the number of junior employees or freelancers, which can increase the overall cost. Having too many senior employees presents the same problem because they have a higher cost per unit rate typically.
Benefits of Better Planning
To ensure that you aren’t exceeding your budget for a project, it is essential to be able to see an overview of what resources you have available. Then you create a plan that will save you time, streamline the project, and increase your productivity. This can be achieved by balancing your resource pool according to the project demands.
However, you must keep your cost method in mind when you attempt to balance your resources for time savings. It might be better to have a team completely made up of freelancers to complete a given project as they usually work more diligently than most employees. Alternatively, it might be a good training exercise for your junior employees, though it may not be enough of a savings for you. You would expect your senior employees to be as efficient as your freelancers, but their usually higher cost per hour may blow your margin.
The same situations apply to streamlining your project and increasing your productivity. Being able to choose the best candidates for the project stems from the integral knowledge a resource planner has. Knowing which senior members make great mentors and combining them with receptive junior members and using as little freelance members as possible makes each project as smooth and profitable as possible.
Decide on Block or Detailed Planning
To avoid wasting any time when the project actually gets underway, it is considered a best practice to establish whether or not you need a very detailed task list, or if perhaps a block metric would be best suited.
A detailed task list is typically used for all the small tasks that need to be performed during a project. Though the small tasks may not always be time intensive, but if they rely on fixed dates, multiple employees needed to perform the task, or there being a substantial amount of work to be performed; then a detailed task list will work out better for you in the long run.
On the other hand, if none of those aspects need to be defined then a block planning metric can make it a little easier. However, if you are unsure of how long to schedule the period of time required for various groupings, having an employee record the amount of time needed to perform the tasks they are performing can create a knowledge base for future projects that involve the same tasks.
Then you may want to have both versions available, one as a master plan where everything is detailed and one that is used as a reference. It may be easier to see the stages of progress using a block planner because of the smaller nature while the detailed planner can show where more work needs to be completed. Keep in mind just how wasteful multi-tasking can be for your planning.
To streamline the planning process for all employees, look into providing them with project planning software so everything can be done in one portal. Employees can then look at what their co-workers doing, and the entire project becomes much more efficient.
Completing the Project
As you can see, how well you plan for a project directly influences how well that project will go off. Like any project the key to it is in the details, and how you assign your resources to executing those tasks.
Try to keep your budget and profit margin in mind when assigning your resources to the project. There should be a good balance that maximises efficiency of your resource pool without damaging your margin in the long run. Too many of one pool of resources is almost as detrimental as too little of that resource pool. Using your resource pool wisely is part of the key to meeting your budget. You can start determining the proper makeup of your team by determining your costs and the project needs.
The best plan you can make involves being able to save time on current projects so that you can get to the next project faster. It has a focus on streamlining projects so that each project can proceed smoothly by utilising planning software and tools. It also encompasses increasing the productivity of the team members involved on the project. An efficient team is one that can complete tasks well and in as short an amount of time as possible.
How you decide to plan out the project can also have an impact on meeting or exceeding your budget. The smaller tasks tend to take up the most time and how you tackle them during planning will translate into increasing or decreasing your budget. A detailed task plan can show a client exactly what will happen and how it is expected to happen. A block plan can be used employees who know what needs to be done and only want to see the timeframes that those tasks need to be performed in.
FinSMEs
11/04/2017