Posts Tagged ‘project’
In the last post on the series regarding my freelance Passive Income project, I wanted to wrap it up with where I am now, and how it all worked out for me (so far).
I started my passive income Buy-To-Let project in the spring of 2012, and I am writing up this wrap-up entry at the end of December 2012. So in theory, the project has been running for 8 months.
How long before I made Money?
As I said in my previous post on my buy to let project, the purchase of the rental property completed on Wednesday, 25th July. We spent the next week with decorators in making the place fit to live in – they decorated the walls and ceilings, we replaced all the light fittings, replaced the curtain poles, purchased new white goods (washing machine, fridge freezer, put in a dish washer). We then selected the property management company, and on the July 30th, the agents went in to take pictures and advertised the property.
The management agency initially advertised the property at a rate of £750 per flat per month. We had budgeted for £700 a month, so we were initially delighted. But a week of no interest and a bit of right move research showed there were a lot of similar properties for rental at £725 – so we instructed the agents to reduce the price to £720 a month per flat.
That was the right move – within days, viewings had increased through the roof, and by the 8th August (2 weeks after completion), we had tenants agreed on all flats. In fact, on the majority, we had multiple offers and we were given different options about which tenants we wanted – all tenants were offering the £720 asking price – so we were above budget. Happy Days. On two of the flats, prospects got into a bidding war, on on these flats, we ended up accepting a higher offer of £750 a month. Even better!!!
How The Money Works
At the start of the project, I created a spread sheet with the budgets for the project (per flat). But, now that money was coming in, I double checked the income, which worked as follows:
Each month a tenant would pay £720 (2 were paying £750). Of this, the funds initially worked out as….. £520 went back to paying back the loan on the property – interest and principle (so the tenants were paying off our loans – nice!), £49 went to the managing agent (their fee for dealing with finding the tenants, collecting rent, dealing with any tenant problems), which left £151 profit per month per flat.
However, we decided that ever 4 months, the extra income money would be then transferred back to the loan payments. Our lender had a clause which said when we pay off a chunk on or above £500, the interest is recalculated. So paying the additional income not only reduced our debt amount, but also changed the monthly payments back to them. So on month 5, the £520 loan payment reduced to £507, which means that each month our profit increased to £164 per flat. It may not seem a massive leap – but its compounded – every 4 months the loan payments went down and the profit went up – exponentially.
And of course – this is cash in profit (from rent). On top of this, our share of the property increases (as the loan is repaid) so that increases the net worth, and if the properties increase in value, that’s triple bubble on the passive income.
It’s a rocky Road Ahead
Of course, is a great picture now. My company owns more property, which hopefully will increase in value, and in the mean time, my tenants pay off my loans which means that in a few years, I will own the property outright (and so will double my originally invested money). Once the loan is paid off, all rental income is then passive income.
BUT, despite all the efforts of the central banks, Europe, the USA is in a desperate financial state (and soon Asia will join them). This means that interest rates could change very quickly from the current historical lows to shocking highs – who knows. My own predictions are that in the next 6 to 12 months, interest rates will drop further (to ZERO %?!?), before starting to grow – but that is why we are keen to reduce the loan amount as quickly as possible.
However, if you are thinking about following me into the Buy-To-Let passive income route, careful consideration should be given to the turmoil which may follow in a few years time.
when I started this project, I was looking for a passive income stream, and I found one that I am happy with. Yes, its not as ‘freelancery’ as say writing e-books, or developing a sell-able software product or generating money through advertising, but all of these seem to be hard work for little return. For my investments, I am already generating a reasonable amount of money. And whilst the monthly income may not be shockingly high, it compounds up very nicely and very quickly, and will generate a big pile of catch with little no no risk or work – just what I was looking for.
It’s still early days in this project. I am not looking for a quick win or to make millions – but it is going to generate cash over my ten year plan. If things continue in the future as they have done in this project, I will certainly be looking to expand into more properties whenever a major non-passive (regular day job) project generates sufficient cash to allow additional investment.
So, that’s it – that’s my passive income project.
What do you think??
Continuing on with my passive income Buy To Let project, I wanted to touch on some of the problems I encountered on the first part of the project – which were all around finding and buying a property to let.
On Wednesday 17th July 2012, the exchange and completion on the property took place. Because we were keen to get cracking on finding tenants (and start earning money), we made sure that we exchanged and completed on the same day.
We also did this as we had a schedule of work to do to make the property letable. Keeping the fact that empty (or void) days means a loss whilst a filled (or let) day means a profit, we scheduled everything around this day. We had arranged a week before the exchange/completion so that the moment we completed, our work force went in with a list of items to do.
The Work to Make Good
For our first buy to let property, we wanted a mix of the easy things that we could do ourselves (and so save time and money) and those that we would just pay for and get the professionals to do. Our list consisted of:
- Paint all the walls and repair ceiling cracks (professionals)
- Service the central heating and report (professionals – British Gas – on a landlords service/maintenance/certificate deal)
- Put up window curtain poles and curtains (us)
- Replace worn out taps, a new radiator and other plumbing jobs (professionals)
- Purchase and install new dishwasher, washer/dryer and fridge freezer (us)
- Fit coat hooks and shower screen (us)
- Clean the carpets and oven (professionals)
- General clean (Windows, sinks, etc) (us)
We timed all of this so that the moment we got the keys – the various people would arrive and start work. It was an interesting week of project management to make sure everybody could do their part over the next few days without stepping on each other or getting in each others way.
We created a mini project plan for all the teaks, including the purchasing of the required items (from white goods, to a kitchen sink, to radiators and even paint) so that everything should (and did) fall into place.
The Problems and Advice
Of course, up to the exchange and completion, things did not always run to plan. We hit no end of problems in the purchase which included:
- Having to change lenders 3 times – each lender had strange made up rules on what they would lend to (for instance, the original Bank Of China would not lend on any property within 5 miles of a train station – which of course ruled out almost all towns and cities in the UK)
- Delays in funding meant delays in purchase, which meant somebody else came sniffing and we got ourselves into a mini bidding war (which increased our costs slightly)
- Delays in funding also meant that more work was needed by the legal bods, which added some more cost onto the purchase
And of course the delays also added to a little bit of stress to our own activities
Bending and Flipping Back
In the end, we completed on the purchase (and I had a cup cake to celebrate). And the work kicked off on the rapid refurbishment project.
Whilst a lot of people go through a property purchase, its better with a Buy TO Let, as we wont be living there so there is no emotion involved. If the numbers still made sense and worked – the answer was always going to be yes – if not, then we would have canned the project.
So it was a question of just rolling with any setbacks, and snapping back (like grass) once they had passed. Oh, and remembering to get on with the day job whilst all of this was going on.
Today I want to continue talking about my Passive income project for my company, which as I had described earlier, was taking shape in the form of the purchase of property and then generating income through the Buy to Let market. Today, I want to talk about the project finance.
In 2011, my company had done rather well, and was sitting on a pile of cash. However, it was not sufficient to purchase a house (or other residential property) outright. Therefore, my company needed further finance – in the form of a bank loan.
When it comes to finance, there are a lot of options available:
Loan, Interest Mortgage or Repayment Mortgage
Clearly, the three main options that were open to me was a banking business loan, an interest only mortgage or a repayment mortgage. In terms of the maths, there is really no difference between a business loan or a repayment mortgage – on the amount of money I was looking to borrow, it would still need to be secured against the rental property we would be buying.
In my Buy-To-Let growth spreadsheet that I had put together earlier, the maths suggested that a repayment mortage was the way to go rather than an interest only. After all, with interest only, I would still be left with the value of the original mortgage to pay back at the end of the loan period – so growth would be less. So in my mind, a repayment mortgage would be the way to go.
Also, I liked the idea that the rental for the property would basically be paying off the loan (with the risks of months without rent and bad tenants accepted).
UK Bank Backing – They don’t really want to know
So with the decision made, we went off to see our friendly business bank – the Natwest (who we had banked with for 10 years). We met with the business manager, who was more than happy with our maths, more than happy that it worked, and was more than happy to lend us the money we needed (to top up our own cash into the project). After all, the UK government had introduced Project Merlin a year or so ago, which was a banking incentive to lend to small business with projects such as this, so the project helped Natwest meet their own lending goals.
However, the interest rates quoted by Natwest were shocking. When the UK base rate was at 0.5%, Natwest wanted to charge us just under 6% VARIABLE. We questioned this high interest rate (after all, Natwest were borrowing the money from the IMF at less than 0.3%), and the manager was very frank with us – because there really was not any real need for a UK bank to generate money from UK customers. They were already making so much money elsewhere.
Good old UK banks – you have got to love them.
I was also not very happy about paying a variable interest rate. Yes, interest rates had been at a record 0.5% for the past 3 years, but sooner or later they would be heading up, and I wanted to keep the risk of the rental not meeting the monthly repayments to a minimum. This project after all was all about minimum risk for maximum returns.
Luckily, there is a good table of BuyToLet mortgages and loans listed on the internet, and there was some cracking deals to be had – if we looked further afield.
The Final Solution – from an interesting source
In the end, the finance came from…. The Bank of China. And what a cracking deal it was – 3.88% for the TERM OF THE AGREEMENT. Interest rates could rocket – and it would not cost us a penny more. Our tenants would never have to worry about us charging them more rent to meet the monthly payments because our own payments would be fixed – it was a win for all concerned.
We had to do all the financial applications (and provide 6 months of personal and business bank statements, 3 years of company year end reports, credit checks on all directors (free from Experian)) and a couple of other bits of information. Then, on Monday 16th April, the Chinese Bank said yes to the finance. The project was green-lite (lighted?!?) and we could really get cracking on our passive income project.
Now first off, we have to assume that you have provided an estimate based on a project cost (rather than a day cost). If the customer is paying by the day, then you have to let them know when you think you are going to take more time than agreed or budgeted, so that a higher than expected invoice will not come as a surprise. But if you are using a cloud based project management system, this is an easy task and they will be alerted by the system automatically as tasks slip.
But project based under estimations are a different ball game altogether. When such a project takes longer than you estimated, you could end up making a loss on the project – or cutting corners which means the customer will end up unhappy and unwilling to pay the bill.
Keeping Track to spot problems
First of all, its critical to both you and the customer that you keep track of the project progress in terms of the work agreed, the work you have completed, and if the work is on track. Again, project management software will allow you to do this, so everybody knows what is going on all the time.
The important thing is to spot slippage or extra work as soon as possible. There may be elements that you thought the customer would supply but you are now being asked to deliver, or a misunderstanding of requirements, or a delay from unavailable resources (either on your side or on the customers side). But again, the important thing is, the moment you spot a problem; that is the time to take action.
I have seen too many projects where the project manager thought things could be made up towards the end of the project, either in cutting corners elsewhere or everybody ‘working harder’ to make up the lost time. Yes, this could work – but generally this is just making a situation worse or delaying the pain. Much better to start having a conversation and coming up with a solution sooner rather than later.
Control scope creep or customer based delays
One of the major problems with projects for paying customers is scope creep. This is where the scope of the project is agreed up front, work is started, and then the customer will want more than agreed. This can come about from comments such as ‘But I thought it would do this as well….’, or ‘When you said A, I thought you meant A, B, C and D’. Then there is the external customer influence factor, where your main contact will say things like ‘Just got word from Joe in Marketing, who insists it should do this….’.. Good project scope documents should have a good limitations clause to avoid such problems, but lets assume its too late for that now.
In this situation, it’s important to control the creep. Say “That’s a great idea, but why don’t we deliver what we agreed on, and then we can look at B, C and D after the initial delivery“. This is called change control – and the beauty of change control is that you can then create mini-sub-projects after the main delivery, all of which are chargeable (or at least have the changeability discussion after the customer has paid for the main part of the project).
Customer delays can also come about when they promised to deliver something (data, specifications, resources, hardware, whatever), and fail to do so – or at least, they deliver it late. Once again, having the customer based tasks on a cloud based project management system will stop this from happening. Their responsibilities are scheduled, they are informed of the upcoming requirements, and automatically nagged when it goes overdue.
When customers are late, you have every right to ask for more money if it means delays or additional work for you. I would phrase it along the lines of “The project agreement was that you would provide a widget by the start of November. Unfortunately, the failure to deliver has impacted the project delivery and has resulted in xx lost days which are outside of the original estimate. We are therefore in the unfortunate position of having to bill for these additional lost days at the end of the project”. Again, do this as soon as possible, as this will mean fewer delays in the future (they will not want to get caught out again).
They may of course object to the extra charges, but now you have turned the discussion into a haggle or negotiation. You could of course be the good guy and agree that “Ok, we wont charge you THIS TIME, but will have to in the case of any more delays.”
How I would tell them about under estimation
So now we come down to the tricky business of what to do when you have agreed work and you find that your estimate is nowhere near the amount of work that will actually be required.
Of course, the first option is just to bite the bullet, accept you have made a mistake, learn from the mistake and continue with the project to completion. Deciding to take the hit will need to be based on how much money you will lose, and how much future work is likely from the customer. Generally speaking, I personally side on the rule of “bird in the hand is better than 2 in the bush” and never assume that the customer will provide future work (even if they promise it). If the lose is acceptable, then I will just stay quiet, but if it’s a major hit, then the difficult conversation has to be had.
I would recommend that the conversation never be held either by email or on the phone. When going cap in hand to the customer, a face to face meeting is really the only option that will work. If that is not possible, try to get a face conversation with Skype, otherwise a phone call. An email is going to be last route you should try.
The conversation with them needs to be honest, lay it on the line, and start a negotiation. Try and find an additional payment which works for both you and the customer. They will of course be deeply unhappy, and may force you to complete the project at the agreed price – in which case your only option would be to walk away and make a total loss (with the possibility of legal action against you, subject to whatever legal document you drew up prior to starting work).
I would always try to get a balanced agreement – you are in a bad situation, so your aim would actually be an ‘everybody looses’ balance (e.g., you pay me more, and I will throw in free training and support). The agreement will vary depending on your situation, your project, the customer and your own charisma. But, I would start the conversation with something like:
Here is the situation. I produced the estimate for delivery of the project based on my understanding of the requirement. I am sorry to say that as we worked on the project, my knowledge grew clearer and as a result, I have realised that I have underestimated the effort required to deliver this. We need to talk about reshaping the project, either by re-estimating the effort and cost required to deliver to the agreed scope, or by shrinking the scope of delivery to fit with the agreed budget.
Then, stop talking, and listen to what they have to say. Negotiate!
One thing I can guarantee is that yours will not be the first project that the customer will have ordered that will have gone over budget, and I can also guarantee, yours will not be the last.
We put a lot of effort into starting projects; from nurturing prospects through to agreeing terms and requirements. But what about when projects are completed – how do you wrap up and complete projects?
In order to keep a good relationship and possibly win future business with the customer, doing a project hand over is just as important as the project start.
What to include in the hand over
Depending on the type of work that you do and the size of the project, a face to face hand over meeting may be required. If this is the case, it should normally be agreed from the start and factored in your initial work assessment and quotations.
Regardless of whether the project hand over is a face to face meeting, or is performed by email, some of the hand over aspects which you may want to factor in include:
- Training – Depending on the skill level of your customer, some degree of hand over training may be required. This of course could be factored into the initial quotation, or could be offered as an after-service when the project is completed (with an additional fee). Just remember that if you train them *too well*, they may not need your services in the future.
- Support and Maintenance – The flip side of training is support and maintenance (for me, the icing on the freelance cake). If you can charge your customer a regular yearly amount in advance for fixing problems and answer questions, well, that’s how companies grow and big profits are made. If support and maintenance is a consideration, you will need to think about what form the support will take and what the limits are.
- Problem Resolution and Warranty – As part of a hand over, your customer will want to know what to do if they hit a problem. Let them know how long you will support them for (if at all), what to do if they need changes, and how to contact you (you may want them to use a separate support email address for instance). This then ties them in to the support and maintenance agreements. Be clear about what will be free corrections, and what will be chargeable.
- Suggested Next Steps – Without being too pushy, it is worth providing them with a suggested set of next steps (how their product, web site, documents, etc could be expanded for more value). This is one of my key ways of generating future business.
- Passwords and source code – If you have provided them with a product (software product, documents, art work or web site), they will most likely expect to receive the source code. If there are associated web domains, passwords, or accounts, don’t forget to document these. It will save a lot of problems in the future.
- Time Periods – For most projects, you will have copies of their designs/source/art work on your computers and their projects on your project management systems (you do use a project management system to save time and money, right?). It is well worth stating clearly how long you will retain these copies for before you delete them. This is important as you don’t want to find yourself in a situation where they delete their copy by mistake, and expect to come back to you in 5 years time for another copy (which you no longer can provide).
Thank you – Don’t forget to say a big thank you for their business. You don’t need to go over the top, but in today’s climate, a simple thank you will go a long way.
- Survey and Referral – The end of the project is a perfect time to arrange an end of contract customer survey which covers all your dealings with the customer (from quotation to invoice), and also to ask if they would be happy to provide either a reference or a referral.
- Contact Branding – And don’t forget to brand everything with your company. It should be clearly stamped with your company logo, name, address, web site URL, phone number and email address. It may be that your main customer contact may leave in the future, but your documentation will remain on file for others to get in contact for future work.
Get it right, repeat and evolve
This may all seem like a lot of effort, but the secret is to create a generic project hand-over document (or set of documents), which can be used and tweaked for each project. Once you have a template, the updating of a hand over document becomes part of the project closure, and takes a lot less effort in the future.
As with all other documents your company produces (such as the quotation templates, questions list, etc), this can be a living document, that evolves (and improves) over time.
Preparation and submission of the handover document soon becomes a natural part of your project delivery structure.
Maybe now is not the right time to sell
One thing to bear in mind is that the project handover process and documents are there to present subtle messages of next actions, professionalism, and to keep your company name in front of your customer. However, I have found in the past that coming out and asking for more work directly as part of the project handover very rarely works.
The customer will be too wrapped up in getting to grips with the product or service you have just delivered.
It is far better to present the hand over, and at the end, agree a scheduled call or meeting as a ‘follow up’ (to check everything is still ok) in a month or so’s time. That is then the perfect time to raise the ‘next steps’ you have suggested and to look at fishing for the next project.
Something strange is going on this year. I have been asked to provide either guidance or estimations for taking over more ‘failed’ projects from other freelancers or companies than any other year. This week alone, I have been contacted by no less than six companies asking for estimations for taking over projects.
Now don’t get me wrong, gaining work from other peoples mistakes or failed efforts is just as good as winning new work. But what makes any of us believe that we can do a better job than the last freelancer or company?
Generally, when I have finished discussing the project with the prospect on the phone or in a briefing meeting, I come away thinking ‘this is an easy project, I could do this with my eyes shut’. Well guess what – the guy or gal you are being asked to replace most likely had the exact same thoughts at the end of their briefing. If it was that easy, why are they being replaced?
Here are 10 things to watch out for or give thought to when taking over a failing project:
- We all think that our companies are the best, that we as individuals are more talented, and we have better methods and processes. I can guarantee that the freelancer or company that you are being asked to replace had the same view. Are you really so different? Bear this in mind when considering your responses.
- If the last freelancer or company negotiated any money in advance, bear in mind that the project may not have the funds left to complete the work – get the money issue sorted as soon as possible
- The project will undoubtedly be behind schedule by the time you get involved. Make sure you can extend the deadlines already set otherwise you will be in the same position as the last freelancer
- You need to check how much freedom you have in terms of ‘starting again’ or if they want you to just take over – sometimes there is nothing worse than taking over a project and having to build on somebody else’s failing code, designs or other foundations
- On the basis that the previous freelancer was as equally skilled as you, there is a reason they have failed with this project and customer. What is the customer not telling you? Why did the last freelancer or company fail? Ask those difficult and probing questions.
- When you come into a failing project, the customer will already have the project tagged as doomed. Establish what are the ‘quick wins’ that will be needed to turn the project around and restore faith.
- Check the legal situation. If you are asked to take over a project, don’t take the customers word that you can use the other freelancer’s code/designs/ideas. If they have in their contract that the technology belongs to them until it is paid for, you may be building on a foundation which may get pulled without warning
- If the project has failed once, it is more likely that the project would fail again for the same reason that you have not yet been made aware of (maybe the customer keeps changing their mind during the development). Make sure that your agreements, money payments and rights are even tighter and stricter than they normally would be
- If the previous freelancer or company knows they are being replaced and are happy about the situation, see if you can arrange a conversation to get their side of the story. They may have information that would benefit either you working on the project, or you deciding to walk away.
- At the end of the day, taking over a failing project is always more dangerous than working in a green field. If your heart, your mind or you gut are telling you that the project is too easy, the grass too green, or its too good to be true – then it is. Walk away.
One year ago today, I evaluated a number of cloud based project management systems to help reduce my administration effort for my customer projects. In the end, I boiled this down to 2 strong candidates (having discounted such products as BaseCamp as being very light on features for a typical freelancer or small business), and finally selected TeamworkPM as the solution I would use.
Having used this system for a year now, I thought it would be useful to re-review TeamworkPM, and explain why it has transformed my business.
Providing a Customer Project Portal
Initially, my main requirement was to introduce a cloud based project system which in turn would provide an easy to use method where my company and my customers could communicate whilst working on projects. I wanted a system which would allow my customers to keep track of their deliveries, to be able to track progress, communicate any design/time issues and so ultimately reduce the amount of administration I would need to provide. I thought such savings should lead to reduced management time, therefore reduce any risks and associated costs.
Whilst a number of project management systems provided a customer portal, I initially selected TeamworkPM as my preferred solution because not only did it tick all my client portal boxes, but the use of the client portal was crystal clear and could be fully branded with my company domain, colour scheme, logo and titles. As far as my customers are concerned, the project portal is part of my own web site. I even provide a link to my branded TeamworkPM login screen as part of my main company web site.
All of the customers who have used the portal have commented how easy it is to use, how clear the information is, and how they can find the information they need. Most of these comments were given to me generally as part of a project wrap up process. For customers to report this to me as part of general project meetings proves to me that TeamworkPM most definitely is an asset to my communication with my customers.
Clarity, Focus and Time Saving
Beyond my initial requirements, I have continued to find more and more uses for TeamworkPM when working both on internal projects (I have a marketing project in TeamworkPM) and with my customers projects.
Whilst initially intending to use it only for external customer projects, I found that the reporting, alerts and screens were so clear, it was actually easier to use TeamworkPM for tracking other internal projects within my business. The whole process of having a clear list of tasks, with tracking, alerts if not completed, and a central associated file store ( for specs, designs, scripts, delivery files, etc) brings clarity and focus. It really helps when juggling multiple projects at the same time.
Whilst I initially hoped that TeamworkPM would help reduce the amount of project updates my company would need to produce, I am happy to report that it virtually eliminated project based discussions. In my last four fairly complex projects, once the project was defined and included in the portal, I cannot recall a single email or phone call regarding dates, status updates, slippage or next actions. All communication could therefore be focused on the design and delivery, so administration time and costs associated with running the projects virtually vanished. Customers could simply log into the portal and see for themselves what was being delivered, when, and what the current status was.
We also ended up using the TeamworkPM file storage system for delivery of all files associated with the project (designs, source and run-time). All of my customers loved the fact that they were automatically notified when files were available, and that they could retrieve them at their leisure. They also loved the fact that all previous versions of files were retained, and so they could go back to older versions should they be needed.
The only feature currently missing from TeamworkPM in regard to using it as a file store for projects is the ability to see when a customer downloads a file. This would be a nice feature, but having checked, none of the other cloud based project management systems I originally looked at recorded or audited this information.
There has been no doubt that using TeamworkPM has been a real boost to my company. In terms of reduced administration for project management, it is equivalent to having an additional member of staff who is running the projects for me. Certainly, the reduction of time spent updating customers on project status or emailing files has meant that TeamworkPM has paid for itself many times over.
But in addition to the time and money that has been saved, it has made my company look more professional and has made the flow of information between my company and my customers virtually seamless. I cannot praise TeamworkPM in this regard high enough.
TeamworkPM is a near perfect cloud based project management administration system. I say near perfect, as there are still a few options which I would like to see introduced. Whilst it produces lots of nice reports and gantt views for project overviews, it still lacks project task gantt views – but this is only a small consideration as the task list works well enough and standard MS project files can be uploaded and viewed. As I say, I would also like to see a flag (or get an email) to say that a customer had downloaded or viewed attached files – but that is just me being picky.
I am very glad that I took the plunge a year ago to start using a cloud based project management system. I dare say that one of the others would have done the job equally as well, but TeamworkPM has proved itself to be the right choice for me.
In fact, two of my customers who used TeamworkPM to track the projects I did for them have now adopted it as their own project management system for their own customers.
If you or your business runs any form of projects, I can really recommend using a cloud based project management system. And whilst there are many products out there, I can highly recommend TeamworkPM.
So how long does a typical project take you? From initial signing of the contract to delivery to the customer – is it a day? A week? A month? A year? More importantly, how long do your customers think it takes you?
I have talked in the past about the difference between needed activity time verses the actual amount of effort (including why you should bill for the needed activity). But the other part of the time equation is how long it is assumed it would take.
Needed, vs Actual vs Assumed
So let’s take an example project which is going to take you 2 weeks to complete. You have your shortcuts, the code (or designs) you can re-use, which means if you were starting from scratch without the short cuts, it would take you really 4 weeks (which is what you should be charging your customers). But how long should you tell your customer it will take? Should you say you can deliver it in 2 weeks, or 4?
If it was my project, and assuming the customer is not giving us rock hard ‘we must have it by’ delivery dates, I would say it would be delivered in 5 or 6 weeks. Of course, they would be quoted and billed the 4 weeks of effort, but the extra time gives me breathing room.
It’s important to remember that we are the experts in our particular field, we have the knowledge of how long things take and what our schedules are like. It will be assumed we know what we are talking about. Put it this way, if you received a quote to build an extension on your house and the builders said it would be complete in 15 weeks, are you going to argue and start trying to manage their time? Or would you assume they know what they are talking about?
Projects are never brick shaped
One of the problems with running projects in our companies is that projects are never ever brick shaped. They never just ‘start’, run for a period of time, and then just finish. I would argue that they are more diamond shaped. They start gradually (whilst dates, specifications and designs are agreed), have a mass of activity in the middle, and then sort of fade out (you deliver, they test, you wait for sign-off).
So treating projects as neat squares, that take 3 or 4 weeks, then connect to the next project never works. Making this assumption means we will end up with slack time between projects whilst we try to win more work, or wait for the next project to be agreed.
As per the diagram above, I treat my projects as diamonds, fitted together, with one project starting up whilst the previous finishes. And the easiest way to manage this is to add the ‘assumed’ slack time onto the project which means I have more room to fit the project pieces together.
Plus, it means I am never late delivering projects, the customer is delighted when I deliver early, and I don’t end up with the slack time between projects.
So how do you join your projects together?
One of my own personal demons is that I am a bit of a perfectionist. Clearly this can be a bit of a problem with the creation of ‘things’ for customers – I can tinker and tweak and polish until the end of time. But where to draw the line? When is the right time to say ‘It’s Done’, deliver it and raise that invoice?
There are no hard and fast rules on how much polishing should be completed on a project, but some things to think about include:
- Do you have other work? If you have no other work scheduled, then there is less pressure to complete the work and move onto other things. Just bear in mind that if you do more work on a project, the customer may then expect the same extra polish for future work.
- How important is the customer? If the customer is really important to you in terms of recurring revenue, giving the project extra polish may help land future work. But that it may also be wasted effort.
- Your Gut Feeling? For me, my gut feeling on the completeness of a project just does not work. My own self-doubt kicks in with whispered internal voices taunting that it’s a rubbish delivery, there are things I have forgotten, it will not be what they want, maybe when they said “a” they actually meant “b”. Your gut may tell you what you need to know, but for me, I need to ignore my gut feeling.
- Have you created what they wanted? Does the delivery or project do what they asked for and will it deliver what they need. If the answer is yes, then maybe you’re done.
- Are you happy with the results? Are you happy with what you have done? Push all the tweaking to one side (it will never be 100% perfect) – are you happy delivering the project? If so, you’re done.
- Deliver as soon as possible? The customer may have their own cut off date they haven’t told you about. Don’t polish and tweak taking you to the line. Better to get it to them sooner so they can check your haven’t forgotten a big thing whilst being busy polishing the small stuff.
- Alpha and Beta Deliveries? A good technique is to provide the delivery in alpha and beta deliveries – then the customer can provide you with feedback and tell you what needs to be tweaked or polished before it is considered done. Just don’t give them the opportunity to use this for scope creep – there is a big difference between a minor tweak and a change of scope.
- What’s in the contract or work agreement? If in doubt, use the contract or work agreement to check against the delivery. Run through all the parts you said would be included, and check they are in the delivery – crossing them off as you go. When everything is crossed off, you are ready to ship.
- Using a To-Do or Project List? One of my own trusted techniques is to use a project management tool to control the work. As I work on a project, if there is something I am not completely happy with, I create a task in a ‘tidy and wrap up’ phase. Then at the end, I cross them off as I tidy. When the project do list is empty, I am done.
- Get the Invoice Out! At the end of the day, the most important thing is to get the project delivered as soon as possible and therefore get the invoice out the door. The customer can always talk about tweaks and changes after delivery – but if you have an invoice on the table, everybody knows where they stand.
As a small business owner (or freelancer), I am sure you have noticed that any time wasted is also wasted money. Which is why when working on customer projects, it’s important to get the basics right to avoid mistakes in the project that could cause delays, gaps or things headed in the wrong direction.
Whilst I have attended Price2 project management courses, full project management can be overkill. After all, who needs a 600 step project management system for a small project which is going to take just a week to complete? Not me!!! What I have found that works for me, is that if I can cover 10 project guidelines, 99% of any possible project problem can be addressed without the risk of wasted time, effort or money:
- Have clear requirements from the start, in writing, and agreed by the customer – as detailed as possible – including what will and won’t be delivered, when, and how. In this statement, it’s also important to have a clear statement of what defines the project as complete (such as delivered to them, loaded on their computer, sent to their art department, whatever). This helps stop projects which never end, and drift on and on. Make sure this ‘completion action’ is something for you to do so your in control – don’t fall for the “customer signs it off” condition – you may be waiting months for them to carry out this action.
- Chunk up the work into manageable sizes – not too big, not too many chunks, then assign resources and responsibility. Don’t be afraid to assign some of them to your customer’s staff – generally they will be happy to get involved, provide information and resource that you need.
- Have a plan. Yes, I am talking a project plan – with the steps shown, resources and dates. When you have a plan, keep it up to date (as much as possible bearing in mind point 6 below), check it and review it to make sure you are on track. This way, if something slips, everybody knows what the impact will be.
- Add contingency to your time estimates. A tight project may mean it’s a good project for you as it means you can schedule more work at the end of the project, but add a risk margin for things that don’t go the way you plan. When you deliver early, everybody is happy.
- Assume customers will deliver their parts later than they promise, guarantee and cast in stone – I promise you that they will. Where possible, give them dates for their actions earlier than you need them. This gives you wiggle room, and a day or two for them to be late without it effecting your work.
- If you complete an action or stage early, hold it in reserve. If you have a task which is meant to take 5 days and it actually takes 3, this gives you 2 days of extra buffer at no cost. Use this to start work on later stages. Changing the project to pull all other tasks forward simply puts pressure on these stages.
- Communicate, communicate, communicate – the plan, reminders, the next stages, everything. Let everybody involved know what is going on, if there are problems, hold ups, what is complete, what is outstanding. If you communicate too much, they will let you know – but too much information is far better than not enough. See point 9 below.
- Have a backup plan – if something holds up the flow of work, what else can you do? Projects generally have a critical path – if one task on that line goes out then everything that follows goes wrong. But work out before hand, a plan B, so that if a major component of the plan fails you can move onto other tasks and come back to the main stuff later.
- Use a tool for recording status, documents and conversations – this allows team members to communicate between themselves. I recommend a cloud based tool like teamworkpm. This tool allows people to see the status whenever they want, get emailed daily status updates, view stages, provide feedback, sign off parts, and assist in the project. It has saved my bacon multiple times, and makes work so much easier for everybody. It also does a lot of the project management and communication work for you, saving you buckets of time (and therefore money).
- Halt scope creep. The death of most projects is when a customer asks for additions or changes during a project. The answer to this is to say a firm but friendly NO. Yes, you understand the requirement, but suggest (force) that the project continues as is, and once it’s fully delivered, the changes suggested are made into a separate project after final delivery. This way, it also becomes chargeable.