Strategy squared

“What is a project” is a commonly asked question from new or non project managers. To begin with a project has a number of common characteristics.

1/ A group of tasks carried out in a definable time period to meet a specific objective
2/ It has a defined start and end
3/ It has a defined scope and measurable tasks
4/ It has a budget
5/ It has resources and an organization

Projects usually have different processes and practices than usual business activity. Resources for example may be across traditional organization boundaries, commonly the project manager may not usually be responsible for the staff outside of the project.

Projects are traditionally centered around the delivery of a specific objective with project management concentrating on managing the tasks and resources.

A significant area of a project is the requirement of workscope – this defines the work that will be carried out and provides a means for the customer to review the deliverables against the original objectives at the end of the project.

Projects and project management are a key part of modern business – methodologies and routines have been established (such as Prince 2) to provide best practice frameworks – computer software and associated tools have also been developed to aide the project manager. There are many areas of project management and in later articles we’ll cover these in more detail.

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14 November 2007 OFWAT the UK’s economic water regulator looks set to fine Southern Water upto £20 Million.

The regulator claimes the company mis-represented information prior to October 2005 which resulted in poor services being delivered to customers.

By mis-representing information the company was able to benefit from price reviews and raise bills.

Southern Water claim that the fine will not be passed on to customers but will be picked up by shareholders. The company’s current management team is addressing the issues raised by the regulator and is in the process of returning money to customers that received the higher charges.

For further information the original OFWAT press release can be found Here

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These days pricing policies are rarely out of the headlines, whether it’s stories about supermarket power driving down the cost of goods or industry monopolies resulting in high prices for consumers, an optimal pricing policy remains a key business strategy . When you’re running your own business deciding how much to charge and achieving it can be complicated – there are lots of elements to consider and what might seem initially a relatively simple task can quickly bog you down in math and paperwork.

However, establishing your charging rate is one thing, obtaining it is is another. In a competitive market we can all sometimes be reactive to price sensitive customers needless to say this can be a dangerous strategy so how do you ensure you get just rewards for your efforts? Here are our five tips in getting paid what you want – if you have advice you want to share use the comments section below.

1/ Don’t be afraid to turn down work
All businesses have a break even point – be sensible about how reactive you are to customer negotiations– accepting a lower rate may secure the job in the short term but could be detrimental in setting market expectations of you and your organization in the future – if it something costs $100 to produce then there is little point in consistently selling it for $50. Remember that profit shouldn’t be a dirty word you have expenses and overhead to cover – if the client isn’t willing to match your expectations you have the right to take your business elsewhere.

2/ Understand your clients need
We can’t stress how important this is. Understanding your clients need is imperative, what problem they are trying to solve, its importance and your contribution – how critical is the service that you are looking to provide. Remember that cost is only going to be one of the selection criteria that secures you the client – find out what other buying criteria is being used – is it quality, availability or something else – using your clients needs as a pricing factor is nothing new but shouldn’t be missed.

3/ Know your market
Your market and the competition that operate both represent pricing factors you should take account of. Knowing the relationship between price and demand is crucial in setting your strategy – bear in mind that there is likely to be a relationship between the two in that raising prices will slow demand but consider your margin – selling fewer items at a higher price might be represent an effective strategy – there might also be seasonal variables or demand profiles that need to be taken account of – your pricing should take account for this.

4/ Know your costs
Establish the base price for your service, ensure you know how much it costs you to produce your product – make sure you spend time adequately calculating your overheads and then consider what you need as profit – estimating the likely demand will then help you establish the right selling price – the fundamentals of knowing your base price will ensure you make a profit and help when it comes to negotiating with clients.

5/ Be flexible
Consider a range of pricing options – consider breaking the job down into steps with option payments if need be – consider performance driven pay – could your charge be tied to the performance of your customer once you have completed the job – remember that there are a variety of choices when it comes to charging and being flexible may help achieve a higher fees in the long term.

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When you’re running a project one of the major pains can be having to report on potential project slippage. With most projects basing their tolerance on project timeline and cost – a potential slippage on completion can be bad news. Slippage can cause significant effects, it creates extra cost – by way of resource commitments for project staff, it affect service levels of the organization, and it can create bad PR which could befall on the project team.

There are ways, however to prevent slippage – here we list our favorite 5 – if you have more be sure to use the comments section below.

1/ Ensure the project is resourced correctly

The most common reason that a project over-runs is that it has not been resourced effectively – without the right number of project staff undertaking the tasks required your project will over-run – to help, use a planning tool that can help you accurately estimate the resources required.

2/ Stick to your plan religiously

The second common reason for slippage is that the project plan is not adhered to and additional tasks are undertaken which aren’t on the critical path. Your project plan is there for a reason so use it!

3/ Manage your risks

Manage risks that occur within the project – use a risk register to capture potential problems and develop mitigation to prevent them from occurring and impacting on your plan.

4/ Incentives suppliers and external contractors

If your project involves 3rd parties ensure that your contractual agreement incentives the suppliers for timely delivery – this is usually achieved by linking service level to financials such as 100% of the fee payable for timely delivery with a penalty clause available for each week late. The supplier will therefore be financially incentivized to deliver on time.

5/ Use proven project methodologies

Stick to proven project methodologies and tools that will help you monitor and deliver on time – don’t try and re-invent the wheel – there’s a variety of great project methodologies available that have been designed to manage projects through to successful completion – use one!

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Back in our article 5 Essentials for project managers we described how important it was to capture and monitor project risks. However for first time project managers it may be confusing what to record and monitor.

Risks that are captured within projects are usually recorded within a risk register (sometimes referred to as a risk log). Whilst there’s no hard and fast rule about what risk registers contain as a minimum for each risk captured the log should contain:

1/ Unique ID or Number for each risk
2/ Who raised the risk
3/ Date that the risk was last reviewed
4/ Description of the risk
5/ Countermeasures/Mitigation – how to prevent the risk from occurring
6/ Risk “Owner” – who owns associated tasks and activity
7/ Likelihood of occurrence (often a score e.g. 0 – 5)
8/ Impact – This may be both financial and procedural (again this may be in the form of a rating score)
9/ Action Status

Bear in mind that risks may come from a variety of sources, these can include

Business risks e.g. Resistance to change
Supplier risks e.g. Failure to deliver product to time
Design risks e.g. Product fails to meet business need
Economic risks e.g. Project exceed budget

The risk register should be reviewed regularly by the Project Team, new risks should be added and existing risks reviewed and like hood/impact assessed.

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OK so you’ve been asked to run this fantastic project at work – you’ve been given a budget and group of colleagues that will help you. But this is your first project and unsurprisingly you’re a little daunted. Well don’t worry - running a project can be a pretty terrifying experience first time round what with the mix of supplier, customer and budgetary responsibility. Being asked to run a project can cause even the hardened first time business exec to want to run away and hide. But implementing successful projects isn’t down to luck and using the right tools and practices can help even the novice project manager deliver on time and on budget – here we list our 5 must haves for project managers – we’d love to hear your suggestions too (please use the comment section).

1/ Clear statement of requirements
Ensure that before you commence your project you have a clear brief of what’s expected. This may be in the form of a customer requirements list or definitive brief – it’ll also state when the project should be complete and how much it will cost (ideally with a business case stating the financial goals) – whatever the format the statement of requirements is your checklist of what you must deliver and when so make sure it’s clear and understood.

2/ Detailed plan
The most powerful tool that a project manager can have, spend time to design your plan – ensure you capture the resources and dependencies for each task – plan how long each step will take and what it will deliver – once completed ask your customer to sign it off approving the delivery date and ensure that you develop an adequate change process (which include the customer) should any amendments be required.

3/ Risk Management system
Capturing and mitigating risks is part of any project manager’s job. Create a list of all the risks that may impact your project – think about the impact and probability of occurrence – now think of an action plan to mitigate the risks now set a regular date in your diary to review.

4/ Issues Log
An issues log is a list of all issues that crop up during the lifetime of your project. It’s used to ensure that problems are captured, given owners, monitored and closed down. Storing an issues list centrally will allow project stakeholders visibility into your project whilst giving an idea for resource implications.

5/ Customer sign off
Customer sign off is crucial in any project – there may be various stages in the project that may require customer sign offs for example you may pilot your project deliverable or have a process of customer acceptance. In some circumstances sign off empowers key stakeholders to agree that the project is providing in a acceptable manner allow you to proceed with the next stage of the project.

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