Project Return

Project Revenue & Cost Management Made Easy For Project Managers

December 19th , 2017

Imagine a project that your enterprise is executing for an external customer. The contract has a combination of payment terms with some deliverables being fixed price, some being time & material. On top of it, projects have specific milestones that trigger these payments from the customer.

Now let us add another dimension here.

Irrespective of the value of the project, let us assume that the project needs to outsource part of the product or service to vendors – both domestic and foreign! These vendors could be existing and pre-approved or new ones that require identification, evaluation and finally appropriately engaged. Dealing with vendors include documenting appropriate payment terms and conditions and then managing them as the project progresses.

Just to get the focus back - remember that the project is to deliver a product or service which has its level of complexity. Let me not get into the dynamics of managing the project team; we will save it for another blog!

Most project managers would dread the thought of managing these contractual terms, payments, collections, and the associated documentation. While the legal and procurement teams would be available for consultation and guidance, the project managers have to ensure –

    • Customer pays for the product or service as per the contract
    • Pay the Vendor for the product or service as per the contract

Let us shift the focus to how most organizations manage projects like the one above. The project team may use the following

    • Scheduling software (e.g., Microsoft Project, Oracle Primavera, Clarity, Wrike, and so on)
    • Documentation solution (e.g., SharePoint, Documentum, Google Docs, and so on)
    • ERP solution (e.g., SAP, Oracle, or legacy systems)
    • Accounting software (e.g., Tally, QuickBooks, and so on)

With the software footprint mentioned above, one could imagine the pain of a project manager and his team would have to endure to deal with vendors. The project team needs to manage the schedules in one of the scheduling tools, work with procurement and accounting teams to coordinate customer collections and vendor payments. The procurement and accounting teams handle their work on different systems! So, it is not a rocket science to feel the frustrations of the project manager.

Two vital questions are:

1. How could the organization help such project managers in distress?

2. How could the firm facilitate a smooth collaboration between the project managers and the procurement or legal teams?

The solution is not to immediately do away with the existing applications and replace them with another big one. It is quite sure that the management put these systems for a good reason in the first place!