Consultancies typically work for numerous clients either on a retainer, fixed price project, or time and material, invoicing the clients for the time spent on creating and delivering value. This nature of work demands a strict overview of all the projects, deadlines and finances, which can be remarkably difficult.
Luckily, there are efficient ways to handle most of the challenges. The first step is to make sure you are not making any of these big project management mistakes.
The main condition for any project to be successful is having a well-thought-out plan before the project is launched. The plan should not be a simple list of tasks, it should act as a road map for everyone involved to know exactly where to start and which path to follow.
Without a detailed plan, it is impossible to see how different tasks relate to one another. Consequently, you may end up losing precious time, realising that one task needed to be finished before another could start. It is crucial to break the project down into separate tasks, set precise deadlines for each of them, and create workflows to see how the tasks are intertwined.
When planning a project, time and money are the most important aspects that need to be covered. Due to the overload that consultancies are commonly experiencing, the effort dedicated to time planning and financial project management is often insufficient.
Project managers are time-pressured into relying on gut feelings, vulnerable to biases. Not to mention how easy it is to forget to plan time for unexpected tasks or unpredictable costs.
Treating estimates as straight facts, and, even worse, presenting them as such to clients, is another project management mistake. When it comes to deviations from cost or time estimates, you either have to account for the difference out of the company’s pocket, which has a negative effect on your return on investment (ROI), or charge clients more than you proposed, which can harm the company’s reputation.
Failing to define the project’s scope commonly results in uncontrolled changes or additions to the initial project’s scope, causing a misdirection of focus and overstepping both timeline and budget constraints. This is known as “scope creep” and is a sign of a projects being out of control.
Consultancy agencies are particularly exposed to scope creep. Naturally, there is an interest in keeping all clients happy, which makes it difficult not to give in to their additional requests (“just a small website update”, “a slight change in design”, etc.). If these seemingly innocent extra requests get out of hand, they delay scheduled activities and boost costs, eventually resulting in project delays or even project failure, especially when offering services with fixed price invoicing. These negative effects may spill over into other projects as well.
Whenever there is a need to change or broaden the original scope, the project manager should first work out the effects on timeline and budget, and the client should agree to any extra charges.
This mistake relates to our previous point; by keeping a tight watch on the project’s progress, it is possible to eliminate scope creep. On the other hand, changes to the initial plan and scope of the project can sometimes be beneficial or even necessary. Thus, the need for changes must be recognised at the right time, and everyone involved in the project must be kept in the loop.
To assure this, the project manager must 1) always keep track of the status and progress of the project, 2) making sure the deadlines are met, 3) potential risks avoided, and 4) new opportunities taken advantage of.
Having a sufficient overview of all the different types of invoicing agreements and invoicing methods can be difficult. Important aspects of financial project management, like handling the status of invoices, reacting to overdue payments, renegotiating contracts, and knowing the cash flow, are often neglected, leading to the work not getting valued properly.
When the bookkeepers are left on their own to handle the project finances, errors in the invoicing and payment delays are bound to happen.
The project manager has the best idea of which invoicing method works best for each client, and how the created value should be distributed among tasks and employees. He/she must find the most suitable invoicing agreement for each client, and change it when necessary. For example, if a consultancy experiences a lot of scope creep with a client on a fixed price invoicing contract, it would be beneficial to switch to a different invoicing method, or combine it with a time and material contract for all the extras provided.