When is the last time your company has completed a large scale project before or on the originally prescribed deadline and within budget? The answer for many of you, unfortunately, is rarely. Think we’re exaggerating? Recent data shows that fewer than a third of IT projects are successfully completed on time and on budget, but perhaps even more telling, is that 75 percent of IT executives believe their projects are “doomed from the start”. The latter statistic proves that the issue stems from get go, which is why Fully Managed is stepping in to help make sure your next big IT project goes without a hitch.
5 Keys to Making Sure Your IT Projects Are Successfully Completed On Time and On Budget
1. Define (and Document) Exactly What the Stakeholder Wants
A study conducted at the University of Ottawa concluded that one-third of IT projects fail because of a lack of involvement from senior management. Whether the fault lies with senior management, the project manager, or both (most likely) the urge to finger point must come to a screeching halt by nipping the issue in the bud before the project begins.
Don’t let the budget (and timeline, which impacts spend) be set until a clear picture has been painted. That means the primary stakeholder cannot come in and state “OK, we need this project completed in 6 months from today and we have a budget of x amount of dollars. Here’s what we need.” Instead, it’s the other way around. The project manager must communicate with primary stakeholders to explicitly identify, document, and confirm project goals and requirements. Then, and only then, can you begin to set the budget.
2. Budget for the Unexpected
When budgeting time and financial resources, leave a buffer to factor in contingencies, which are incidents and events that can impede the progress of a project. These contingencies must also be clearly defined, and will be determined via a group effort between stakeholders, projects managers, and the project team. These incidents/events will vary by scope and industry, but can include fluctuations in any of the following:
- Product, material, and service prices
- Product, material, and service availability
- Vendor relationships
- Human resources
- Currency exchange rates
- Interest rates
- Political (municipal and federal) agendas
- Environmental mandates
Be sure to clarify (to the best of your ability) how an event will alter the budget, as in “If x occurs, the timeline will extend by x amount of hours and the budget will extend by x amount of dollars”. That way, if/when an event occurs, you have a backup plan in place, one that immediately adapts the budget accordingly and manages expectations while leaving no room for stakeholders (including financers) to balk when informed about an adjustment.
Remember, this buffer is not an excuse to allow unnecessary delay and excessive spend. If an impeding event does not occur, then the budget should not extend beyond what was originally prescribed.
3. Establish KPIs on the Roadmap
Key Performance Indicators (KPIs) that can be evaluated as the project moves along are essential. These KPIs will be set via a collaborative effort between primary stakeholders and the project management team, and must be inserted into the roadmap so that successes and challenges can be quickly identified. The KPIs will allow you to gauge how much has been spent on a project at a given point in time while detailing how the actual budget deviates from what was originally planned.
Common KPIs that you can apply to your project include (but are not exclusive to) the following:
- Planned Value (PV) - Also known as Budgeted Cost of Work Scheduled (BCWS), this KPI is the estimated cost for the project activities that you have panned as of reporting date. You can compare the PV with other project KPIs (below) to see whether you’re running behind or ahead of schedule, and to determine if you spent beyond what was scheduled to date.
- Actual Cost (AC) - Also known as Actual Cost of Work Performed (ACWP), this KPI is the summation of all project-related expenses (wages, resources, etc.) that have been used to date.
- Earned Value (EV) - Also known as Budgeted Cost of Work Performed (BCWP), this KPI accounts how much-planned work you have actually accomplished and compares that to what the budget was for these accomplishments.
- Cost Variance (CV) - The CV is as it sounds, and will help you determine whether the cost of your project to date is below or above the planned baseline. To calculate, simply compare the actual spend to the planned budget.
- Cost Performance Index (CPI) - This KPI details your project’s cost efficiency, and approximates how much time you’re behind or ahead of the approved schedule. It is the ratio of the planned budget to what has actually been spent to accomplish the tasks.
- Planned vs Actual Hours - Since time and budget are directly connected, you will need to apply this metric to preset time periods and compare multiple project phases. If the actual amount of hours spent significantly exceeds (or is less than) the scheduled time, you will need to re-calculate the time scheduled for the project.
- Schedule Variance (SV) - This KPI calculates (by subtracting the project’s Planned Value of its Earned Value) exactly how far ahead or behind of a planned budget (and schedule) your project is. If you find that you have achieved more (or less) than planned by a given point, you now have a bigger (or lesser) budget to spread over remaining tasks.
- Return on Investment (ROI) - This well known KPI does not necessarily have to become evident from the moment the project has been completed. If the project resulted in a product that goes to market right away, then you can indeed look at immediate revenue. Otherwise, the type of project will dictate when ROI should begin to show so be sure to be realistic with expectations.
Armed with a measurable set of KPIs, you will not only be able to gauge the incremental successes (and challenges) of your ongoing project as it occurs, you will be better able to plan future projects accordingly.
4. Set Accountability
You need to make sure that every billable hour is accounted for. Each hour must be carry a recordable task so that there is no ambiguity, and this should be reported to stakeholders and the entire team via scheduled project updates. This public facing accountability will keep those working on the project conscious of everything they do, ensuring that they work efficiently towards the common goal.
It should be noted that accountability in this context does not intend to create a punitive environment. You will absolutely want to give members of the team a degree of autonomy, requesting their valued input so that they know they’re an integral part of the decision making process. You can absolutely encourage them to experiment and create new efficiencies, while reinforcing their efforts with positive feedback. Let them know that the accountability plan is one that seeks to recognize their contribution, not to look for deficiencies (even if it does that too).
5. Bring in Project Management Support
You may have vast experience in managing small to medium projects for your business, but when it comes to large scale IT projects, prior practices may not be so scalable. There are off-the-shelf project management tools that can be applied to your undertaking, but there will be a significant amount of learning involved so that you can apply them to your unique needs.
When it comes to a more substantial IT project, it is best bring in outside support that can either take on a fully managed role, or at the very least serve in a co-managed capacity, so that everything above can be addressed to the tee and see your project through to successful completion. Learn more about our fully managed, custom managed, co-managed solutions, or simply contact Fully Managed today to learn more about how we can help you keep your big project on budget.