The ABC’s of ROI

ROI ChartAnalyze Benefits and Costs and Always Be Capturing ROI

Some project managers stop measuring ROI once they have sold the business case. Good project managers understand that capturing ROI is a continuous task that can continue even when the project is closed.

ROI stands for Return On Investment or, in other words, “What do I get for my money?” It is often used to decide whether or not to proceed with a project and to prioritize the projects worked on. ROI is taking all of the costs, the investment, of the project; working out all the benefits, the return, of the project; and calculating what you get for what you are spending. It is a great selling technique because people will invest when they see what they get for their money.

The first ROI calculations are often prepared as a part of the business case before the project is authorized. There are many unknowns at this stage of the project and assumptions are used. Another uncertainty in early stage calculations are the estimates used to quantify things that are not normally measured. The first step in capturing the project’s ROI is making sure the assumptions are confirmed and the estimates are replaced with facts as soon as is possible.

The associated (hidden) costs are the important part to think about when measuring costs for ROI, e.g. Benefits and Overhead for labor; OS, db and maintenance for hardware. Check for completeness and track the costs throughout the project.

The returns of an IT project are typically harder to quantify and it is the most difficult things to measure that can matter most of all: increased sales, productivity, happier employees, better customer service, better customer relations, increased number of leads, better corporate image… . Furthermore, many IT projects target these hard to measure areas.

You will need measures of “before” to measure returns. Analyze the current situation and identify what the project will change. Take the time to quantify the efforts/results pre-change to get your baseline. The only way to get “before” measurements is to measure the current state before you introduce change.

Start capturing returns as soon as they start. If you are staging the deliveries, then start measuring the impact of each deliverable from the day it’s delivered. If you are doing a big bang, make sure you are ready and able to measure the results.

Remember your ABC’s and your customers will be grateful because they can show they are smart investors. More importantly, you can show you are a good project manager with quantified results in your list of accomplishments.

Anatomy of Trusted Project Manager

Question markDr. Ellen Weber‘s lessons from a positive experience with a contractor also applies to project managers. The post outlines five game-changers:

  1. Offer Reasonable Rates — Reasonable implies profitable for the vendor and affordable for the customer. The contractor in the story gathered the requirements, scoped the work, and talked about pricing. The contractor then went away to analyze the job before quoting the effort. This led to an on-budget delivery.
  2. Optimize Resources — Can you use customer documents to build your requirements document? Can you re-purpose an existing training program? Have you looked at what is already available?
  3. Inspire Collaboration — A project is a partnership with the sponsor. Discuss the work, give expert advice and listen. The sponsor is a member of the project team and your job is to deliver the solution to their problem.
  4. Project Vision — Future phases that complete a solution mean the first phase was incomplete. Future phases that take the solution to the next level are visionary.
  5. Build Trust — Earn trust by delivering on many factors: fairness, expertise, honesty … . Fail to deliver on anyone of the factors and trust is lost.

The story dissects and shows the benefits of delivering great service. Who needs advertising when the quality of your work earns you a case study on a widely read blog.

Related:
Eleven Behaviors of a Good Project Manager
Are You In Demand?

What’s Wrong With Why?

Question markProject managers are taught to ask why and encouraged to ask it many times. Remove it from your vocabulary!

“It’s not an excuse, it’s a reason”

Why is a confrontation. Why asks for motives. Motives justify. We are saints and all others are psychopaths (Actor-observer asymmetry). We are getting a lot of biased information with why. How, what, when, where and who are curiosity — friendly questions about facts.

A project is how, what, when, where, and who. We want processes and facts. The why is a conclusion based on facts: Costs, Benefits, ROI…. Removing why and rewording your questions will get you the facts more quickly.

We Need A Faster Server
Why do you think we need a faster server?  The system is too slow.
Why is it too slow?  It takes forever to prepare management reports.
vs What problem does the faster server fix?  The management reports take too long to prepare with this server.
Why does it take forever?  I need lots of data from different places. vs How long does it take?  Two days to gather all the data for the management reports.
Why do you need lots of data?  I need it to assemble the management reports.
Why do you need to assemble the reports?  I don’t have all information I need in one place.
vs What do you do with the data?  I need to pull it all together in one place to run the management reports.

Ask friendly questions and you may only need three questions to ask five why’s!

Related:
Why, why, why, why, why do you need this?

Classy Project Management

Classy Chassy5 Ways Project Managers Can Display Project Management Class from the ProjectManager.com blog gives project managers tools to lead successfully.

  1. Project Managers that Say “Thank You” — Appreciate the things others do for the project. Their work is helping you deliver the project. Thank them.
  2. Project Managers that Brag About Their People — Bragging about your team member’s contributions makes them want to keep their reputation for good work, and, seeing that contributions are recognized, makes others voluntarily more cooperative.
  3. Project Managers that Keep Their Cool — Stay calm when the going gets rough and objectively analyze the situation. Deliver a measured response.
  4. Project Managers that Take the Blame — It’s your project and you are its manager.
  5. Project Managers that Share The Credit — Team work, team credit.

A class act acts classy!

Eleven Behaviors of a Good Project Manager

Good MannersBrad Egeland gave his advice on how to react to feedback in two posts on the Project Management Tips site. A good project manager applies the suggestions in all situations.

From Reacting to Negative Feedback on Our Projects:

  1. Be truthful — A good reputation is essential for a project manager. Getting caught in a lie will give you a reputation for dishonesty along with a questioning of the integrity of your work.
  2. Deliver on your promises — Set expectations that you can deliver on. Creating unrealistic expectation means having to discuss unmet expectations later.
  3. Ask for clarification and confirm your understanding — Make sure you understand the other’s objectives. Efficiently achieving the objectives requires clarifying the objectives.
  4. Admit it — Admit mistakes.  Admit shortcomings.  Admit ignorance. Apologize and learn from the experience.
  5. Remain calm — Control your emotions and act rationally. Be a professional.
  6. Always accept the blame — As the project manager you are at least partly responsible for everything on the project. Accept the blame and work on resolving the problem.
  7. Correct misperceptions with tact — Telling someone they’re wrong will embarrass, and/or anger, and/or strengthen their resolve, and/or…
  8. Follow-up quickly — Identify the next actions, set due dates, monitor and regularly report on progress.

From Reacting to Positive Feedback on Our Projects:

  1. Listen carefully — Listen what they are saying and pick-up on what they are leaving unsaid.
  2. Share the praise — Team members will give unequal efforts. It’s still the whole team that delivered the project.
  3. Acknowledge accomplishments — To share the praise for a job done well, you have to recognize the achievement.

Eat Your Muffins Calmly

Muffin with melting butter“Well, I can’t eat muffins in an agitated manner. The butter would probably get on my cuffs. One should always eat muffins quite calmly. It is the only way to eat them.” — Oscar Wilde, The Importance of Being Earnest

The Project Manager is the leader of the project team. When the leader overreacts, everyone on their team follows suit and it creates chaos and drama. When the leader is calm, the team works on their tasks. When the project members concentrate on their jobs, problems are solved.

Learn to stay calm and control your emotions. The title from The Tao of Project Management‘s post The Source of Your Ability underlines the importance of restraint in managing projects. Restraint is the source of power and excellence. A sign of leadership.