3 trends should you know about your projects
Most Professional Services (PS) firms aim for growth, or at very least want to avoid contraction. Most PS firms are excellent at what they do, and love what they do, so the key to growth is rarely capability. What really matters is productivity and effectiveness.
If a firm is effective at delivering work — that is on time, on budget and at the right profit margin, it is more than likely that it two things will happen:
The customers will be happy that they paid the amount of money they expected and got the result on time. (I.e. they will likely come back for me and word of mouth will grow)
The firm would make enough profits to invest back into the business in order to grow.
Realistically there is only one other major parameter, which is business acquisition, but we will talk about this in a separate blog.
To achieve a level of productivity and effectiveness, firms need to have a good idea about what's going on in their projects, specifically you want to know:
Revenue
Profitability to complete
Time to complete
Revenue
Despite being somewhat an obvious parameter, you need to know how revenue is behaving over a period of time. You are looking for early warning signs that there might be an issue on the project and that an intervention may be required, such that the project delivers on time and on budget.
When measuring revenue you want to take a measurement of the past and the future every week. This will enable you to see how the predicted curvature of the revenue changes. For example if one week you predicted 5k next week, but only achieved 2k that should be a cause for investigation. It could either mean a number of things including write-off, people not being available and so on.
Profitability to complete
This is a similar measure to revenue but it more clearly indicates whether there will be a budget problem. Measuring forecast profitability of the project at each week will quickly tell you if there is a problem. If the profitability forecast starts to diminish, it gives you the opportunity to catch the issue early on, rather than when the project already lost money.
Time to complete
This is a similar concept to profitability. Measuring time to complete the project each week, will tell you a trend — if you notice that time to complete each week extends by a week, you can quickly see that there is a problem there.
In summary, sustained growth for Professional Services firms hinges on monitoring key metrics — revenue, profitability, and time to complete. Regular assessments provide early warnings, allowing timely interventions and ensuring projects stay on track. By proactively managing these factors, firms not only secure client satisfaction but also pave the way for reinvestment and long-term success. Stay tuned for our next blog, where we'll explore strategies for effective business acquisition in the professional services sector.