27 Sep How to Maximize Your Project Profit – The Basics
About the project, the goal is almost always the same: Complete the project as possible while meeting all agreed-upon budget and scope measures. In other words, your success as a project manager is measured by how profitable your projects are. Since you’re reading this article, we assume you want to be an excellent project manager. But instead of thinking of that as a burden, think of it as an opportunity. How? This article will give tips on maximizing your project’s profit so you can achieve your personal best in this area. Read on to discover more.
What is a Profitable Project?
A profitable project meets all its agreed-upon budget and scope measures while also bringing in more money than it costs. This is the ideal scenario that every manager strives for. Since you have a general idea of what this means, let’s dive deeper into each of the measurements that make up a profitable business. The budget is the amount of money allotted to the project for costs and expected profit. The expected yield is the amount of money you wish to bring in from the project after all expenses are paid. The work scope refers to the work agreed upon by the project manager. You can think of it as an agreement between all stakeholders about what the project will look like when it’s finished. A project must meet all agreed-upon budget and scope measurements to be profitable.
Profit is the difference between the money you’ve earned and the money you’ve spent. So if you earn $100,000 and spend $90,000, your profitability is $10,000. This can sometimes be tricky to quantify, especially if the project’s revenue is non-monetary. For example, if you have to write a whitepaper for a client, there’s no set monetary value you can use to determine profit. In these instances, the best way to measure profit is to take the time you spent on the project and multiply it by your hourly rate. So if you spent 10 hours writing the whitepaper and charge $50 per hour, your profit is $500.
The Basics of a Profitable Project
Here are the most important ones. Make sure you have all these covered and have a worthwhile project. First, you must ensure that your project is scoped. This means that all parties have agreed on what the project will look like once it’s finished. For example, if you’re managing a project for a client, you need to ensure that the client knows exactly what they’re paying for. Once you’ve confirmed that the project has proper scope, you must ensure that the budget and timeline are realistic enough to be profitable.
Tip 1: Have a Solid, Realistic Scope
You’ve heard it said that the project management process is like building a house. You must gather the proper materials, and put them together according to a plan. Well, the same logic applies to project scope. If you don’t have everything you need to complete the project, if you don’t have all the proper materials, or if the materials are not put together, you’ll end up with a house that doesn’t stand. The same is valid with the project scope. The materials may be excellent, but if they’re not being used, they’re not going to help your part and to be good. So make sure that every item on the project’s scope is necessary.
Tip 2: Specify Quality from the Get-Go
There will likely come a time when you’ll need to decide whether to choose the cheaper or the more expensive option. This can be tricky since you want to complete the project, but you also want to maximize your profits. , there’s a simple way to deal with this. Whenever you’re in a situation where you have to choose between two options, specify quality from the get-go. What does that mean? It means you should always go with the more expensive option. Here’s why. If you go with the cheaper option, you could have to spend more money down the line fixing the issues with the more affordable option. If, but, you go with the more expensive option, you can save money in the long run.
Tip 3: Make Smart Changes Before Starting
Before you dive into the project, you can save money. How? By making intelligent changes before starting. This might include changing the timeline, or even the location in which the project will be completed. Whatever change you make, make it with profitability in mind. Let’s say you’ve been assigned to manage a project that’s expected to earn $100,000, but you notice that there’s an opportunity to make a change that will increase the project’s profitability by $15,000. Even though it’s not a huge change, it’s still worth doing since it can impact your bottom line.
Tip 4: Use the Best Resources You Have
To complete a project, you need to use the best resources available. This could be people, tools, or even materials. For example, if you’re working with a client on a project and you need to interview their team members, you may not have the resources to do so. In this case, you should try to find the best resources available to conduct the interviews. This might mean hiring a third-party company to complete the interviews for you. Doing so will cost more upfront, but it will be worth it in the long run since you’ll have better results.
Tip 5: Don’t Forget About Contingencies
Contingencies are a type of extra money you save to use in case unforeseeable costs arise. Your project will cost $100,000, but you have $20,000 allocated as a contingency. If an unforeseeable cost arises, you can use the contingency money to cover it. What does this have to do with maximizing a project’s profitability? Everything. If you don’t have a contingency budget, you could have to complete it with a deficit. But, if you have a contingency budget, you can complete the project, even if there’s an unforeseeable cost.
Tip 6: Start Using Time Tracking Software
Time tracking is an excellent way to optimize the profitability of your projects. It allows you to understand better where your time goes daily and how you can maximize it to use it better. Many project management software platforms offer a time tracking feature. If you don’t use one, start using one today! It’ll help you determine where your time is going and how to use it more. Doing so will help you be more profitable, giving you a more accurate understanding of your profit margin. Let’s recap what we’ve learned so that these time-saving tips work magic in your project.
First, make sure that your project has the proper scope. Next, specify quality from the get-go. Make intelligent changes before starting, utilize your best resources, and don’t forget about contingencies. Finally, start using time tracking software to understand better where your time goes daily.