Design Project Management: Is a cost blowout redeemable?
Ahead of our upcoming Auckland DA Workshop: Running a successful project: on time, on budget, and on brief. Our workshop facilitator Sarah Ritchie shares valuable intelligence on time and cost blowouts on design projects. Sarah has spent 25 years in design and advertising account management, which included 10 years running her own, successful graphic design business. These days Sarah works for 3rdeye Consulting and specialises in supporting account managers and strengthening agencies. She is also the author of the 2018 book “How to Wrestle an Octopus: an agency account manager’s guide to pretty much everything”.
Is a cost blowout redeemable?
You are sitting at your desk, looking at a printout of time spent on your client’s design project. You and your team had discussed the number of hours that would be required, and everyone was happy. You were confident that your quote was accurate, and your client gave their approval to proceed.
It’s time to invoice the work and the job control report (JCR) shows a blowout in design time – nine hours over-budget! You scratch your head to figure out what went wrong, and what you are going to do to recover the additional costs. Can you invoice your client for the over-run of time?
Right about now you feel yourself going into panic-mode, and a slew of questions start rushing through your head. These questions will need to be answered before you can decide what to do next.
Why is there a cost blowout?
The first step is to go back over all the time entries to assess the work completed, and then talk with your team. Questions for your team could include:
- Was any additional work completed that you did not know about? If so, who requested the additional work and why were you not informed?
- Did the team encounter difficulties? If so, what were they, and why didn’t they flag them with you?
- Did the team accidentally (or on purpose) record internal errors/fixes as ‘chargeable’ in their time sheets?
- Was the original time estimate wrong?
- Was the brief misunderstood or unclear?
Why are you surprised?
As an account manager, project manager or studio manager, your job involves keeping a tight handle on time and cost-tracking for projects. This vigilance is especially important for projects with a web development or creative design component, as both of these areas are notorious for time over-runs if not monitored vigorously. In this example, a nine-hour time over-run should have been red-flagged long before the completion of the project.
Is the additional work chargeable to your client?
The answer to this question will depend on if the over-run was a result of work requested by your client (over and above the quote supplied). If so, then you have grounds for talking with your client about the cost of the work. However (and it’s a BIG “however”), this conversation should have taken place as soon as the request was made, rather than after the work was completed.
Somewhere along the way, there has been a communication breakdown – especially if your client by-passed you and went straight to your creatives or developers to request the work, as often happens in large studios or agencies.
If the additional time taken was due to internal issues (e.g. lack of skills or knowledge; slow execution; sub-standard processes; errors; inaccurate time estimation), then you will not be able to on-charge the extra work to your client. The project over-run will mean that the gross profit for your job will be affected, and further chats with your team will be required.
Is the cost blowout redeemable?
Probably not (sorry), and your studio or agency will have to absorb that ‘bottom line hit’. If any good can be extracted out of a situation such as this, it would be your expensive (and potentially embarrassing) learning experience.
This situation may be your opportunity to change inefficient processes (internal or external), or re-jig the way that you work. As long as you can learn a good lesson (and hopefully not repeat it), then you will have managed to salvage some positive out of a negative situation.
Keen to learn more?
If you are responsible for running client projects or campaigns in your studio or agency, this workshop is for you. You’ll learn how to take the guesswork out of project planning; organise your workflow; and determine the essentials to keeping a project running on time, on budget, and on brief. You’ll receive practical tools and templates to help improve your planning, productivity, and profit.
