Complete Guide to Resource Leveling vs. Resource Smoothing In Project Management

Complete Guide to Resource Leveling vs. Resource Smoothing In Project Management

Without a project resource management system, it is difficult for any project (or team) to succeed. It’s all too common to have resources from different projects overlap or for certain tasks to suddenly need additional people or equipment. When this happens, the project manager (PM) should be able to re-allocate or re-adjust as required. This flexibility is crucial as the average employee is severely overworked and burnt out due to unrealistic deadlines. In a 2021 global survey conducted by the consulting firm ADP Research Institute, they discovered that 67 percent of respondents experienced stress at work, up from 62 percent pre-pandemic.

While the primary goal of PMs is to ensure each project is executed as efficiently as possible to save costs, they also have to consider proper management of company assets and work-life balance for employees. Human workers are the company’s greatest resource, and their well-being should be a priority. This is where resource leveling and resource smoothing become handy. These two strategies enable PMs to look at their project plans and pinpoint problematic areas, like days when people are overworking or unrealistic deadlines given the available resources.

In this article, we’ll walk you through resource smoothing vs. resource leveling, their advantages/disadvantages, and the situations where these methods work best.

The resource management process

First, it’s important to understand the process of resource management, which involves planning, scheduling, and allocating people, technology, and money to a project. Resource management is crucial because it helps PMs prepare an inventory of existing resources, pinpoint gaps or missing information, and prioritize allocation based on the needs of different projects.

This process has three main components: resource allocation, resource leveling, and resource smoothing. The first step is resource allocation, where team members are assigned specific tasks based on their strengths and expertise. This is the planning stage, where resources are strategically placed to optimize the timeline. 

However, projects might encounter resource and time constraints for various reasons. Resource leveling or smoothing is a method for anticipating these challenges and applying the right solutions and adjustments.

Here is a quick video on how resource management can work in a Professional Services Automation or Project Management Software.

What is Resource Leveling?

Based on the Project Management Body of Knowledge (PMBOK) Guide, resource leveling helps PMs evenly allocate resources by adjusting a project’s start and completion dates. This strategy ensures that no one is overworking, the equipment is available, and requirements are made clear so that there are no additional costs to the project. 

Leveling works best when there are limited resources and the PMs want resource usage at a constant level. That’s why this technique is sometimes referred to as resource constrained scheduling (RCS). 

There are several factors that will help PMs apply resource leveling effectively. First is knowing the dependencies or the relationships between tasks. For example, which activities must be completed before the team can move on to the next? Another factor to consider is the resource conflict. What is the main issue that needs to be solved? Is it human resources, equipment, or technology? 

Finally, it is also important to look at the different types of constraints. Is it mandatory (physical limitations like lack of equipment), discretionary (team members’ preferences or actions), or external (third-party challenges)? Only after figuring out these factors can PMs create a resource leveling plan that adequately addresses the pressing concerns of the project.

According to Online PM Courses, here are some of the things PMs can do during resource leveling:

  • Delay start times
  • Extend planned duration
  • Remove some tasks
  • Allocate additional resources
  • Split tasks up
  • Bring tasks forward
  • Assign alternative resources

In addition, there are also specific instances where resource leveling can be used:

  • There is no fixed deadline (e.g., the project can be finished within the first quarter of the year).
  • A resource has to be shared with another project (e.g., some teams have to work on another website for a few weeks).
  • A resource is highly in-demand (e.g., laboratory equipment has to be used for three projects simultaneously).
  • A resource is unavailable for a certain time (e.g., a subject matter expert won’t be available to consult until they return from their holiday).

Basically, resource leveling answers this question: Given the resources you have, when will you be able to complete the project?

Watch the complete video about What is Resource Leveling from OnlinePMCourses here:

Advantages and disadvantages of resource leveling.

Aside from re-balancing resources, leveling can offer several advantages:

  • Identifying under-allocated or unused resources 
  • Maximizing downtimes
  • Reducing project delays
  • Team members can have one centralized reference that they can use to adequately prepare for their next tasks.
  • Team members are working on areas/tasks that best suit their expertise

However, there might also be disadvantages to this technique, mainly because something has to be sacrificed, whether cost, scope, or time.

Other disadvantages:

  • Risks of tasks delays and budget overruns
  • Can be tricky to re-shuffle some tasks, especially if they’re all critical
  • There might have to be additional resources (whether labor, time, or budget)

Example scenario of resource leveling:

Suppose a project is planned to be completed in two days. It has three activities (A, B, and C), and each activity takes 8 hours to complete. 

Activities A and B can be done by one employee (Alex) and C by another (Jane). 

At first, it would seem like A and B could be performed at the same time by Alex. However, it would take Alex 16 hours to complete both activities. This situation would lead to him being overworked on the first day.

To address this, the PM decides to extend the project to three days instead of two. Activity B is then moved to Day 2 to give Alex enough time to finish each task and evenly allocate working hours.

Resource leveling methods

Now that we’ve discussed the basics of resource leveling, let’s look at the different methods or techniques that PMs can use, depending on the urgency of the situation. There are three main methods: critical path analysis, fast tracking, and crashing.

Critical path analysis (CPA). This most common technique comprises mapping out every critical task needed to finish a project. This process includes identifying how long it would take to complete each task and the other tasks dependent on each other. CPA is a good tool to ensure that deadlines are realistic.

The first step in CPA is to define all project tasks (both critical and non-critical), and the maximum and minimum times it would take to complete these tasks. It’s also important to include slack time (or float) in the calculation to come up with a reasonable deadline.

A timeline is then created to track each task using Gantt and bar charts. CPA is often used in industries that have complicated processes. However, most CPAs are now automated using resource management software.  

Fast-tracking. This resource leveling technique compresses schedules so that some tasks are completed simultaneously instead of sequentially. For example, if certain activities are not dependent on each other, they can be done on the same day. This method is particularly helpful if there is simply not enough time.

One example of this technique is creating different prototypes before a design has been approved. However, while this can save some time in the beginning, it does have the risk of being reworked if there are mistakes or massive changes to the design.

Crashing. This method is often considered the last resort, particularly if fast tracking is still insufficient. The idea behind crashing is to shorten the project duration by adding more resources (e.g., labor and equipment) with the least possible cost, including hiring extra staff or paying a premium to acquire a service faster.

This technique can become expensive real quick, so it’s best to use it when there are no other options available or when a project can no longer afford to miss its deadline.

The chart below summarizes the main differences between resource leveling vs. resource smoothing in project management.

 

Resource Leveling Resource Smoothing
The finish dates of the project can change The finish dates of the product stay the same.
Critical paths change, mostly increasing. You can pause activities within its float boundaries.
Scheduling when resources are under or over-allocated. Scheduling is based when resources are unevenly allocated.
The main constraint is your resources. The main constraint is your project end date.
Resource leveling can be implemented for tasks on the critical path. With resource smoothing, you don’t alter the critical path.
Resource leveling is usually scheduled first. Resource smoothing is often performed after resource leveling.

What is resource smoothing?

We’ve discussed resource leveling and when to use it, let’s now look at the other resource optimization technique: resource smoothing. Some people might be confused about when to use resource leveling versus smoothing because they have very subtle differences. 

Resource smoothing is used to balance the peaks and troughs of individual tasks after they have been leveled or re-allocated. Whereas resource leveling deals with the question of resource constraints, smoothing deals with time constraints (which is why it is also known as time constrained scheduling (TCS)).

Here are some instances where resource smoothing works best:

  • There is a fixed deadline (e.g., the tasks have to be completed within their allotted timeline).
  • The resources have been properly re-allocated, and the critical tasks can no longer be re-shuffled.
  • Only minor tweaks are needed to smooth out the timeline (e.g., slight changes in working hours).

Advantages and disadvantages of resource smoothing

While often done at the last stages of the project, resource smoothing is a good tool to keep everyone on track. This method is particularly crucial since the project can no longer afford any delays at this point, particularly for critical activities.

Advantages:

  • Project sticks to its assigned timelines
  • Tasks are monitored well 
  • Fewer ambiguities and unexpected factors that can affect the overall schedule

Disadvantages 

  • No more room for flexibility
  • Increased pressure to stick to the timeline
  • People have to commit to their work schedules as best as they can

Example scenario of resource smoothing:

A project must be completed within three days and is once again assigned to Alex and Jane. They can both work on the project simultaneously, without any activity dependencies. The PM notices that on Day 1 and Day 2, Jane is working 10 hours while Alex is working for only 6 hours.

The PM then re-arranges the tasks on Days 1 and 2 so that they’re evenly distributed (as much as possible) between Alex and Jane. This strategy would ensure that both employees are not overburdened and can maintain the quality of their output to finish the project on time (Day 3).

The important thing to remember on resource optimization is to understand the main challenge the project is facing. Sometimes, these two techniques are done simultaneously to ensure that issues are being addressed in a timely manner. Like everything around project management, there is a time for flexibility and a time to stick to the plan.

Find out how Resource Leveling & Resource Smoothing can be done in resource management tool.

If you want a resource management tool that’s automated, flexible, and highly customizable, Klient can build one to tailor it to the needs of your business. We can help you take control and manage staffing, and allocate tasks appropriately and intuitively.

Resource Management in a PSA Software for a specific project

Resource Management in a PSA Software for all your project.

We’d love to help you out. Schedule a demo with us.

Everything you need to know about Resource Histogram for Project Management

Everything you need to know about Resource Histogram for Project Management

  • What is a Resource Histogram?
  • Why Use a Resource Histogram?
  • What Can You Do With a Resource Histogram? An Introduction to Resource Leveling and Smoothing
  • How to Build a Resource Histogram on Excel/Google Sheets?

Project management is a complicated beast, mainly because it requires monitoring resources. And resources – whether people, time, or money – can rapidly disappear. However, with a resource histogram, project managers (PMs) don’t have to panic. That’s because they know exactly where the budget is going daily and where they might tweak things to get the project back on track. 

Resource histograms are just one way PMs streamline processes and protect themselves from unexpected situations. Fortunately, companies seem to be catching up to the importance of being prepared. According to the Project Management Institute (PMI), wasted funding due to poor project management (e.g., budget overshoots, scope creep, and missed deadlines) has declined to 9.4 percent in 2021 compared with 11.4 percent in 2020. 

In this overview, we’ll walk you through your burning questions about resource histograms, how to build and implement one, and how you can take advantage of these tools to get the best results possible.

What Is a Resource Histogram?

A resource histogram is a visualization and statistical tool used to manage resources. Typically, a simple table might give you an idea of how your resources are monitored daily, but it’s hard to visualize information that way. (Also, let’s face it, tables can be boring). By turning your tables into resource histograms, you can easily see at a glance how well you’re keeping everything on track and if daily costs are exceeding the budget.

You might have guessed it, but the first step is establishing the resource cutoff per day. Without this clarity, it can be very easy to overshoot spending or over-allocate. Next is creating a “table of dependencies,” where details like types of activities, how long these activities will take, and how much they will cost per day are recorded. From this information, you can create a Gantt chart to visualize the data. 

Most people stop at this part. But if you take a step further and create a histogram, then you can have a better guide on when to move resources around or when to delay the due dates. We highly recommend two great videos from Engineer4Free that explain this concept really well. But, don’t worry, we will explain everything in this blog.

However, to give you a better context, we will explain the concept further with some nuance.

Why Use a Resource Histogram?

Aside from getting a cool visualization tool, resource histograms give you detailed information on the progress of your projects. In particular, some tasks are too complex and have many components; without a resource histogram, it’s like getting lost in a maze. The Gantt chart below demonstrates how you can have multiple activities/resources that overlap on a project. 

In this video, you can watch how a Professional Services Automation/Project Management Software replace a Resource Histogram with no effort.

When to Use a Resource Histogram?

The PM can use a resource histogram throughout the project. It can be a handy tool, even if it takes time and effort to create one in Excel. (It can even be manually created on paper, but it would be time-consuming and error-prone).

The resource histogram can help PMs figure out how profitable a particular activity is and which activities are interdependent. They can also monitor different processes and make data-based decisions. For example, they can determine which part of the project might benefit from added resources or have been over-allocated for quite some time.

Below are other examples of when a resource histogram is most beneficial.

  • You have a limited budget and must stick to it to the last dollar. Sometimes, budgets are incredibly tight, and overspending even for a few hundred dollars can lead to the dreaded scope creep (when unplanned tasks keep adding up, most of which were not initially included in the budget allocation).
  • You want to limit the number of daily resources assign for a project. For example, you have a specific role that executes a particular task and want to monitor that these tasks/roles don’t excessively overlap or get unnecessarily duplicated.

To demonstrate this, let’s say we have five parent tasks for the whole project.

Task Predecessor Duration Start Day End Day Cost / Day
Analysis 2 0 2 1560
Architecture Analysis 3 3 5 1680
Configuration Architecture 3 6 8 1680
Implementation Architecture 2 6 7 1520
Training Implementation 3 7 10 1400

 

In the table of dependencies below, you can see that each task/role is clearly specified per day, along with their corresponding budgets. Being detailed as much as possible helps to create relevant and accurate histograms.

Day Task Total Daily Cost
1 Analysis 1560
2 Analysis 1560
3 Architecture 1680
4 Architecture 1680
5 Architecture 1680
6 Configuration + Implementation 3200
7 Configuration + Implementation 3200
8 Configuration + Training 3080
9 Training 1400
10 Training 1400

 

This is the kind of table that is simple to do like this, but it’s a nightmare for a 6 months project. This is the kind of report that a PSA Software can generate quickly.

Pros and Cons of a Resource Histogram

While resource histograms are very useful, they also have certain limitations. For one, it feels outdated and should have been automated long ago. But resource histograms do serve a purpose, and PMs continue to benefit from this simple but informational tool. 

Pros:

  • They allow users to compare and contrast data easily.
  • The data can cover a long period range (e.g., monthly or annually).
  • They have commonly used tools, and references are easy to find.

Cons:

  • It can be difficult to compare different categories because histograms work best with one dataset over a long period.
  • They can require a lot of file space just to display basic information.
  • They can present misleading or incomplete data if the parameters are not clarified in the first place. 

What can you do with a Resource Histogram?

Resource histograms enable PMs to do two main strategies: resource leveling and resource smoothing. 

Introduction to Resource leveling

Let’s say you discovered through your resource histogram that there are three days where the project exceeds the daily budget or time limit. PMs can then re-shuffle major activities to move some tasks to the days below the resource limits, leveling the playing field and avoiding strains on teams.

When to use resource leveling

Resource leveling basically ensures that resources are spread evenly throughout all the client’s projects. Here are some examples of when to apply this technique. 

  • To maximize resources. As we described earlier, projects can have multiple tasks, and companies can have various projects simultaneously. With resource leveling, PMs can ensure that resources are re-allocated as needed. 
  • To give teams work-life balance. For groups overworking or exceeding time limits, PMs can either bring in other employees to help or push back the timeline to accommodate incontrollable delays (e.g., experiments and test results). 
  • To manage client expectations and output quality. PMs can efficiently update their clients on how resources are allocated while maintaining the quality of every deliverable. 

Resource leveling examples

Here are more concrete situations where resource leveling works best:

Moving a project completion date.

Let’s say a user interface (UI) developer team is refreshing an e-commerce website for re-launch within the week. However, a bug fix has been delayed for a couple of days. Since it is very critical to ensure that all bugs have been fixed beforehand, the PM can choose to extend the deadline to the following week. To make up for the lost time, the PM can maybe tweak the due dates of some minor tasks.

Moving a project start date.

A large project is due to start by next week, but the requirements/specifications from the client are still not complete. The PM communicates to the client that since they don’t have all the needed information yet, they will have to start a few days later. The PM then gives the client choices on how they want to re-allocate resources to compensate for the lost time caused by the client’s delay. 

Short on staffing.

A team of software engineers got sick at the same time, and a project needs to be delivered to the client by next week. The PM can then re-allocate some of the engineers from the other projects that are not due yet to help out in the meantime.

Introduction to Resource smoothing

Resource smoothing is usually done after resource leveling. In leveling, the primary constraint is resources; in smoothing, it’s time or schedule. After everything has been re-allocated, PMs saw that there were still some workdays that exceeded the limit within the new plan. The PM can then re-allocate tasks and teams without major re-shuffles, particularly in critical activities. 

Want to learn more about Resource smoothing and leveling? 

When to use resource smoothing

Smoothing ensures that things are going according to plan and that the project won’t have any more significant shifts or scope creep. Here are some examples of when to use resource smoothing.

  • The project deadline is set in stone. PMs can look at their histograms and ensure that work hours and labor are evenly allocated across the remaining days/months.
  • The critical paths/activities are not going to be affected. As long as the main tasks are going along as scheduled, then some small re-shuffles (a day or two) will be fine.
  • Some minor activities can be paused within their timeframe. To make room for other more crucial tasks, some activities can be slightly delayed without much impact on the overall project timeline.

Resource smoothing examples

To better visualize how this technique works, here are some sample situations where resource smoothing works best.

  1. The project is due within the week, and the PM sees that everyone seems to be working overtime on Wednesday. The PM can re-allocate the excess work hours to the other weekdays to smooth out the schedule.
  2. A website banner is due for review on Monday, but the Design Manager is on leave and will return on Wednesday. The PM can pause the review until the manager returns. Fortunately, the manager will still be able to finish the task before the banner’s scheduled to release on Friday.

How to Build a Resource Histogram on Excel/Google Sheets?

First of all, it’s much more simple to use a project management software or a PSA software to manage those. But I know that some of you are still using excel for those report. Now that we’ve gone through the background and essential characteristics of resource histograms, let’s look at how we can build them. We’ll start with a relatively simple example. First, we need to create a table of dependencies on Microsoft Excel. For example, the table below shows the number of employees required per month.

Resource Histogram - Excel

Next, select the entire table, including the titles and headings, and click the Insert tab. Under Column, select the Stacked Column in 3-D (under 3-D Column). (You can also choose the 2-D version, but in general, stacked columns work best).

Generate Resource Histogram with Excel

Our table of dependencies should be transformed into this:

Resource Histogram - Excel Graph

Source: Watch the complete video from Eugene O’Loughlin on how to Create a Resource Histogram in Excel.

As we can see from this basic resource histogram, additional information can be included, like extending the months or adding more roles/employees. This way, PMs can immediately see the months where employees would be needed more (e.g., July-September on the sample histogram). The team can then prepare in advance for these periods, including hiring additional staff if required.

Another way to read this histogram is if there’s an employee limit. For example, the client only wants to pay for 10 employees max for this project. By referring to the histogram, PMs can choose to shuffle specific tasks so that they are performed in the first quarter or last quarter of the year, where resource allocation is much lower.

For more information on how to build resource histograms in Excel, you can check this video out.

Resource histograms can be simple to create but can give valuable detail. It all depends on how PMs want to use and adjust them to the project’s needs.

Are you interested in a resource management tool for your business?

You don’t need to be an excel wiz to do this kind of report. This is why a solution like Klient can help you out. If you want a resource management tool that’s automated, flexible, and highly customizable, Klient can build one to tailor it to the needs of your business. We can help you take control and manage staffing, and allocate tasks appropriately and intuitively.

We’d love to help you out. Schedule a demo with us.

Strategies To Encourage Employee Adoption of PSA

Strategies To Encourage Employee Adoption of PSA

So you made the decision to adopt a Professional Services Automation (PSA) solution for your organization? Great choice! But the work is not over. Once you’ve decided which PSA tool is right for your business, you now need to approach the implementation process strategically in order to unlock the full potential of the solution. That strategy must include processes and practices that will encourage employee adoption of the solution, since a tool is only as powerful as the people who wield it. 

Here are three strategies to ensure that the people who will use your PSA solution are not only excited about the new tool and eager to make use of it, but will also be equipped with the knowledge and training they require in order to use it wisely and maximize your investment into the product:

Get buy-in from your team early by outlining the benefits of adopting the new solution

In order to achieve wide-spread adoption and support of the new solution, getting employee buy-in right from the start of the process is key. Clearly identify and outline for your team the reasons why your organization is investing in this solution and how its functionality will be of benefit to them and help solve problems or challenges they currently face. 

Be sure to establish and share the business benefits you are expecting to achieve after go-live. This can include benefits such as achieving scalability, reducing overhead, or increasing business predictability.

Allow your team an opportunity to describe current challenges they face specific to their individual departments, and explain to them how they can use the new solution to help them overcome those challenges. 

Start by training a few select people on your team, and make sure you have representation from every department that will ultimately use the solution

Approach your implementation with a select team of employees that are excited to try out the new solution and that represent different stakeholders in your organization.

A PSA implementation team that includes stakeholders from only the services team, for example, will miss critical requirements from sales, resourcing and the back office, which will slow down adoption across the organization. If you run a consulting organization, involving someone who understands the needs of your consultants in the project planning will go a long way to ensuring consultants will use the tool when it goes live. Take time to understand who will actually be utilizing the tool and include representatives from those different areas of the organization in the actual implementation process so any potential challenges can be raised in a proactive manner.

Encourage feedback and check-in regularly with your team to address concerns

Once you’ve gone live with the solution, don’t just sit back and hope that your employees are adopting the tool to its full capacity. Schedule monthly check-ins where you sit down with various departments and ask questions about how they’re using the tool, where it’s benefiting them most, where it isn’t solving their challenges, how it could be used better, areas where they could use some additional training, etc. 

Doing so will encourage your employees to test new features of the tool and find new ways to use it, and they will trust that their feedback is being taken seriously and that the organization is interested in helping make their jobs easier by maximizing the effectiveness of the solution. 

Essential Ways to Improve Resource Utilization in Professional Services

Essential Ways to Improve Resource Utilization in Professional Services

Resource utilization is one of the key measures that services firms use to gauge the efficiency of their businesses.

It expresses what percentage of their time people spend generating revenue for the organization. Since the vast majority of resources in most services firms are salaried employees, that time not spent generating revenue is still costing the organization money.

Whether you’re the VP of services, a project manager, resource manager, or consultant, you should know that utilization is critical to your bottom line, and always look for better ways to track it and improve it.

Here are a few essential ways to improve resource utilization for your professional services business:

Have the right people for the right job at the right time

Being “resource-ready” is about more than just ensuring your employee headcount is large enough to handle influxes of work. It’s also about knowing you have the best possible resources, with a variety of skills and experience under their belts, to equip you to handle projects of all types and sizes. Having the right team on the right project at the right time is what truly drives success for services organizations. It’s a huge piece of what keeps projects on track, margins in line, and customers happy.

One way to improve this is by ensuring your sales and services teams are working with the same data, in the same system, from the same customer record, so everyone involved has a view of current customer projects, staff commitment, and pipeline. The sales team will know what service levels they can promise, while the services team can see what’s in the pipeline and build the right staff to deliver.

Track utilization using the right tools

If you’re still using spreadsheets to track utilization, the time to stop was yesterday. Resource managers can attest that nothing throws utilization off its axis quite like the chaos of managing resources, conflicting schedules, and a wide-range of billable rates. Not only is it extremely time-consuming to use spreadsheets to track utilization, but it also sets you up to make numerous potential errors that could be damaging to your margin tracking and profitability.

To improve utilization tracking, look for a powerful and modern professional services automation (PSA) solution that will make it possible to automate utilization tracking with speed and accuracy.

Don’t forget to track utilization against profits, too

Tracking utilization in itself is important, but at the end of the day operating a successful professional services organization will not be possible if your utilization rates are at an all-time high, but your bill rates are going down.

In the professional services industry, utilization and profitability are two sides of the same coin. It’s quite simple to optimize one at the expense of the other, at least in the short run. Discount your rates heavily, and your utilization will soar, but to the detriment of profitability. Overwork your people without investing in training and professional development, and you’ll see great resource utilization today, only to see major drops in profitability next quarter. Figuring out how to optimize both at the same time is one of the real keys to running a successful professional services business.

This is another instance where it pays to have sales and services teams on the same page with access to the same data.

Leverage a PSA solution built native on Salesforce to keep Sales and Services in sync

By unifying all the data related to your customers, projects, resources, financials, all in one place, not only does it make calculating utilization and increasing it easier, but it accounts for every detail and ensures that your sales team and services team will have access to the same data and be able to work together for the greater good of the organization as a whole.

One way to improve the synchronicity between sales and services teams is to leverage a PSA solution that is connected to your CRM tool, like Salesforce. A modern PSA solution connected to your CRM system has become a no-brainer when it comes to boosting your utilization figures. Leading industry analyst firms like Gartner, Services Performance Insights (SPI), and Technology Services Industry Association (TSIA), report that when organizations have a PSA solution integrated with a CRM, their utilization is 4% higher than organizations that don’t have the same system in place.

How PSA Fosters Improved Team Collaboration For Services Organizations

How PSA Fosters Improved Team Collaboration For Services Organizations

Services organizations depend on team collaboration for success.

Between connecting the Services team members themselves, to cross-departmental collaboration with other teams in the organization (Sales, Support, Accounting, etc.), to ongoing communication with the client, there is no shortage of people that need visibility into a project and its status.

A Professional Services Automation (PSA) software with functionality that fosters team collaboration can make it easier for Services organizations to support open communication with internal and external stakeholders throughout the entire lifecycle of a project.

Communication Among The Services Team Members

Services teams need to communicate and collaborate amongst themselves in order to manage projects efficiently and effectively.

PSA software offers features that make it simple for Services teams to create visibility within their department and increase communication. Some of these features include project management, resource planning, and time and expense management. A sophisticated Gantt chart with functionality including full inline editing, rapid task creation, drag-drop of task sequence, quick predecessor creation by wbs or task name, task scheduling directly from the Gantt, configurable columns display, split-pane, and much more deliver an exceptional experience for managing projects and ensuring teams are on the same page when it comes to project deadlines.

In addition, choosing a PSA solution that integrates with the tools that organizations are already using to communicate can drastically improve team collaboration. Integration with Slack for example, is becoming increasingly important for organizations selecting a PSA software, because it allows teams to manage projects and services directly from within Slack. A PSA like Klient Software, for instance, allows users to view projects and tasks, drill into project and task details including project profitability and financials, create new project and tasks, as well as enter time worked against projects and tasks directly from within Slack.

Communication Across Departments

The most successful services organizations also work hard to improve communication across various departments within the business. Repeatable project delivery success relies on close collaboration between the sales team, the project delivery organization, the finance function and the client. PSA provides a single, trusted platform to manage deal scoping, deliver projects and track financials that improves outcomes for all parties and builds stronger customer relationships.

A PSA built on Salesforce, for example, can boost communication and transparency between your Sales and Services teams. This can drastically improve project scoping and estimating. And, by integrating with various accounting and ERP applications, a PSA software can succeed in aligning the accounting department with sales and services as well.

Communication With The Client

Perhaps most importantly, communication with the client is imperative to driving repeat business and creating long-term customer relationships.

PSA software enables better client collaboration throughout the life of an engagement, significantly improving the likelihood of the project being delivered in line with customer expectations. PSA formalizes the process of engaging the services team in the sales cycle, which promotes confidence on both sides that the project will be delivered as sold. During the delivery of the project, customer communication can take place in real-time, quickly resolving issues as they arise.

Krow Software, recently announced survey functionality for their PSA solution which goes a step further in fostering collaboration between the project team and the client. With Krow PSA, you can now create and deliver project and customer surveys including NPS, CSAT, or free-form surveys to analyze client feedback and sentiment, learn from project engagements, and help build long-term customer advocacy to increase retention and expanding selling.

Why A Customer-Centric PSA Is Best For Team Collaboration

A Customer-Centric PSA is designed with customers at the core, providing a way for project teams to work with each other, and hand-in-hand with customers from sales through service delivery.

Klient PSA offers a modern and seamless customer experience, fully transparent communication between the project team and client to ensure alignment of expectations with real-time two-way communication, integrated customer feedback through survey tools and project health check statuses, and real-time integration with back-office systems for more successful project implementation and greater customer success.

The Top 5 Professional Services Metrics You Need To Be Tracking For Customer Success

The Top 5 Professional Services Metrics You Need To Be Tracking For Customer Success

The most mature professional services organizations and the ones who consistently deliver successful projects and foster long-term customer relationships, are those that offer high levels of organizational visibility across departments, have optimized business processes and integrated systems, focus on profit improvements, and have moved away from a one-time project focus to an increased emphasis on delivering great customer experiences for life.

These organizations have largely accomplished this by tracking 5 important and influential metrics for the professional services market. These metrics are not only imperative to a profitable business, but also critical in keeping customers happy through improved service delivery experiences. We recommend that all organizations who deliver projects to clients, start tracking these 5 key metrics immediately if you aren’t already:

1. Annual Revenue per Billable Consultant

Annual Revenue per Billable Consultant is a measure of a business’s total revenue divided by the number of billable consultants they employ. Understanding how much revenue each consultant is producing is a key indicator of financial success as well as consultant productivity, but it must be assessed in relation to labor costs. Revenue per billable consultant should ideally equal one- to two-times the labor costs of employing each consultant. Organizations with high annual revenue per billable consultant tend to do well because higher rates indicate better consultant productivity with respect to larger projects, more revenue in backlog, as well as more on-time and on-budget completions.

Tracking consultant productivity is key to improving customer success because you will have greater insight into when and how you should better utilize your consultants in order to improve their productivity and speed up project timelines and delivery.

2. Annual Revenue per Employee

Another core metric, Annual Revenue per Employee, is measured by dividing total revenue by the total number of both billable and non-billable employees. Similar to annual revenue per billable consultant, high annual revenue per employee is strongly correlated with profitability and efficiency. By measuring how much revenue each employee brings in relative to how much they cost, you can accurately determine the financial health of an organization. While not everyone on staff can provide billable services, it is important to be aware of the risks of too many overhead costs in relation to revenue per employee.

This metric can also be important for professional services organizations hoping to optimize business processes because business leaders can see departments where they may be spending too much money on employees, and can better re-allocate budgets to hire employees in areas that will make the business more successful. A successful business is one that has the right number of employees in each department in order to successfully manage client expectations and provide the support necessary to maintain loyal customers for life.

3. Billable Utilization

Employee utilization is defined by SPI Research on a 2,000 hour per year basis, and is calculated by dividing the total billable hours by 2,000. Utilization is central to accurately determining organizational profitability, as well as a key signal to expand or contract the workforce. By tracking work hours for billable employees, an organization can get a better picture of workforce productivity.

Your utilization rate tells you how much of your employees’ available time is spent on billable work. If this rate is too high, you likely need to add more resources. Too low and it means that you’re not bringing in enough work.

Tracking this metric can help you improve customer success because overworked employees are often tired, unhappy employees, and may even become so rundown that they are unable to perform to the best of their ability. On the other hand, underworked employees may become bored or uninterested in their work which can also affect the quality of the work they deliver. Both of these circumstances can be damaging to your organization’s reputation if the work your employees are performing does not measure up to customer expectations.

4. Project Overrun

Project overrun is the percentage above budgeted cost versus the actual cost of a project. This KPI is important because anytime a project goes over budget in either time or cost; it cuts directly into profitability. Whether a project goes over in either budget or allotted person-hours, it can limit future work and in many cases reveal internal efficiency or management issues, which also negatively impact bottom-line results. Project overruns are also detrimental to client satisfaction and even incoming sales opportunities.

By tracking project overrun, you can identify which projects are consistently going over budget, and identify ways to improve internal efficiency in order to manage projects better and stay on schedule. This will greatly improve your number of projects delivered on time, on budget, and to your customers satisfaction.

5. Profit Margin

Profit margin is the percentage of revenue which remains after paying for the direct costs of completing a project. Keeping profit margins high is essential as it ultimately drives overall revenue. Poor financial performance can often be directly correlated to low profit margins, as organizations are no longer able to invest in future growth activities.

An organization that has revenue to invest in the future growth of the company is one that can remain innovative, continuously enhance and improve their product or service, and foster long-term relationships with their customers. Tracking profit margin is therefore crucial to the ongoing success of a professional services organization.