I was thinking about our many projects at iProv today during church. We’ve got a pretty solid process for managing our project but there are some hand-calculations that still have to be made.
As most of you know, the majority of my job is project management and new business. I can’t really teach you how to come up with creative solutions but I can talk just a little bit about project management. This blog entry is going to focus on proposal development, project evaluation, and break even points.
At iProv, we break projects into “days”. If your business breaks things into “hours”, you will have to do a little modifying.
Proposal Development
When you look at developing a project, use this formula
- $ per day = (Amount of Money You Want Your Organization to put in it’s Pocket Each Day) + (Price of an Employee Per Day * Number of Employees Working)
- Total Project Price = ($ per day) * (total number of days in the project)
Sure this is simple, but many people try to make this a lot more confusing. The “$ per day” is what the organization profits each day.
Break Even Date
After the customer agrees and signs off on the project, take a look at the start date and figure out what day the break even date is. You may tell a customer that the project will be done on January 1st. But, b/c the customer puts the project on the back burner, it won’t get done until March 1st. It’s fine b/c the customer doesn’t get mad at you but you’ve got to keep paying your employees each day. The longer the project goes on, the more it cuts into your organizations profits.
- # of work days for break even = (Total Project Price) / [ Price of an Employee Per Day * Number of Employees Working ]
Project Evaluation
After the project is done you can evaluate the project and see what your organization made after the project was complete. To do this, just reverse the Proposal Development.
- $ per day = (Total Project Price) / (Total # of days in the project)
- net profit per day = ($ per day) - (employee price per day * Number of Employees)
Good luck on your next project!