Ask The Expert: Lauren Maffeo
Categories: cost management
It’s been a while since we’ve had an Ask The Expert column so I figured it was about time I reached out to some people and brought you some insights from others! I caught up with Lauren Maffeo, project management researcher at GetApp, recently and here’s what she had to say.
Lauren, what are the most surprising things you've uncovered in your recent research?
When I conducted research on the project management software market last year, I expected project managers to cite a diverse range of software that they use to manage projects. Instead, two in three respondents said that they use Microsoft Project (you can read more about that result here), despite the fact that three in four respondents worked in a small business.
I was also surprised that almost three in four project managers use between two and five total tools for project management - and five percent use more than 10 tools! These numbers suggest that today's most popular project management software tools support built-in workflows that don't match how today's project managers work.
Yes, I can totally see that from my own experience! Has any of your research uncovered areas where decision makers in project management could cut that down? It must be expensive to maintain so many tools.
The best way for project management leaders to save money and improve efficiency is to shop for project management software that integrates with the tools their project teams already use.
For example, let's say your cross-functional project team uses Salesforce for customer relationship management (CRM) and MailChimp for email marketing. If your project management software doesn't integrate with Salesforce and MailChimp, then you're paying for three separate tools and keeping project data in three separate locations. By contrast, if you switch to project management software that integrates with Salesforce and MailChimp, then all project team members can view project details within the same software and keep using the specialty tools of their choice.
Great tip, thank you. What other tips do you have for project managers wanting to make decisions about their tools? Where should they start?
Project managers should start by confirming how many tools they're currently using for project management. This can be everything from software to Google Sheets to Post-it notes. Then, they should shop for project management software that integrates with as many cloud-based products in their toolkit as possible.
They should also prioritize project management software with strong task management and collaboration features. Finally, project managers should shop for multi-tiered software that can scale as their project teams and business needs grow.
What do you think project managers should be aware of going into the remainder of this year?
Project managers should be aware of how crucial it is to prioritize "soft skills". Gartner research shows that the traditional PPM role won't exist by 2020. This is largely because the nature of IT projects is changing as businesses shift to digital. Since business leaders will be pressured to innovate more quickly, Agile project management will grow in value. So, project managers who can successfully lead project teams and persuade stakeholders will have more influence than ever before.
Wow, interesting. So tell us, what's the best thing about your job?
The best thing about my job is learning and sharing how technologies that seem abstract today (like blockchain) are already improving peoples' lives. It's also exciting to see the project management discipline gain so much respect. Not long ago, project management was largely limited to IT departments in large enterprises. Today, teams across industries from healthcare to digital media practice project management methods that range from Agile to Kanban. Project managers who can merge technical knowledge with strong soft skills are not just poised to lead successful projects - they have the chance to lead business strategy.
About Lauren: Lauren Maffeo covers trends in the project management, finance, and accounting software industries for GetApp, a Gartner company. She focuses her research on strategies and tools to help small and midsize businesses create unique value. Lauren previously covered technology trends for The Guardian and The Next Web.
In this video I look at 5 costs that you might not immediately think of but that could have a drastic impact on the profitability of your project.
Here’s a summary of what’s covered in the video.
During project execution you are putting your plan into action. Part of the monitoring and controlling of your project is to make sure that you understand how much work has been carried out so that you can work out the costs.
It boils down to two questions:
Armed with the answers to those questions you can calculate the additional cost, if any of completing the work.
During execution you may also be using earned value calculations, which are beyond the scope of this video today, but definitely worth a look if your sponsor wants a really detailed understanding of project performance.
As well as monitoring cost performance you can also monitor and control your risk response budget, review your quality efforts and costs and check that your resource planning is still accurate and you’re on track to deliver for the budget you set.
You’re likely to have to do some kind of course correction as it is a rare project that moves ahead perfectly to plan. This will involve handling change so you’ll be drawing on a change, contingency or management reserve budget or moving numbers around so that you can deal with the costs of change.
The biggest challenge during the execution stage is communication, and the authors of Project Management Accounting talk about that a fair bit. Without good communication you won’t have an accurate picture of project performance and you won’t be able to track and monitor any aspect of your project, let alone the budget.
You also have to work out what is the right level of detail to be sharing about your numbers – while you need all the detail your managers might not want that. If you don’t have a standard project management reporting template then you’ll have to make one up and getting the level of detail right could be trial and error as it depends so much on what your audience is interested in.
Tracking project financials is a really important part of the execution stage because it’s how many projects are judged – cost control is essential. Make sure you are spending enough time on it, and know enough about how to do it, to keep your project financials under control.
4 Tools for Cost Control
Categories: cost management
In Project-Driven Creation, Jo Bos, Ernst Harting and Marlet Hesslelink talk about 4 instruments for cost control – and by ‘instruments’ they mean tools.
They describe 4 different tools that you can use as your project progresses.
Let me talk a little bit more about each of those tools and how you can best use them.
During the project’s very early days you won’t have a lot of detail. The first financial planning you do for the project is in the form of cost estimates. And there’s a ton of stuff on this blog about estimating. (Start here).
At this point all you are doing is working out whether the project is financially viable or not. You might still go ahead even if the finances don’t stack up. There’s often good reasons to do projects that are going to cost, rather than make money, such as compliance and regulatory obligations. But even if that is the case, your sponsor will still want to see an early view of how much the project is going to cost.
Cost estimates are how you do that.
When you’ve got approval to go ahead and you’re planning out the work, you take the cost estimates and turn them into a working budget. It’s more accurate than your early estimates but it’s still only a forecast.
You build your estimate from the work breakdown structure, details of how much tasks will cost and expert input from your team. Then build in a margin, just in case you’ve got it wrong.
Now the project is fully underway and you’re working your way through the tasks in the Execution Phase.
This is where you use cost monitoring to check that your project spending is broadly in line with what you said it would be. Monitoring your costs regularly lets you see if there are any overspends or trends towards performance that you want to investigate further. The faster you spot it, the faster you can do something about it.
The authors write:
“This comparison is only useful if the monitoring includes evaluating whether the project activities are also on schedule.”
That’s really important, because you could burn through all your money and only be 20% through the tasks. Doing this in any formal way normally includes using Earned Value but for many projects that is overkill. Use your professional judgement to monitor your costs and if you aren’t comfortable tracking expenditure and tasks and taking a position on whether they are progressing as you expected, then talk to your finance team, your PMO or someone else who’s opinion you respect.
Finally, you’ve reached project closure. Your cost control work doesn’t stop just yet: first you can complete your financial evaluation.
This lets you see if the project has hit the financial targets that were set, especially around benefits. So, did it achieve the increase in revenue or cost savings that were expected? This is an evaluation around the outcomes of the project.
Second, you want to measure the project management effectiveness of the project. Did you do the work in line with the budget? Or was your budget woefully wrong? How did you deal with any surprises or overruns and what caused them? And most importantly, what can you and the team learn from them so it doesn’t happen again?
Taken together, these 4 tools give you a good handle on cost control. Even if you didn’t do anything else on your project, these would let you manage the financials adequately.
Do you agree? Let me know what you think of the 4 instruments of cost control in the comments below!