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?

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!

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.

Are You In Demand?

VictoryUse how often customers ask for you to manage their projects to measure your success.

The Community Post “How do You Measure Your Success as a Project Manager?” on the PMI’s site looks at the definitions of successful project management. It is a digest of a conversation in the PMI Career Central group on LinkedIn and it looks beyond the classic triple constraint (Iron Triangle) of in scope, on time, and on budget.

Measuring success only by scope, time, and budget is ignoring a key measurement of true success — customer satisfaction. If your definition of success stops at the triple constraint, you risk upsetting the people who help you get more projects to succeed with. Riding roughshod over people to meet all the three constraints is a hollow victory. Match the importance you attach to the triple constraint to the customer’s attachment to scope, time, and budget.

Your definition of success is the goal you work towards and a happy customer who wants you back is great goal to have.

Stay Calm and Improve Your Reputation

Oslo BeachA big part of successful project management is the ability to stay to calm in the storm of activities and issues.

The relationship with the customer is one of the biggest sources of stress and conflict for a project manager. Dan the Project Manager Man tells the story of his adventure with an upset customer. He reminds us that just by staying calm and responding rationally, we can solve a problem.

A rash reaction makes problems bigger. A careful answer stops a situation from getting out of hand. It creates a setting to get to a solution and, sometimes, like in Dan the Project Manager Man’s Adventure, it solves the problem.

Composure during turbulence is a visible sign of a good a project manager. Stay calm during the storm and improve your reputation.

Six Practices For Project Success

CIO.com outlines six practices from Project Assurance.

  1. Context analysisIdentify the real issues — Understand the context and analyze the issues objectively.
  2. Set realistic time frames — Monitor dates in the schedule, adjust dates when the schedule changes and remember to check for effects on the dates of related deliverables.
  3. Align the work streams — Watch the dependencies between deliverables. A smooth running project has the nail ready when it’s time to shoe the horse.
  4. Look beyond the indicators — Project health indicators are often trailing indicators telling you how well the project has performed until now. Look for leading indicators that will tell you how the project will perform from now.
  5. Manage the expectations — Set realistic expectations from the start of the project and continue managing them by communicating project changes;
  6. Seek objectivity — Find experts from outside the project and review the project with them.