Do Project Types Really Matter? Here's A Quick Method for Tracking.
You have heard us talk about discerning margins on Equipment, Parts and Labor and even going to the point of determining the mix in your proposals. All are very important levers to profitability.
But do you know the size of your projects and how they affect the organization? Tracking project types and the profitability of different size projects can be helpful to improvement as well. Small quick response projects are totally different from engineered long term projects and there are shades of others between these two bookends.
One method for classifying project could be:
Fast Turn/Quick those under a one-day labor allotment of 16 hours. Usually not requiring a detailed proposal, engineering or project mgmt. on the scale of other types of projects..
Multi-day projects those under 80 hours of total labor and usually completed within a couple weeks. Proposals are more detailed, project planning more detailed and drawings and the like not usually required.
Larger projects over 80 hours of labor and completed within 4 months. These typically involved a detailed proposal, may be even some design fee-based work and take a lot of project mgmt. resources.
Engineered projects these projects are large in labor required but also take in excess of 6 months. The proposal, documentation and drawing support is much more than any other project type.
If you code these projects in QuickBooks and track their margin and performance against estimate, you may find some informing things. Profitability, performance to quote, even changes in the mix can give you valuable insights and can affect how you build your organization.
Do you choose these projects or are they choosing you. In either case, you need to know more about them to make better decisions on selecting and executing them.
We think, if you understand the project types better, you will do better job of managing them.
Paul & Steve