Leaders in professional services companies have a tough time taking on suitable work, staffing it with the right people, budgeting accurately, ensuring costs are met and protecting profitability. In addition to applying their knowledge and experience, the business's current plans play a key role and need to be as accurate and accessible as possible.
1. Which projects, of what size, are coming our way?
Having a solid grasp of the sales pipeline ' both opportunities and confirmed projects ' is an important part of realizing a business's potential. Companies need to know what projects are lined up in which periods to understand how the company's resources are being utilized. Understanding where new projects need to fit is the key to running sales cycles at the right speed and employing promotional activities at the right times.
2. How does our capacity look for a given period?
Capacity can be influenced by factors other than the planned work mentioned above. Holidays, sick leave, job shares, part time workers ' all issues that make a clear picture of the people you have available difficult to obtain. To ensure that you're able to deliver against customer expectations and budgets, understanding what your people are doing, and plan to do, at all times, is essential.
3. How is the cash flow looking?
Keeping a close eye on projected cash flow is a core aspect of controlling a healthy profit and loss account. Having a good idea of the revenue coming into the business at given points helps ensure that expense commitments can be met. A slow month followed by a fairly empty looking agenda could influence your decision making in the projects you take on. A fixed price project with 25% up front could be handy to generate some cash, as could additional focus on the timeliness of consultant reporting, or the postponement of blue chip projects with 90 day payment terms.
The double importance of good planning
The question above underline why good planning is essential for professional services companies on two levels. At the project level, failure to accurately budget time and costs leads to overruns, customer dissatisfaction and reduced profitability. At the company level, these overruns then have a knock on effect across the entire company's planning. Work may need to be shifted or dropped if capacity is not available when it was originally expected, while failure to judge future capacity and cash flow accurately can result in the wrong projects being taken on.
Take the time to get it right
When considering these three key areas, issues in the processes at the individual project level will be dangerously amplified when viewed at the company level. Unexpected overruns that demand extra time and money impact the projects around them and the overall profitability of the business. To minimize issues that spread across the whole corporate agenda, professional services firms need to ensure project planning receives the time and the attention that it deserves.
When it comes to judging the time and resources required to complete a individual project, creating careful work estimates based on previous experience, data analysis of actual versus planned activities, a detailed WBS and the opinions of experienced operational people will boost accuracy. If management can then operate with trust in this process, testing and challenging but not overriding it, they can be confident that their planning overview can be relied upon.
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