But even though you know how valuable it is, sometimes it can be hard to quantify exactly what the impact will be on your bottom line.
Here’s a handy cheat sheet to help you figure it out. Use these five formulas to calculate and measure the tangibles, and see how big picture project management could impact your business — and your clients’ businesses too.
1. Calculate the increased bandwidth it gives your project managers
Between cutting time spent looking for information, chasing things up, replicating processes, and reporting back to the client, the right tool can help your project managers save a huge amount of time — helping you to deliver more for your client, and focus on scaling your business.
Ask your project managers to estimate for themselves how much of their days are spent in total doing all of these tasks per project. Then multiply that across projects.
Once you know that, you can figure out how many more projects they could be working on.
2. Calculate the time it saves your team
There are two stats that keep project managers up at night:
- Knowledge workers spend an average of over a third (36%) of their day looking for and consolidating information from the various platforms they use.
- What’s worse — nearly half the time (44%) they don’t find it at all.
Look at your knowledge worker staff — programmers, engineers, designers — and estimate what 36% of your total staffing spend adds up to across all of them.
Even assuming they don’t get all of this time back, if you estimate that you could cut this down to, say, 16%, that means you get close to a fifth of your staff time back — essentially like adding another day in the week.
That’s a lot more time to add extra value for your clients.
3. Estimate waste reduction
On average 9.9% of every dollar is wasted due to poor project performance during a project’s lifecycle.
If you charge on value delivered, that’s bad for you because you’re eating that cost.
If you charge on hours and timesheets, that’s worse for you because your client has to eat that cost, and has less faith in your quotes and the value you’re delivering.
Take a look at your waste — you might find you’re over this average. But even if you’re not sure, if you take that as a baseline and then halve your waste, that still means nearly 5% more revenue for you on each and every project.
What does 5% of every project you run add up to for you?
4. Boost employee performance and reduce new hire acquisition costs
Employee retention is a particularly big problem in professional services. The Institute of Practitioners in Advertising put agency turnover rates at 31.9%. Keeping the quality of your work high when nearly a third of your workforce leaves each year is tough.
With each hire in the US costing an average of $4000, that adds up to a lot of avoidable costs.
And the employees who stay can be just as much of a problem.
Studies have shown that 70% of staff feel unengaged at work — and in a services business, this problem is even bigger. Because at the end of the day, if your staff are demotivated, it shows. And if they keep leaving, it sends a signal to your clients that things aren’t stable. (Not to mention you lose your best talent.)
The good news is that it’s also been shown that companies performing in the top 25% on employee experience report nearly 3x the return on assets and more than 2x the return on sales, compared to organizations in the bottom quartile.
Now no one wants to think of themselves as being in the bottom quartile, but it’s worth looking into a) the reality of your people’s engagement levels and b) how much the tools you’re using are getting in their way.
And this engagement factor extends to clients too — the easier you can make it for them to work with you, the more likely they are to want to repeat the experience.
5. Charge appropriately with more accurate timesheets
The Harvard Business Review published some research showing that across the entire economy the cost of forgetting to include certain work on timesheets (such as reading emails) was estimated to cost companies an average of $50,000 per employee.
That’s a mind-boggling number.
Now that includes some of the most senior, highest-paid people in the world. But the reality is that almost every business will be losing something to this problem.
Depending on how you price your work, someone is losing money. Plus, you’re losing invaluable data on how long work really takes.
By making sure you’re considering all staff time on projects — even the little chunks of work — you’ll be making sure you price your work in a fairer, more accurate way. That’s better for your margins. And it’s better for your clients because they know what they’re getting.
To learn more about how big picture project management can transform your business, check out The Business Case for Teamwork Projects in Professional Services.
What’s been the biggest difference you’ve noticed since implementing project management software? Let us know in the comments below.