How a Project Manager Saves Money For Your Startup
My article explains how startups with a tight budget can benefit from project management. It is based on my experience of managing IT projects as well as on the latest findings of international surveys. “Why should I spend money on a project manager?” This question often haunts entrepreneurs, especially those who are going to build a startup with a tight budget. The right answer is something like this: “Because without the right project manager (PM) you run the risk of spending much more.” Incredible as it may seem, this article from PMI says that businesses that invest in tried and tested project management practices waste 28 times less money. The figure is impressive, yet easy to explain. Such organizations rarely if ever fail to complete their projects. Moreover, they have a far better chance of launching the product to market on schedule, within budget and scope. Why is working directly with programmers less cost-efficient for startups? What makes a project manager so important in terms of startup budgeting? In this article, I’ll share my conclusions, based on seven years of experience in IT project management, and findings of recent international surveys.
PM sees the project from a business perspective
When you bring your startup idea to developers, they will mainly focus on a technology stack and the complexity of the task in terms of software development. However, you can hardly count on their business intuition. A project manager, on the contrary, will first consider the relevance of your idea. The number one reason for startups failing is that people just don’t want to buy what they have to offer (in fact, according to this Gadgets Now article, no market need is responsible for 42 percent of unsuccessful cases). So, is your project really worth investing all your money in? Or would you be better off starting with a proof of concept? Let me give you an example. Once, a client asked our company to build a kind of social networking service for the dead or, rather, for their living relatives who have no time to visit cemeteries. The application would give them access to a virtual tomb, where they could leave condolence messages or even light memorial candles. It was, however, doubtful if such a project would achieve commercial success. To avoid wasting money on a disadvantageous app, our PM team suggested the client validate their business idea with a landing page. We built a simple and less costly MVP with an e-mail sign-up form. Analyzing user feedback proved that there was little demand for virtual cemetery services. Eventually, the client decided to spend their budget on a more promising project.
PM translates technical language into business terms
Most software engineers are not great communicators. They know their job, but they often can’t explain complex issues clearly and simply. If you don’t have a strong tech background, it will be a challenge to understand “developers’ language”. When it comes to discussing the solution stack and development process, you’ll probably need somebody to translate technical information into business terms, and vice versa. Project managers work as bridges between entrepreneurs and developers. They convey your requirements, goals, and vision to a development team. Ensuring smooth and transparent communication, PMs save you tons of time, energy, and, thus, money.
PM prevents time and cost overruns
According to the Wellingtone project management survey, only 37 percent of сompanies complete their projects on time and only 42 percent complete them within budget. The chances of time and cost overrun increase dramatically when businesses work directly with a development team. Engineers are not managers. I’ve seen all too often how they get lost in phases of the project life cycle causing unexpected delays. The task of controlling expenditure, people resources, and schedule becomes even more difficult if you hire a remote team. You can hold regular online meetings, but you don’t get the whole picture. That’s why you need a single contact point responsible for timely and efficient teamwork. The on-site project manager is crucial for accomplishing the project within the required timeframe and budget.
PM controls scope creep
Entrepreneurs sometimes change their requirements as the project evolves. They may want to add extra features, integrate more functions or suddenly become obsessed with newly released technologies. Such shifts result in scope creep or unwarranted growth of the project beyond the agreed upon estimate. In other words, the development team gets more work, deadlines are destroyed and the app goes over budget. The 2018 Project Management Institute (PMI) survey shows that scope creep occurs in 52 percent of projects. If left unattended, the process can easily turn a promising idea into a business loss. To avoid a disaster, someone should control changes, namely:
- analyze their positive and negative impacts
- assess their cost
- define the new timeframe
- re-scope the work
- make sure that all team members know about updates
- monitor changes thereafter
Changes are not always unwelcome. They are almost inevitable within large complex projects that take months or even years to develop. The point is that, in case of changes, you need an expert who won’t let them wreck your startup.
PM enhances project performance
The PMI survey mentioned above reveals that 9.9 cents of every dollar is wasted due to poor project performance. At the same time, only 58 percent of companies understand the importance of project management. Those who don’t see much value in PM activity report project failures nearly 50 percent more frequently. These findings only prove that investing in project management will bring in substantial revenue. Judging from my experience, appointing a PM makes sense even if you are dealing with a small team of one to three developers. How do PMs actually boost project performance? Here are some of the most evident facts:
- PMs motivate people and help to create effective working relationships.
- PMs ensure that all team members are working in the same direction, and thus increase development speed.
- PMs resolve issues before they get out of control and help to avoid conflicts.
- PMs document and prioritize tasks.
- PMs keep everybody in the loop, provide transparency, and ensure that everyone involved (investors, entrepreneurs, engineers) pursue the same goal.
An IT project’s future depends not only on the idea behind it or skills of the development team. The list of main success factors also includes:
- understanding customer needs.
- clearly documented requirements and business goals.
- effective communication between business owners and engineers, as well as within the overall development team.
- ability to meet deadlines and the agreed budget.
- strict scope control.
- ability of the project to deliver the expected business benefits.
All these keys to success belong to project managers who have a business vision and can help entrepreneurs translate concepts into technical solutions. Organizations involving project experts show better performance, spend fewer dollars and, in the end, stay competitive.