10 Estimating Mistakes that Kill Project Profits

You planned for your project to make 14% but you end up with 8%. So do you know what caused this loss of potential revenue that your firm was counting on? Was it: A. Deficient project management? B. Scope creep? C. Lack of systems and processes? D. Poor scope development and management? Very often it is all of the above! That elusive project profit variance is often caused by many different factors and can be very difficult to control and mitigate. What’s the #1 Way to Meet Your Project Profit Goals? Start with a great scope and estimate that includes a plan for possible situations. Estimating is one of the most crucial steps to ensuring a successful project, yet many estimators do not have the tools and skills to develop a scope and estimate of costs that will stand up to all the challenges faced during project execution. From unexpected delays, changes in clients’ staff, regulatory issues, unplanned meetings, and unrealized client expectations, your estimate must anticipate and account for anything that could happen. The recession and all the bad habits it created is long … Continued

How to Strategically Grow and Retain Your Best Clients

  Trying to get work in the door can be a challenging process for A&E firms, and many may be missing the easiest opportunity of all. Getting more work from existing clients! You may assume that your clients are giving you all the work they have, but what if they aren’t? What if they don’t even know everything your firm is capable of? Are Your Business Development Efforts Strategically Focused I frequently see business development effort focused on getting new business while ignoring the greatest asset the firm has – it’s existing clients. Research done by Frederick Reichheld of Bain & Company (the inventor of the net promoter score) shows increasing customer retention rates by 5% increases profits by 25% to 95%. And it is well known that it can cost 5 to 10 times more to acquire a new client than it does to retain an existing one. While many A&E firms rate themselves as having excellent client relationships, the truth is that much of that is by accident. Only a small percentage of firms actually have a documented and strategic initiative to retain and grow … Continued

3 Estimating Lessons to Boost Project Profits

We have all had projects that for some reason did not meet our financial expectations. Overbudget projects happen for many reasons, including bidding on the wrong projects to begin with, underestimating the number of hours needed to successfully complete the project, failing to allow for delays and problems, or just not knowing the client well enough to anticipate what they really wanted.   Not only does your firm lose the profit margin associated with budget overruns, but overruns can also have a negative impact on client relationships and cause stress for your teams as they try and minimize the losses.   A great deal of value can be gained by analyzing past project failures to understand what went wrong, and designing safeguards, processes and approvals to minimize the chances they happen again. The following are three of the most common issues with developing accurate estimates, and some structure and practices you can put in place  to turn prior past project disasters into lessons that add protection for future jobs:   1. Understand the Client’s Expectations One of the most common problems in accurately developing a … Continued