Organizations typically know what goals they want to accomplish and have grand ideas and intentions from a high-level, big picture perspective. However, organizers often overlook the detailed, actionable steps in achieving these big ideas defined in the project scope.
“Ideas are cheap. Ideas are easy. Ideas are common. Everybody has ideas. Ideas are highly, highly overvalued. Execution is all that matters” — Casey NeistatAccording to Lucid Chart, there are four phases in a project management life cycle: initiation, planning, execution, and closure. Even though the phases have distinct qualities that overlap, this article focuses on defining the specifications within the first phase, project scope. Project scope is a process that helps determine the overall project goals, tasks, deliverables, deadlines, and budgets as a part of the initiation process. Your project scope helps your business envision the entire project's lifecycle to ensure the end goals are achievable and worthwhile. Below are eight steps to defining your project scope and effectively deploying within your organization.
1. Establish ObjectivesBefore defining your project scope, you first have to establish objectives. Project objectives describe and measure the "what" of a project. Eventually, your project scope will get you there, but first, we must determine what "there" is. Great questions to ask at this stage include:
- What does project success look like?
- What factors are involved in this project?
- How will we measure performance?
2. Parameters and LimitationsUnderstanding what a project will not do is essential to create boundaries and meet expectations before beginning this venture. Determining what the project will not cover will ensure your team members aren't wasting time on irrelevant tasks. In the beginning, decide which assignments are necessary to complete the project and who is responsible for the respective duties. Document everyone's jobs so that employees stay on track. If you do not document the necessary steps, confusion is imminent, and some workers may assume specific tasks will get done. Still, since no one was appointed, these unexpected duties will eat up more of your timeline and budget. As the leader, it is your job to provide clarity to all members who play a role in the project.
3. Project Scope RequirementsIt is vital to discern exact requirements to estimate costs and timeline. This knowledge will require you to work with the project stakeholders to understand their needs. If you don't know what the customer and users need or want, project success cannot be achieved. Without doing your due diligence in this critical step, you may find yourself running into the following issues:
- Requirements that constantly change
- A complete rethink of deliverables mid-project
- The outcome not being what the client expected
4. Scope DocumentationA project scope statement puts all of your research to use in detailed documentation describing the justification for the project. This statement explains the individual project deliverables, objectives, and how to accomplish them. This documentation ensures the stakeholders and team members are all on the same page while maintaining expectations and staying on track.
5. Train Team MembersOnce you discuss the project scope with your team, you must ensure these employees can complete their assigned tasks. Additional specialized training or education may be necessary, and it is important to anticipate these costs and time requirements before beginning the project.
6. Institute DeadlinesTo ensure your project is completed within the allotted time, create weekly or bi-weekly deadlines while checking in with each team member or department to ascertain they are meeting these deadlines.
7. Change ManagementIf certain members or departments are falling behind, it is essential to reallocate resources rapidly. There will always be roadblocks or limitations you didn't expect. By swiftly identifying these constraints, you can quickly minimize the problems and overcome hurdles. Scope creep occurs when additional features, functions, requirements, or work is added beyond the original parameters. Project cost increases, time delays, low productivity, are examples of potential causes for scope creep. Establishing an effective change management process can help avoid scope creep. Change control is a methodology used to manage any change requests that impact the baseline of your project. It is a way to capture a change such as weather delays or low staffing levels and evaluate the request with the stakeholders who will approve or deny the change, along with any necessary adjustments to your budget.
8. Communicate WellGood communication is the single most crucial component to the success of your project. The best method to ensure effective communication within your project is to develop a communication plan. This plan documents all communication activities and provides alerts to ensure you have an adequate follow-up plan for your stakeholders and team members, and anyone else involved. During the project management process, unexpected events are sure to pop up eventually, which is why it is critical to have a well-researched plan in place. By managing the project's scope, the PM can document all required resources to accomplish the project goals within the timeframe while staying on budget. Overall, setting a defined project scope ensures stakeholders are happy as their project will complete on time, team members are empowered to manage their workload, and project managers have the flexibility to restructure as needed. Take a tour of FINSYNC’s financial management platform and discover our project margin and management tools to help optimize your project needs.
Learn how to improve the profit margin of your next small business project with the help of analysis, flexibility and intuitive project management tools. By FINSYNC Profit margin is an important metric for any business because it reflects the overall financial health of your operations. Calculating profit margin is simple. For example, if you make $45,000 on a project while your total expenses are $35,000, your profit margin is $10,000, or about 22%. Healthy small businesses work continuously to improve their profit margin. Wondering where you can start improving — or at least measuring — your profit margins? Here are three simple steps to increase the profit margin of your next project.
Step 1: Learn From the PastBefore you turn to more general advice that might work for your business, you have to start internally. Look at your past projects and ask yourself the following questions:
- Do you charge enough? You might be underselling your services. Consider your expertise and your experience, and perhaps consult a few colleagues to see what the industry standards are. While you may not be able to increase your rates significantly from one project to the next, a gradual increase is more realistic.
Do you follow your budget?It doesn’t matter if the profitability of your project looks good on paper. If you’re not tracking your expenses, you’re more likely to go over budget. While you can use a simple spreadsheet and input the figures manually, an online accounting tool that syncs your accounting and project tracking will be much more efficient.
Do you underestimate the timeline?Projects that go past the deadline go over budget. Compare your estimated time for different tasks to the actual time spent to uncover any patterns. Unplanned tasks could be something you forgot to account for or something your client came up with when the project was already underway. Either way, this is an indication that you need to develop a better project planning system where every possible aspect of the project is considered and discussed beforehand. You can even put a billable rate for unplanned additions into your project proposals.
Can any parts of your project be automated?Repetitive tasks that are the same for every project should be put on autopilot. Billing and accounting are two non-billable tasks that tend to take a lot of time for small business owners. Tracking billable time and expenses automatically in an integrated online platform can save you significant time. That way you can complete billable tasks more efficiently.
Are you paying more than you need to?Review all bills and contractor expenses. Can one of your employees do all or parts of the work that was done by a contractor? Can you get a better deal on the software that you are using?
Step 2: Start Tracking Profitability in Real-timeOnce you’ve gained enough insight into what factors have had a negative impact on your profit margin in the past, the next step is to start tracking the profitability of your future projects, preferably in real-time. Tracking the profitability of individual projects will enable you to address all of the problem areas you uncovered in step one. To get a clear picture of project profitability, you will need to track:
- If you are over or under budget
- Hours worked by employees and independent contractors
- Milestone progression
- Different tasks completed for the project
- All out-of-pocket expenses related to the project
Project Management ToolIdeally, you need a project management tool that offers a time tracking tool, project cost accounting, and payroll, and can automatically translate all the data into a profit margin report. FINSYNC’s all-in-one platform allows you to manage your accounting, payroll, and cash flow from a single command center. You can assign bills and work hours to specific projects. In addition, you can also check up on the profit margins of the projects in real-time.
Step 3: Make Adjustments Along the WayAs we said in the beginning, profit margin is something you need to work to improve continuously. With a single source of data and a budget, you can see which tasks in the project have the biggest effects on overall profitability. This detailed view will allow you to make adjustments as necessary while the project is still in progress. You may learn that you need to switch to a different vendor for a service you’re using, or find a more affordable contractor. Real-time profitability tracking can also help you see when it’s time to hire in-house talent and stop using contractors altogether. A project management tool that provides real time analysis can give you the actionable data you need to increase the profit margin of your next project.
Learn how to use FINSYNC to track project profitability in real time so you can ensure a healthy profit margin. By FINSYNC Tracking individual project profitability isn’t an easy task. Many projects stretch over months and involve the efforts of multiple people. It can be difficult to keep track of bills and expenses, even when you’re using some of the best project management software on the market. Let’s assume you run an IT consultancy. You’ve been tasked with building a new website for a client who has a budget of $15,000. You have back-end and front-end developers in-house, but you will need to hire a freelance graphic designer and copywriter. You will also have many small, out-of-pocket expenses, such as web hosting, domain name and payment provider plug-ins. How are you going to make sure that you achieve a solid profit margin?
Get Real-Time Profitability Updates with FINSYNCThe first instinct of many small business owners is often to use Excel spreadsheets to manage their projects. But how do you keep track of employee timesheets, freelancer invoices, and out-of-pocket expenses for various projects? An Excel spreadsheet will require manual daily updates, which only add more tasks to your already growing workload. With project management software like FINSYNC, you can track the profitability of all of your projects by using the “Projects” feature. The Projects functionality is especially useful for businesses that do multiple long-term projects that have scheduled payments across the lifetime of the projects. You can track the profitability of your next project in FINSYNC in five easy steps.
Step 1: Set Up a BudgetIf you’ve been in business for a while, you might already have estimates for what it costs to build a new website from scratch. Still, it’s useful to ask your developers for estimates for the work specific to each project. It’s also a good idea to add a contingency on top of all your estimates to account for delays and changes in the scope of the project. If you don’t know how much contingency to add, 10% is a good rule of thumb. Here’s how to create a new project in FINSYNC. Go to the PROJECTS menu, then select “NEW PROJECT”. Fill out details and enter a budget amount for the project. Now create a budget specific to that project. For the website project, you would want to choose the “Based on Total Cost” option, because you want to track how close you will come to the total budget. However, you can also track projects where there is no set budget, and all hours are billed after the project is complete. Or, you can simply track hours spent on a project.
Step 2: Set Up MilestonesMilestones, even if they are internal, are a great way to organize your long-term projects and track progress and profitability in greater detail. Milestones are referred to as “Phases” in FINSYNC. Each phase can represent a week, a month, or a specific task associated with the project. For example, you can bill your website client three times in the span of the project: once after your designer delivers the final mockups for the website, a second time after the front-end developers implement the designs, and finally when the back-end team finishes coding the rest of the website. It can be useful to return to your budget from step 1 and set up the same milestones here as in the budget.
Step 3: Set Up Tasks Under Each MilestoneEach milestone you’ve set up in Step 2 can be broken down into specific tasks that can be assigned to a person. There is no lack of project management tools out there, but the benefit of using the built-in task manager in FINSYNC is twofold. First, your employees and contractors will always know the next task they should be working on. As a result, less time is wasted on emails and calls. Second, you’ll be able to see which tasks are billable, the true cost of each task, whether the tasks are completed on schedule, and how each task impacts the overall profitability of the project.
Step 4: Give All Project Participants Access to Track TimeAs mentioned earlier in this post, you can assign each task from Step 3 to your employees and freelancers, and invite them to track their time. When they do, the cost of the project will be automatically adjusted. You’ll need to be signed up for FINSYNC Payroll to benefit from this feature.
Step 5: Track Out-Of-Pocket ExpensesYou will inevitably have expenses beyond labor that are input by your employees and freelancers. Perhaps your web developers need to upgrade an existing tool, or a contractor bills you a fixed sum for a service they delivered for the project instead of tracking their time in FINSYNC. All of these and other expenses can be easily linked to your project. You can either add a new bill or edit one that you have already received in your bills inbox. First, select a bill. Next, add it to the project.
Insight for Future ProjectsOnce the project is complete, you can evaluate the profitability of your project against your budget. The division of the project into milestones and tasks makes it easier to see what worked and what didn’t so you can make adjustments for the next project. You can see the profitability of each invidual phase. Track your next project in FINSYNC and get real-time insight into your projected profit margin and where you actually end up.
Protect your profit margin with project management tools that allow you to identify issues in real time — before delivering a project at a loss. Learn how to track margin on a project your team is working on. By FINSYNC Understanding profit margin is critical to managing any project. Especially when you have offered to deliver it for a fixed fee. Unless you’re a charity, you need to know how to track and measure time allocation and out-of-pocket expenses. Anyone who has had to quote a flat fee for a project knows that capturing those metrics in a timely manner is a challenge. The right tools can help you track your margin in real time. Regardless of the size or scope of your business. Giving you the opportunity to make adjustments that prevent you from losing money on a project.
Many popular accounting platforms don’t track time or offer project cost accounting. Look for an intuitive project management tool like FINSYNC that can collect, track and evaluate all of that valuable data.
FINSYNC’s cash flow, accounting and payroll software is an all-in-one solution. It can replace applications like QuickBooks and other disconnected apps used to run a business.
Christophe Choquart, a FINSYNC customer says, "FINSYNC allows me to have a clear understanding of my business finances and where I am headed."
With FINSYNC you can check up on a project’s health in real-time, with an understanding of what your current margin is and how much of your budget you’ve already spent. Here's an article to help you refresh on how to track margin on a project using FINSYNC.
The software collects historical data. Historical data is tremendously useful for future projects. Have you been asked to build another website? Have a look at the last website project you did. Then, clone it and make adjustments.
With all that valuable data stored in FINSYNC, all you have to do is run a report and you’ve got all the information you need to track margin on a project — and make better decisions as a business.
Whether you build websites, apps or houses, you need an intuitive solution that allows your business to track time and expenses, and understand at any point in time how profitable your project will be.
FINSYNC is that all-in-one solution, and it’s just a click away.
What is Gross Profit Margin?Gross profit margin is the percentage of every dollar earned left over after subtracting cost. Let’s say that your firm charges $100,000 for a website build, and it costs you $60,000 to deliver. Your profit is $40,000. $40,000 in profit is equal to 40% of every dollar earned, or $40,000 divided by $100,000. In this example, your firm kept $0.40 of every dollar you made. A firm can increase the size of its margin in two ways: increase price or decrease costs. Your margin is just a percentage. Calculating your profit margin isn’t necessarily difficult. However, tracking all the various metrics that you need to fill in the above equation can be a challenge in real-time. You don’t want to find out that you spent $120,000 of your own money to build your client a website that you delivered to your client for $100,000. Yikes!
Determine What it Costs to Generate RevenueBefore you can track margin on a project you need to understand the cost of generating revenue. To do that you need data, including time allocation, out-of-pocket expenses, cost of labor and materials, etc. Once you fill in the blanks of the profit margin equation with this data, you can determine how much to charge your client for a delivered project. Fortunately, all of the data you need is readily available.
Payroll Tracking and Project Management SoftwareOne way to keep profit-eating project expenses in line is to manage labor costs. A business may start a project with a budget. However, often their sense of how on-budget they are is skewed before they’ve processed payroll. Payroll is predictable enough when it comes to a salaried workforce, but understanding how much of your salaried team’s time was allocated to a project can be difficult. Allocating a freelancer’s hours to a particular project can cause a real blind spot without the right tools. The answer to these problems is time-tracking and project management software that allows your team (both employees and contractors) to track time in real-time and convert the hours logged into labor cost on a project immediately.
De-Centralized Sources of DataThe software needed to track profit margin is seldom centralized. It’s often scattered in different places across your network in disconnected systems. When your profit margin data (time sheets, labor costs, etc.) isn’t centralized, you often have to pay someone to collect that data, crunch the numbers and determine your profit margin. If that type of analysis is performed at all, it’s typically an exercise that involves gathering data from multiple sources and compiling it in Excel. This type of work is costly because of the hours required. Also because it can’t be done until the project is over. A single source of data, on the other hand, not only makes it simple to track margin on a project, but also gives you the ability to determine whether a specific project phase is profitable and determine if the overall project is still tracking towards a profitable conclusion. If the project starts off on a bad foot, you still have time to correct course.
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Overwhelmed by your “to-do” list? Learn four smart strategies for prioritizing tasks so you can get more done with less effort and master time management. By FINSYNC Ever wish there were about five more hours in the workday? We know the feeling. As a small business owner, learning to manage your time effectively can help you minimize your efforts and maximize your results. As author Tony Morgan said, “You get to decide where your time goes. You can either spend it moving forward, or you can spend it putting out fires. You decide. And if you don’t decide, others will decide for you.” Ready to tackle that endless “to-do” list? Learning to prioritize tasks is the first step to effective time management. Using a proven strategy to help you prioritize will allow you to make the most of your time — and knock out that list once and for all. In the training course Time Management for a Small Business, the SBA introduces four different ways to tackle prioritization: the Pareto Principal, the ABC System, the Eisenhower Method and the POSEC Method. Trust us, these “methods” sound more daunting than they actually are. Here, we give you the basics of each approach so you can choose the strategy that works best for you and your business.
80/20 RuleMost of us know the Pareto Principle as the 80/20 rule. The idea behind this rule is that 20 percent of your time and effort will produce 80 percent of your results. Just as 80 percent of your customers likely represent 20 percent of your revenue. Say your goal is $100,000 in sales. Around 20 percent of the time and effort you spend to achieve this goal will likely result in $80,000 in sales. The remaining 80 percent of your time? That’ll only get you the final $20,000 to reach your goal. So how can this idea of unequal distribution help you manage your time more effectively? Your job is to identify the tasks that produce the best results. Then bump those tasks to the top of your to-do list and tackle them first to get the most bang for your limited-time buck. FINSYNC’s suite of software tools can help you free up precious time to get back to growing your business.
ABC SystemAs a small business owner who juggles a variety of responsibilities, you need to make sure that the most important tasks get done first. The ABC method is a simple way to prioritize your to-do list in order to accomplish just that. Go down your to-do list and label each task A, B or C. “A” rankings are reserved for your most urgent tasks, “Bs” are slightly less pressing and “Cs” are your least important to-dos. Once every task has a letter, prioritize subtasks for each major item with numbers (1, 2, 3 …). You’ll complete task A-1 first, followed by A-2 and so on until you get to the Bs. This straightforward method helps you get organized quickly and leaves you with a road map that can make an overwhelming to-do list look much more manageable. As every small business owner knows all too well, things can change quickly, so you may need to re-prioritize in order to adjust to outside factors.
Eisenhower MethodIt you prefer a time management method that’s slightly less precise than an ordered list, the Eisenhower Method may be for you. This strategy helps you distinguish between urgent and important tasks. As Dwight D. Eisenhower famously said: “I have two kinds of problems: the urgent and the important. The urgent are not important, and the important are never urgent.” Once again, you’ll want to start with your list of tasks. This time, group all of your tasks and activities into four categories:
- Urgent and important
- Important but not urgent
- Urgent but not important
- Neither urgent nor important
POSECThis odd acronym stands for “Prioritize by Organizing, Streamlining, Economizing and Contributing” (POSEC). To put it to use, work your way through each step, starting with “Prioritize.” Similar to the other strategies we’ve looked at, this one starts by ordering your list of daily tasks from highest priority down, based on your daily goals and how much time you have. Next, you “Organize” your day-to-day tasks. This entails setting a schedule and providing a structure for basic tasks that you do on a regular basis. After that, it’s time to “Streamline” the responsibilities that you must do even though you’d rather not. The point is to simplify the annoying tasks that you’d rather avoid. When you “Economize,” you’re tackling things that you would like to do, should be done, or are enjoyable — but are lower priority in the scheme of running your small business. Finally, once you’ve achieved everything else on your list, it’s time to “Contribute,” or give something back to society.
Beyond PrioritizationNow that you’ve prioritized your to-do list and daily tasks, it’s time to roll up your sleeves and get to work. The biggest challenge here, of course, is finding the time to get it all done — from those high priority tasks that you start with through the items you’d simply like to complete for your own enjoyment. Maximize your productivity by working more efficiently during the hours that you’re allotted in any given day. FINSYNC can help you free up some valuable time by automating time-consuming back-office tasks like invoicing and payroll. Putting your accounting on autopilot may even help you feel like you’ve found an extra five hours in your workday. Save time and money with FINSYNC's all-in-one accounting and cash flow management solution for small businesses.
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