When your agency overspends on a project, or commits more of your employees’ time than you’d budgeted for, it damages your profit margins. With profitability so essential for growth, it’s vital that you work in a way that maximises the chance of your projects coming in on-budget.
So today I’m looking at 4 tips to help you run your agency projects more effectively to prevent them from going over-budget.
1) Agree the Scope of the Project
Scope creep refers to all those little add-ons that work their way into a project, taking up time and resources in a way that you can’t bill for, and eating into your profit margins. To avoid scope creep, you need to define the scope of the project and agree this with your customer before you start working on the project.
This means that from the outset your customer’s expectations are aligned with the work you’ll be doing. Additionally, they’ll understand that if they change their mind about what they want from your agency, and the scope of the project changes as a result, they will need to pay more for it.
2) Adopt an Agile Approach to the Project
With its focus on flexibility and continuous improvement, agile project management is naturally suited to your ever-changing projects. Two agile processes will be invaluable for keeping your agency projects on-track and on-budget: the daily stand-up and sprint reviews.
The daily stand-up gives each team member the opportunity to share their previous day’s progress, as well as any problems they’re experiencing. This means you can identify potential problems before they become major, so you can minimise delays or mistakes that can impact your project’s budget.
And with a regular review process after each sprint, it’s easier to keep the project on-track in terms of budget, so you notice when you’re over-spending or over-investing in terms of employee time, and so can readjust your priorities and workloads accordingly. This reduces the risk of your project over-running or over-spending, which will harm your agency’s profits.
3) Make the Budget Your Starting Point
When submitting a proposal for a project, many agencies start with the work they can do, and then adjust the budget or compromise on quality to make it affordable for the customer. Instead, your agency should make budget their starting point, so it’s the scope of the project that changes to fit the budget.
Working with a fixed budget can help your customer focus on what they actually need (rather than what they think they need) from the project, so you can prioritise your work based on the impact each part of the project will have on your customer’s business.
4) Communicate Regularly with Your Customer
Communication with your customer is essential for keeping your project on-track. It will keep you in the loop if and when any changes are made to your initial agreed requirements, so you can make adjustments to your work accordingly.
Regular communication, like the agile sprint review, means your finished project will be closely aligned with your customer’s actual requirements, rather than what they thought their requirements were when you kicked-off the project.
Additionally, it will keep you informed of any delays or roadblocks that will impact the timeline and cost of your project – such as a key decision maker taking a two-week vacation just before you need sign-off for a key part of the project, halting all your agency’s progress and resulting in you over-running and over-spending to try and make up for the delay.
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