Case Study: Improving Coordination Between Project Teams and the Business Office

 Photo: CC BY-SA 3.0 Nick Youngson

Photo: CC BY-SA 3.0 Nick Youngson

Background:

In a small but growing research firm, there was no system for sharing information between the business office and the project teams on the projected labor hours and costs included in the contract nor the actual hours and expenditures once a project was underway. Project directors and managers were kept in the dark on all aspects of labor hour usage and direct costs, preferring to focus solely on methodology and execution of the research.  They were also not privy of the accounts receivable – that is, whether invoices were being sent out and paid correctly by clients, whether subcontractors and consultants were billing appropriately, etc. As a result, projects went over budget, incorrect invoices were sent out, and miscommunication occurred frequently with clients and partners.

The Challenge:

There was a longstanding disconnect between the project leadership and the business office regarding responsibility for monitoring project expenditures and labor hours. For the company’s 10-year history, there was no expectation that project leads should receive and monitor budget and projected labor hours, or that comparing actual versus projected expenditures would be useful for project management purposes.  There wasn’t a clear understanding among the project side about why the contract and budget considerations were important, and these parameters were not factored in to how projects were staffed and managed.

The Solution:

I worked with the business office, company leadership, and a group of project managers to build a system for regular and more detailed oversight of project budgets at both the company and project level. We developed a new system of monthly reports sent from the business office to each project director that compared budgeted hours and dollars with actual expenditures for their projects. We ensured that the report provided enough information to allow project leads to make management decisions and identify potential problems before they arose, but not so detailed that the reports were intimidating or irrelevant – two problems which often lead to critical reports being ignored.

I also developed and implemented a company-wide training on the basics of budgeting and contract terminology, and a training for all project managers and directors on how to use the new monthly reports to manage their projects.

Results:

With a better understanding of the contract and budget process, and with access to expenditure information about their projects, project directors and managers were better able to track project status. It allowed for project leads to see if project staff were billing appropriate numbers of hours and if subcontractors were charging appropriately, which in turn helped inform decisions on when and how to change staffing to keep the budget on track.

This greater attention to detail helped the business office focus more on macro-level budgeting issues rather than checking the minutia of each project. As a result, the company saw a dramatic decrease in cost overruns.  Equally important, the company improved its relationships with clients and partners, while at the same time implementing a better invoicing system that led to more efficient payments.