The Value of Project Management: How to Communicate it to Sales | TSIA
At TSIA, we’ve received a lot of inquiries from our members who are having a hard time selling project management with their professional services engagements. In looking at our data and speaking with services sales people, we’ve found that this issue is just one part of a much larger problem: the value a mature project management capability can bring to a project is not being fully understood on both sides of the deal. After all, if the value of project management isn’t being communicated to sales, how can they be expected to convince your customers they need it?more
The Project Management Problem and How to Fix It
The difficulty in selling and positioning project management along with your professional services engagements is a vicious cycle consisting of smaller issues that directly affect one another. The good news is, change can happen anywhere in this cycle, which will cause a domino effect of improvement across the board. If you’re going to start the path to improvement, it’s important to first understand how each of these separate issues are working against your efforts.
For starters, customers might resist paying for project management either because they expect you to include it for free or because they want to use their own project management. Therefore, if customers regularly don’t express a need for it, this can cause your sales team to not understand the value project management can bring to the table, making them unable to properly position that value to your customers.
This results in more deals being routinely sold without project management. This is bad news for the project management capability because, without expressed demand, there’s no justification to invest in its development and maturation, so it will remain in an immature, less robust state. However, without project management, your project delivery quality ends up lumpy, which in turn reduces your ability to convince your customers to buy project management, and the cycle continues.
The best place to break this cycle is to start by giving your sales team proof points that demonstrate the value project management will bring to their deals. Once sales gets it, they’ll be able to position its value to their customers, who will then buy it, and the rest of the cycle will rectify itself. Here are some good data points you can start with.
How Do You Demonstrate the Value of Project Management?
Every other year, TSIA conducts its Project Performance Study, which helps determine what a “best-in-class” project looks like by measuring performance in a variety of criteria, including but not limited to:
- Is the project profitable?
- Did the project start on time?
- Did the project end on time?
- Was it on-budget?
- Are the customers happy with the result?
When we think of all of the elements that make for a best-in-class project, these needles can be moved by good project management, and this study provides us with hard data that demonstrates its value. Our members are then able to use this data to make the business case to sales (as well as their senior leadership team) to include project management in their deals. While the full study is only available to members, here are some key data points you can use to show sales exactly how valuable project management is based on data we collected from enterprise companies on large projects (over $250k).
Have a Project Manager Involved in Presales Activities
Even before the sale happens, it’s a good idea for your sales team to get project managers involved earlier on in the presales activities for an opportunity. This allows project managers to become familiar with the overall scope of the project, provide deeper insights from an experience standpoint, determine which resources are needed, and assist in defining any other key parameters of a project that are needed in presales motions. Based on our survey, we saw a 34% actual margin compared to a 26% actual project margin, with organizations netting 8 points higher when they had project managers involved in presales activities.
“Margins increased by 8 points when project managers were involved in presales activities.” – Tweet this!
Improve Project Duration
In another data point that demonstrates the value of project managers, we’ve seen that projects with an assigned project manager had 2% better performance in regards to the actual duration of the project. In short, project managers can help your customers get closer to their planned project duration, while projects without a PM tend to have longer duration or a longer end time.
“Project managers can improve project duration by 2%.” – Tweet this!
Project Managers Can Help Your Customers Reach Their Billable Targets
Billable targets can be achieved more closely to what was originally planned when a project manager is assigned to the project. According to our study, projects with an assigned PM are under time by -3%, as opposed to typical projects without a PM which can go over planned time by 2%, result in unwanted financial surprises. Billable time on a project can have a direct impact to margins, and a project manager will ensure that actual project scope stays close to plan by carefully managing resources and closely monitoring all essential tasks and functions within a project.
Does Project Management Improve Project Performance?
After seeing some of these data points, you might find yourself wondering if these metrics are better because of project management being involved in the deal, or if the projects were already better to begin with. While there will always be a cause and effect issue with these correlations, at TSIA, we’ve seen enough examples of projects both with and without project managers to confidently say that these factors do have an independent effect.
These numbers don’t lie: projects that have project management embedded in them do better on margins, schedule performance, budget performance, scope performance, and are also ultimately better for customer success and satisfaction. So, is there a relationship between project management and project performance? Pretty much no matter how you measure it, there is.
About the Author
James Cho is the director of professional services research and operational best practices for TSIA. In this role, he is responsible for developing and delivering research programs that are focused on helping TSIA member organizations build and optimize professional services. He is also responsible for leading and delivering operational best practices to member organizations. James has over 20 years of experience in technology, operations, analysis, project management, and consulting, including experience in telecom, hardware, software, and professional services.
Source: The Value of Project Management: How to Communicate it to Sales | TSIA