Effective Project Management Improves Profits

Project management is at the heart of the business of design. It provides the earnings engine that makes the entire enterprise thrive—or it can be the cause of the slow erosion of profits that weakens the health of the company.

In XL Design Professional’s studies of highly profitable companies there is a consistent and statistically significant pattern: Companies that commit to training in the process of project management do better than those that don’t. This training takes many forms, but concentrates on the quality of the handoffs, the speed of throughput, and the quality of the communication among the stakeholders on projects.

Project management training in the design sector has traditionally concentrated on the events surrounding the management of projects. These events include the mechanics of handling the forms, finances and internal tracking for projects. This training is good for maintaining the basic skills of project management, but does very little to increase the overall efficiency, quality or profitability of the projects.

When these companies analyze overall profitability, the project management system is rarely investigated systematically. Usually, these traditional companies concentrate on making a budgeted amount of profit from each project without looking at the total project portfolio and how the mix of project work affects the profit of the company.

By looking at the quality of their handoffs, speed of throughput, and quality of information among stakeholders, highly profitable companies are investing in the underlying processes of project management. As their processes become more efficient, these companies capitalize on the increased efficiency by being able to charge more for their services. Their clients see this efficiency as a value-added and are willing to pay for the perceived increase in level of service. This results in a double win, since companies reap profitability twice: once in internal efficiencies, and again in increased fees.

Some examples of the advantages of this process-based training are:

Quality of the Handoffs-Training in the process of project handoffs has significantly reduced the quantity of rework among departments or studios. As handoffs occur between the internal project teams, the team checks for completeness of information at the time of handoff. As each team regards the other as an internal client, the quality assurance process is enhanced, lessening the volume of quality control work needed before detailed design drawings are delivered to the external client. This confirms the findings of many studies in the quality movement that demonstrate that money spent upstream on planning pays off against money spent in error-checking and rework later.

Speed of Throughput— By studying the process of delivery on their projects, many high-performing companies have taken lessons from industrial engineering and new product design. They have learned to cluster work and perform many functions in parallel rather than sequentially. This parallel work processing requires that some departments begin work on a project with incomplete information from other departments, but allows for completion in later phases. This results in overall time savings on the projects, resulting in faster project delivery schedules.

Quality of Information Among Stakeholders— Through the use communication and responsibility matrices, high-performing companies are coordinating the information flow among the stakeholders on projects. As with the internal handoff issue resulting in less rework, increases in the quality of the information flow also pays off in less rework, fewer requests for information (RFIs) during the construction phase and fewer missed opportunities for add-on services.

These are three of the significant benefits that have come to our attention in high performing companies that concentrate on training managers in the process of project management rather than the events—or milestones—within it. As the industry consolidates and clients search for increasing levels of value among design practitioners, the qualities that differentiate design professionals will more and more be how well they deliver projects. By concentrating on the process of project delivery, designers can expect to be rewarded with better-than-average fees.