don’t like to think about the amount of money i’ve lost on projects. Let me go back, it’s not exactly true. I haven’t lost money so much as eroded margin.
That’s the thing with pricing. So long as there is a gap between your internal hourly rate target and your hourly cost, you will always have a margin of error in your projects wherein they’re still profitable, but simply not as profitable.
I wrote last week about why I believe flat rate projects are better, and this is one of the many reasons that it’s doable.
I never expect to earn much, if any, money on the first round of any type of project. When my firm executed our first on-prem to cloud domain migration project, we definitely reduced our margin down to nothing. After talking to our PM I realized that it was based on the fact that we hadn’t calculated the cost of migrating user’s workstations. We went back and ran an analysis of the time on that and reworked the scope for future project to include an extra hour per user in subsequent projects.
The next one, we lost a little less, and we found ways to be more efficient so we didn’t have to adjust the quote or the scope. By the third project we were hitting right around our target.
Was each subsequent project perfect?
No.
Did we get close to our target within an acceptable range of 5% up or down?
Yes.
There is no reason that you should be able to produce a consistent deliverable on something you execute often. You should be able to have a well scoped profitable project after working towards the same deliverable 3 times.
Thoughts? PM’s out there, am I on or off with this assessment?
Thoughts on Data, Culture, and Organizational Development
