Why we are building a project budget planning tool – Price&Cost
3rd April 2017
Some tools are made to fulfil the needs that they themselves create. Some are more innovative and superior versions of a long-standing and established offering. But some are born out of the pain of using something that’s not really fit for purpose. This is the story of Price&Cost – why we are building it and how it all came to be (the picture at the top? That’s actually Price&Cost in the making).
My career has exposed me to a number of digital agencies and software consultancies – very well-known companies with even more well-known clients. I have held various project management positions and worked on very demanding accounts. I have also come across a particular issue that most such companies in the industry face and are either reluctant to fix or don’t even realise it needs fixing. I am certain that fellow PMs would agree.
Agencies strive to focus all their attention on serving the client in the best possible way from day one, and somewhat neglect the internal process definition and the development of tools. If one were to look at the lifecycle of any agency they would normally be boosted by a project or an account (sponsor client). There is a point of time in a successful agency’s lifetime when the process that used to work for one account or for a smaller number of people does not work anymore. The agency output, however, continues to improve from day one. Surprisingly enough, the incompatibility of the internal process and the level of the agency’s output can often exist for long periods of time or be ignored completely. What I am about to discuss is very often seen in mature agencies; trust me, I’ve seen it myself.
Now, where was i?
Among the responsibilities that people in project management roles have are project budget planning and tracking, in addition to monitoring other project metrics. Projects should deliver value and if a project runs severely over budget, no value will be gained, regardless of how good the deliverable is.
Even though project budget tracking is the very basic requirement for a Project Manager, it is often left to PMs to decide how to do this. So, most of the time, this ends up being done in differently formatted and unstructured Excel tables, which vary from project to project. This may be a way of tracking one or two projects in isolation, although it lacks integrity. When you are working with other PMs on an account, producing a consolidated account view is a nightmarish, labour-intensive process.
Some of you would say “Well, hold on there! My agency has an Excel template we all use”. Yes, right….I’ve seen those. Now, let me throw a curve-ball back to you. Open up this template and change a project to Capped T&M (I assume you have it as Fixed Price); tell me what the margin to date would be if we look at setting a specific cap and also discount the rate for all the senior guys by 15% for past 2 weeks? Does your template allow you to do this in 10 minutes? I doubt it. I have actually had such questions asked by my manager 10 minutes before the client meeting, so this is not made up.
At best, small to medium sized agencies would implement a unified Excel template for project cost control. The examples I have seen and used are convoluted VBA-rich applications which are often “take-it-or-leave-it” solutions; once set-up at the start of the project, they are very hard to update, and the process is very slow when you are trying to crumble through a lot of data, they are system dependent – some are only Windows Excel compatible and don’t work on the Mac version of Excel (despite recent VBA support).
Making somewhat decent Excel-based solutions that can support multiple project types (Fixed Price, T&M, etc.); can make it easy to calculate not only the price, but also the cost and margin; differentiates actuals from forecast – they require some VBA coding and take no less than 2 weeks of work (so, it actually works and is accurate). In this industry, time is money, and an agency would rather spend this time on clients’ work. Such tools are pretty important though – agencies often use them for billing the clients.
Why not use MS Project for project budget planning and tracking? You can’t be serious asking this. Please see my previous article on project budget management tips where I bring up these issues.
The bigger companies would go for a full PSA (Professional Services Automation) software. There are a number of solutions available on the market today offering the full suite of functionality, but these all have a number of issues:
- High price point (some cost $100K+ per year for a medium sized agency)
- The project budget planning and cost control functionality is interweaved with other aspects of the PSA solution – accounting, revenue recognition, timesheets, CRM, etc., and so you are tied to using just those. They are dreadful – trust me.
- Most of the project budget planning and tracking tools available are made by accountants for Project Managers, which doesn’t always work, as two groups are often seeking different bits of information and are used to working in different ways.
Yes, I know, there are a myriad of web-based Project management solutions. However, 90% of these focus on Agile Project management, task management and collaboration. Those which have a budget planning and analysis functionality have it at as rudimentary at best.
The above dead-end situation is where the idea of Price&Cost came from – create an online tool offering a simple, yet effective way to track project budget. Price&Cost was not meant as a task management or project collaboration tool – project cost control and management is a PM’s weekly chore and Price&Cost is meant to turn it into something Project managers can actually use for their own benefit. Up-to-date financials on the project are the best indicator of project health and the impact of the decisions made.
No more Excel, people!
We are creating a powerful and flexible project estimation and budget-tracking tool that will be accessible to all thanks to a fairly low pricing band.
A lot of work has gone into building Price&Cost so far, and there is so much more to do! Good news is, however, that we will be starting Beta testing very soon and you can apply for a early access here!
Price&Cost has a super-simple workflow, integrates with what you are using already (so you can migrate from scary Excel and never look back), and offers all of the features which are craved by PMs across all industries:
- Versioning – a new version is automatically created each time you make updates. You can always go back.
- Resource rates – define all of your resource names, roles and rates, and just add them by name. You can have multiple rate cards for different clients.
- Data import – from either CSV/Excel or an MS Project.
- Graph view – see how your project financial metrics have changed over the course of the project.
- Flexibility – Time and Materials or Fixed Price, man-days or hours, US dollars or Euros, day or week breakdown. We can handle it all.
Start using the project estimation and budget-tracking tool that delivers – Request early access today!
Filed under Project management