1/3/2018

Three Ways to Close the Project Management Loop

Project Profitability

We're constantly reminded that software is a tool that acts as a means to an end – a goal. That goal being to manage a project-focused organization that delivers products/services in a repeatable manner to be profitable.

Companies either build or buy software with the intent that it will allow resources, (employees, project managers and executives), to manage the work and be more predictable on project delivery, project costs, and project profitability. Software does not ‘just produce results’. Data has to be input, maintained, revised and analyzed to determine what changes needs to be made to the day-to-day processes.

Closing the project management loop – why it matters

More importantly, people need to ‘close the loop’ to ensure next steps may be taken, billing processes can start and projects are completed on schedule/budget. Closing the loop should be a continuous action by project managers. This concept takes place at various processes/stages. Organizations that fail to embrace the value of closing the loop, more often than not, fail to realize the full potential of their success.

Closing the contract loop

One of the first places where project managers need to close the loop is when they are signing a new contract.

Agreeing on the specifics comes first:
  • solution requirements
  • start and completion deadlines
  • budgetary constraints
  • billing expectations
  • key contacts/decision makers

These are all vital aspects that need approved and signed off on before signing the contract. Attention to detail is critical because the details set the stage for how the project will run once work commences. Unanswered questions have the ability to distract the focus of assigned resources and cause delays, which drives costs up and customer satisfaction down. Closing the loop on all details before signing a new contract sets the project on a trajectory for success and profitability.

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Many organizations provide repeatable services from one customer to the next, or they produce relatively identical products for sale throughout the year. We know that customer needs are often unique. We can agree that 90% of the solution/product is exactly what they want. The other 10% makes up the unique portion. Within that 10% lies the details of what can make or break the success of the project.

Clearly identifying, documenting and agreeing to the details (in writing with signature sign off) assures that both the provider and the consumer know what to expect during project execution. Closing the loop on the details upfront is a key for successful project management.

As the requests for additional projects arrive, companies should leverage the results of previous similar projects as a starting point for the new estimates. If all of the tasks for the prior project are captured in the software, it lends to a more accurate estimate for subsequent projects. Simple things like prioritization of tasks, actual time spent on tasks, cost reductions opportunities (such as staffing with employees versus subcontractors, or vice versa), afford a project manager the ability to utilize prior results to reduce costs and maximize profits on future engagements.

Someone taking time to close the loop on tracking these details as they transpired on previous projects allows the organization to produce tighter estimates and predictable results for new projects. In other words, project managers need to close the loop during the execution of a project by making sure time and expenses are properly recorded. The project results then become a highly valuable asset to be leveraged for future, similar projects.

Closing the software loop

Another area of project management that often goes unfinished is officially closing the project in the software. If we take into consideration that resources tend to immediately move on to the next project when they complete one, it is easy to understand how projects left open in the software might be accidentally used for time or expense tracking for future projects – especially if the work is similar in nature or for the same customer.

We often notice that organizations stop updating projects when no one is entering time and expenses against it any longer. Everyone just knows the project is complete (or so they think). In reality, the resources don’t necessarily know the project is complete. Since they are not responsible for the overall project, they don’t know if everyone else assigned to the project has their part done.

It is the project manager's responsibility to oversee the completion of the project and more importantly, the closure of the project in the software. By ensuring the project is updated to closed status, a person can prevent time and expenses from being accidentally recorded against a project. Although this may sound like such a simple step, the fact that it often remains undone results in leaving money on the table.

Active projects may appear to be running under budget while completed projects start to look like they overran their budget. Once this problem is identified, extra effort is required to move the time and expenses to the proper projects, right-sizing the effort across the projects. Had the project manager ensured they closed the loop when the work was complete, no extra effort would be required. If your intention is to use past results to negotiate future contracts of a similar nature, it is critical that project statuses are kept up to date at all times, allowing project managers to negotiate future projects based on facts. Customer satisfaction remains high. Repeat business increases. Cashflow remains strong. Company growth occurs. All because you closed the loop.

Closing the customer loop

Finally, it is a best practice to follow up with the customer after the work is complete and the bills are paid to make sure the customer received what they expected. Taking time to close the loop with the customer often results in discussions around future needs. If they are satisfied with the product/service that was provided, they are more likely to come back to you with their next request.

They have no need to look elsewhere because they know you took care of them from the first step of signing the contract to the point that the work was delivered. This personal touch is often the lasting memory of your organization simply because your project management processes enforce the concept of closing the loop.

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Topics: Project Profitability

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