Maintaining a pre-defined budget is extremely important in any endeavor but is significantly more important when consultants are involved. Consultants can be higher rates compared to other options, but they seasoned consultants bring a wealth of experience and knowledge to help you achieve your goal more efficiently, quicker and with much less risk. An experienced consultant obtains the experience of having “been there and done that” and can bring best practices and know-how to the table.
In our experience of working with hundreds of customers and over 1,000 projects, we list some of the most common pitfalls and best practices in managing the budget on a project. Obviously, this cannot be an exhaustive or a one-size-fits-all list but these are some of the more useful tips we’ve collated from our experience.
The best situation in any project is for everybody to be prepared for the risks and outcomes. If everyone on the team understands what the requirements are, how it’s going to be designed and then implemented, then you will have a perfect project. Of course, we live in a highly imperfect world. Many business leaders have a strong sense for what their business needs are, but they may not be able to immediately articulate it in a way that translates into how the requirements will be met with technology. Consultants often specialize in a particular industry and certainly the technology to support it, but they need to draw out and distill the business requirements that are specific to the strategy of the company at hand. It usually takes multiple discovery and design sessions to arrive at that point. The more the business understands the technology and the technology understands the business, the better and faster the solution will surface.
A customer can make huge strides in this area by taking the initiative to learn the technology. For instance, by watching the numerous training videos on the Web, testing the technology in a demo environment, or building in some prototype time with the consultant, customers can get a strong start on understanding of the technology in order to make discovery and design sessions more productive. Alignment of business and technology should occur as quickly as possible. In addition, you must own the solution going forward, so having a better sense for the capabilities and set up will only help later down the road.
The other thing that is important for the business user is to truly understand and articulate the definition of a key business win. What is the “big win?” Can you quantify it? Are there business goals or KPI’s that you are trying to meet for the Board or Executive Management? Defining what the actual reports should be is extremely helpful to the consultant so that they can understand the hard quantifiable goals. It’s surprising how many managers run their businesses with a hazy idea of the metrics that describe their business and with no specific goals in mind. A good place to start is knowing what the Executive Management goals are and then constructing metrics that show progress towards that goal. What is reported in the board meetings? What are the metrics that are looked at every week? How do we measure bonuses for employees? If these metrics haven’t been well defined, it seems well worth creating them. Some consultants can help with that, but before the implementation consultant gets involved it’s good to have a clear idea.
One of the classic results of poor preparation is an inordinate amount of priority switching during the project. Switching context in the middle of the project simply costs more. If a design document has been signed off, but during the implementation the customer wants to “switch gears,” that will simply cost extra time. What was built takes time. What was tested takes time. What needs to be re-built takes time. In addition, anything that depended on the original approach may have dependencies, which may take time to unwind. There may be some buffer time set aside to account for these shifts, but often not enough. This is where having a strong vision, having good upfront planning and having the discipline to stay on course will significantly help to keep project budgets under control. Of course things change but one should realize that by not investing the sufficient amount of time up front will have budget ramifications.
You can’t keep a budget if you don’t have any planning or visibility. Set a budget at the beginning and create a detailed budget plan before the project begins. Some consultants may provide a very rough estimate with no details, but this increases budget risk significantly. Receiving a fairly detailed breakout of deliverables and estimated hours is key to setting budgets. Of course, this can go too far – spending too much time over-planning when the details cannot possibly be known until the project is well under way. Either way, get an estimate that you feel comfortable with so that you can begin planning. Always budget for the inevitable “curve balls” that will crop up. No project ever goes without a hitch and so you have to budget a little extra to deal with deviations from the path.
Break up your budget by milestone or by capability. As you progress through the project you’ll know earlier whether you are on track or not. Knowing for instance that we are behind on discovery because there are more people to interview is good to know right up front. An extra you take up front is an hour that is taken away from somewhere else.
Another aspect of budgeting is to be realistic about what is needed. You may have budgeted one training session as your entire rollout but not realized that you need to do some prep work with the executive team, run a pilot program with a smaller team, perform a staged rollout to different groups at different times and to allocate some ongoing support to assist with the change management process. Visualizing how the project will be conducted and providing realistic planning will always help move you closer to understanding the real budget.
Also understand where the risks may be. You may have allocated some number of hours for a particular capability, but also know that requirements haven’t yet been fleshed out yet. That’s okay but know that this is a risk area and estimate (and manage) appropriately.
You will never know everything aspect of the project up front because requirements will change. Assumptions may have changed after you’ve “looked under the covers.” You may realize that a new capability you didn’t know existed could be important and you want to add more scope to the project. Watch for “scope creep” – it happens. By all means add to the project if it strategic but remember that there is a major benefit to keeping it simple and to create a series of incremental wins. No accurately budgeted project can “absorb” extra. If you planned well you might have buffer hour set aside, but if not, remember that you simply just have to add more budget. Stay on point as best as you can.
Remember also that there may be several ways to accomplish the same business goal. Focus on the business requirements and how they can be fulfilled and do not get stuck on how it must be done on a particular way. Sometimes keeping the technology simple and accomplishing the business goal through process or organizational change is the best answer. Creating a fully automated but highly complex and brittle system is often not the best choice. Focus on the end goal from a business perspective.
In any project, a lot of questions will be brought to attention and decisions must be made. Life would be much easier if the best solution was always the cheapest and simplest to implement. Instead, there are choices – many choices, each of which have tradeoffs and opportunity costs. Projects will have budget and time limitations. The technology being built also has its limitations – it simply can’t do everything you wish it could do. Both the consultant and the customer want the project to be finished quickly and one of the things the customer can do to help move the project along quickly is to make decisions quickly and accurately. The customer should be constantly prioritizing the various options, understanding the tradeoffs and making decisions to move the project forward. For instance, one stakeholder liked how things were done in Excel and wanted to replicate it in Salesforce. Creating an Excel-like interface in Salesforce would be quite expensive, but there are many cheaper and simpler ways to solve the same business problem. Not surprisingly, these additional options are also typically more scalable and effective in the long run in addition to being less expensive.
One of the key times where decisions are made is during design and implementation. During design, there are often several approaches that can be taken with varying pro’s and con’s. Making quick, informed decisions will help drive the project to the agreed upon architecture. During implementation, reviewing and approving prototypes or development iterations put the “ball in the consultant’s court.” Managers have to be good at compromising – seeing the forest through the trees to arrive at the best solution given all the other factors.
Project pace is also a critical factor in maintaining a project budget. As projects begin to drag along, requirements will change, assumptions will change, your staff will change and people will begin juggling new priorities. In addition, the team can lose focus and lose the urgency that is present at the beginning of the project. As projects get slower, costs increase. Keep the pace going and be responsive.
At the end of the project, the customer has to own their solution. The sooner the knowledge transfer can occur the quicker the learning occurs. Getting up to speed is critical in owning the solution going forward and will also have the potential added benefit of speeding up the project. Whenever possible see if you can start to take on pieces of the project where applicable – it helps your team learn and on budget or even under budget.
Another way to help is to help participate in the training. The consultant can provide the technical training but the business justification and process and are always helpful to include in the training.
When you are working with a trusted partner the goals are aligned. Many consulting firms want a happy, referenceable customer that asks them to help them with future needs. Looking to get more billable hours than deserved is short-term thinking. Good consultants are in for the long haul – to conduct successful projects where a happy customer lets others know.
On the flip side, projects take a time – sometimes lots of it and it would be unfair to have the consultant eat time if for instance, you have trouble making decisions or if the participants aren’t well prepared.
On any given project, it’s easy to budget too few hours – to estimate based on the best case scenario rather than the most likely or even worst case scenarios. Technology projects and the change management process that occurs during the rollout and ongoing are almost always more than expected. Work with the consultant closely and collaboratively to plan your project well, stay laser-focused on the project and to be flexible with the inevitable twists and turns that will arise.