October 26, 2010
One of the areas that has always amazed me with respect to Alliance Partners and their system integration efforts is their ability to estimate and ultimately bid the project cost. It seems almost an art (perhaps a black art) as it is a science, but it is critical to the success of the business.
It starts with gathering good requirements which is an art in and of itself. In a previous post, we discussed a ‘needs-based’ approach and the type of requirements that you want to gather. We also talked about probing techniques and how to deal with conerns.
Once you have a good set of project requirements, you still face the challenge of estimating the cost of the project. Hopefully, you have a good idea of the hardware requirements, but labor usually makes up the bulk of the total cost. Ideally, you can break down the project into a set of tasks to develop a system that meets the requirements. Then for each task you can estimate the effort, duration, and cost.
There are several methods for estimating the labor cost of each task:
- SWAG (Not recommended) – Scientific Wild Ass Guess
- Expert – ask an expert based on their experience
- Delphi – Ask a group to brainstorm and build consensus
- Comparative – Based on history or similar task
- Weighted average – a combination of estimates (e.g. Optimistic + 4*Likely + Pessimistic) / 6)
Obviously, depending on the size of the project, you’ll need to decide how much time you want to invest in this process. But, estimating project costs is critical to your profitability.
Labor Cost Variables
Other factors to consider in estimating projects.
- Work interruption factor – no one can work uninterrupted. For instance, meetings. Such breaks in the thought process and work effort will inevitably impact effectiveness. Idea: consider limiting meetings and e-mails to certain parts of the day.
- Part-time effect – Working on multiple projects can impact effectiveness. The developer must ramp up or down from one project to the next.
- Skill factor – Obviously, a novice may take longer to complete a task than an expert.
By completing the task breakdown and considering the variables, you can reasonable estimate of the labor cost which often constitute the majority of the cost of the project. Next week, we’ll formulate that into a price and ultimately the proposal.
October 12, 2010
Here are some of final insights from a NIWeek 2010 Alliance Day presentation given by Don Roberts, Exotek. He is a principal of a consulting and operations-support company focused solely on the systems integrator.
Objectives and Measures
The end result of good strategic planning is a set of goals considered critical to the future success of the organization. Each goal is accompanied by specific objectives clarifying what must be done and what is critical to success. Just as important, are defining the measures that will track the accomplishment of the objective? The measures should be:
- Linked: Measurements communicate what is strategically important by linking back to your strategic objectives.
- Repeatable: Measurements are continuous over time, allowing comparisons.
- Leading: Measurements can be used for establishing targets, leading to future performance.
- Accountable: Measurements are reliable, verifiable, and accurate.
- Available: Measurements can be derived when they are needed.
- Over the next six months, delivery times will decrease by 15% through more localized delivery centers.
- By the year 2013, customer turnover will decline by 30% through newly created customer service representatives and pro-active customer maintenance procedures.
- Un-billable time will get cut in half by cross training front line personnel and combining all four operating departments into one single service center.
Plans into Actions
As you put your plans into actions, determine who is the right person or team to accomplish these goals. Consider all people that influence change, including outside contributor or perhaps even a facilitator. Then, decide what the appropriate timing is. A major plan may take more than a year, but should have quarterly or monthly reviews.
October 5, 2010
Last week, I shared some of the insights from a NIWeek 2010 Alliance Day presentation given by Don Roberts, Exotek. He is a principal of a consulting and operations-support company focused solely on the systems integrator. Continuing on, Don suggested some tools to assist in your strategic planning process.
Strategy maps put into focus the often-blurry line of sight between your corporate strategy and what your employees do every day
– Kaplan and Norton
Strategic Maps and Balanced Scorecards
Strategic maps help communicate your corporate strategy. And, balanced scorecards are a way to measure your strategic progress. They typically focus your company strategy around the following areas:
- Financial Perspective – How do you look against the financial objectives of the company’s owners
- Customer Perspective – How do you look to your current and prospective customers?
- Internal Business Perspective – What must you excel run an effective business?
- Learning Perspective – What must you organization learn to improve your business?
These perspectives then help to layout both your strategic map and balanced scorecard. There are more details, then I could effectively cover in this blog, but there are lots of useful information available on-line. Don offered an example for an Alliance Partner.