As you probably know, I’m always talking about the scourge of over-delivery and the terrible impact it has on your profits. Well, here’s a real-life example that illustrates my point perfectly.
WARNING: this makes for uncomfortable reading!
One of our clients showed me the CMAP performance report for one of his designers. Suffice to say, it wasn’t good news!
Here’s a screenshot of the offending report (with the name blanked out):
Now, if you’ve ever spent any amount of time talking to me you’ll know that one of the key principles I always rant on about is making sure your people know exactly how long they’ve got to complete their projects.
For example, if you’ve quoted 56 hours for a designer on your project, you pick a designer and give them those 56 hours. Their responsibility is simple: to deliver the project successfully within the time you’ve given them.
Unfortunately, most agencies aren’t run this way. When they win a project they just dive in and work on it until it’s done regardless of what they quoted.
Anyway, back to our story…
We had just implemented CMAP for this particular client and he had a bunch of historical timesheet data (that he never looked at!) and project quotes in a spreadsheet, so we were able to import it all into CMAP for him.
This meant he could run some reports for the previous year to get his starting position, including the report that showed him how well (or badly) his people where performing.
Pretty much every report told a sorry tale. However, it was when he ran the report for this particular designer that his blood started to boil!
Whilst everyone was over-delivering to some degree, this guy’s numbers where horrendous. Almost every project was ridiculously over-budget, and the bigger the project the worse it got.
Take this project for example:
On this project alone the designer spent an extra 130 hours that they couldn't bill the client for. At £80 per hour that’s £10,400 down the drain.
What’s worse, when this happens project after project it really starts to mount up, which is exactly what happened. Here we send the end result for his year:
The total value of the work this designer did was £143,840 which would be fantastic if it could all be billed for.
However, only £72,640 of it was actually billable, meaning this designer alone was responsible for flushing £71,200 right down the drain.
That £71,200 would have bought this rather nice Aston Martin (with change):
Now, you might be thinking that none of your staff would run over on a project as much as the designer in this agency. But the reality is that this kind of lost revenue is happening right now in the vast majority of creative firms.
A few days lost here, a couple of weeks lost there…over time it really mounts up and if you work out the numbers the results will probably shock you.