Cowshed Projects - Better projects and profit from flexible project management
It pays to be more mature when you’re small. Why smaller projects need even better management.
What’s a small project to you? It’s all relative, I would suggest that a large project is one where you sub-contract a proportion of the work because its beyond your resources and a small project is a project that only uses up a maximum 50% of your resources at a time. Both large and small projects have their good points and obviously a balanced portfolio of projects is the ideal, we don’t live in an ideal world, so we all do what we need to do.
An initial thought might be that a large project is going to be more draining on management than a small one. You’ll need to manage more people, there are more opportunities for something to go wrong, bigger numbers involved, larger items to cost you time and money and so a small project if something goes wrong will mean you won’t lose as much money. So that’s a winner, right? No need to worry about them!
There is a but though. Yes in terms of turnover the losses will be worse on a larger project, but in terms of profit you need to beware.
Say for instance you have a larger project £500k made up of 220K of costs and 220K of labour 80k profit and a smaller project £50k, 22k costs 22k labour 8k profit.#
Both projects have a issue with communication and you end up having to reissue drawing information 3 times because you’ve not interpreted the clients wishes correctly. Each issue uses up 2 hours management time and 4 hours design time.
That’s 18 hours at £25 per hour = £450.
On the larger project that 0.566% of the profit gone but on the smaller project its 5.6% of the profits gone. 20 of those mistakes and the profits totally gone. You’ll probably also use up more management time arguing to try and save you money, that’s not a good conflict to have (there is good conflict btw).
This example would be for a bespoke manufacturer but for a designer the profits are reduced even more as you don’t have cost profits to help you out! That example given could easily be 10% of profits gone for a designer!
As you can see, the effect an issue has on profit is magnified the smaller the project. You could just put in a contingency and accept that things will go wrong. Or you could employ the view of a bigger organisations who’s small projects are a lot bigger than yours and look at maximising profits and benefits when you can and use a contingency where it’s needed (That would be for events you have no control over, something for another day).
This is where understanding project management maturity comes in useful. It’s a bit more complex than this but essentially Project management maturity is elevating how you run projects from.
You can operate at any level and it’s not wrong to, but to start to get the best out of your projects and have less frustration, then just getting to stage 3 where you define how you run projects will start to make a big difference, in terms of profit and ease.
At this level you have a process that covers and mitigates issues pre them happening that’s not administrative heavy and aligned to the business. It won’t negate change and threats, but will greatly reduce issues like communication breakdown happening. These sorts of issues are how the profits slip away quickly on small projects.
Small projects are great, manageable, much more fun, you feel part of them and they spread the risk for the company. But to get the best out of them, manage them well and manage them with maturity.
No one likes an immature project after all … well apart from maybe your mom!
I'd love to hear your views, experiences and comments and if you're interested in finding out more, drop me a line.
Thanks for reading
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Hi I'm Simon. I've worked in projects for a while now, either management or design. I love projects but they're frustrating. Hope some of this help you.