Project analysis helps you deliver projects on time and within budget, ensuring client satisfaction while also reaching profitability targets.
When you don’t have an optimized, repeatable process in place, you often fail to complete projects within timelines. The delays not only lead to lower profitability in that project, but also impact the other projects in backlog. This situation leaves little room for project managers to take a step back and analyze the projects to make improvements. However, performing project analysis from time to time is essential to make sure the business performs optimally and is set up in a way to drive growth in the future.
In essence, the purpose of project analysis is to identify the areas of improvement, look for opportunities to streamline and automate processes, and create standardized delivery mechanisms. The aim should be to progress the business into a more mature organization that is capable of taking on bigger, more complex projects that will allow your consultants to clock more billable hours and also increase the billable rates to increase profit per consultant.
Only with proper project analysis will you be able to improve profit margins and grow the business.
What is project analysis
Project analysis can be broken down into two segments: analysis of ongoing projects and analysis after a project is completed. The first segment is tactical in nature that ensures the project is on track. The second segment is strategic in nature that forces the project manager to consider the bigger picture of what can be improved in the project delivery for the long-term benefit of the business.
The focus during project analysis is usually on the financials, timelines, and resource allocation. You would typically measure project profit margins, billable hours, profit per consultant, resource allocated to the project and the cost incurred, and whether the project was delivered on time. What you should also consider are elements like workload analysis, which is to check if the project had the right mix of senior and junior resources, whether there were some consultants who were overworked while others were on bench elsewhere in the business, and if there are mundane repeated processes that consultants are spending more time on instead of adding strategic value to the clients.
Insights from this analysis will tell you where the gaps are.
To begin with, you need to check if you are accurately capturing all the relevant information needed for each project. You also need to check if the project manager has adequate visibility of the project and across different functions of the business to staff the project, monitor the progress, and ensure that invoices don’t get rejected by the clients at a later stage.
Analyzing project effectiveness
If you examine the reasons why you have low margins, you will find one or more of the following as the areas to focus on:
- Inaccurate project estimates
- Skills mismatch in project staffing
- Inefficient project monitoring
- Low collaboration within the team
Once you identify the problem area(s), you can start with the core KPIs of a project, which are on-time and on-budget delivery. With this, you can move to the more advanced project analysis.
The aim of the project analysis is to help drive higher billable utilization and improve project delivery quality through automated, repeatable processes. Project managers will be able to work towards this goal if they have the right tools and system to support them. What you need is a good Professional Services Automation (PSA) solution that is integrated with your Enterprise Resources Planning (ERP), Human Capital Management (HCM), and Customer Relationship Management (CRM) solutions.
What results you can expect from effective project analysis
Project analysis will help you build a thriving business that is ready for new opportunities and growth. You will see incremental improvements, but by building repeatable processes and using the right technologies, you will put your business on the path to growth and not be stuck in the challenges of a mid-sized firm.
Some of the benefits of project analysis and implementing new strategies based on the insights derived are:
- Increase in number of projects delivered on time
- Decrease in number of project overruns
- Improved project margins
While building a project analysis plan, it is important to understand that this is not just an activity that you take up once a quarter. This is a mindset that forces all the project managers and consultants to think long-term.
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