Estimating and Budgeting Accurately in the Professional Services Industry
Estimating and budgeting are key factors when taking in new business as a professional service company failing to do so can be a painful and costly mistake.
An estimate involves a variety of dynamic factors that make it difficult for a professional service individual or company to accurately estimate the amount of time and effort that must go toward a project. Since each project is unique, there is not a one-size-fits-all estimating and budgeting formula. Instead, project managers and professional service representatives need to look at the full scope of the project and estimate based on its unique properties.
Underestimating: A Common Problem
Professional service providers often underestimate their projects; thus leading to significant losses or project shortcuts to mitigate losses. Some common reasons underestimating occurs can include:
– Unfamiliarity with the industry or project equipment required.
– Client is demanding an immediate estimate
– There is too much “grey area” in terms of the time required for the project.
Professional service providers are under pressure to offer competitive estimating and budgeting for new clients. With all of the “service-match guarantees” out there, service providers have a need for cash revenue quickly, which trumps the requirement of making sure they’ll profit in the long run off their shot-gun estimate. By identifying and overcoming the common estimating and budgeting issues, service providers can bypass the underestimating barriers and increase estimating accuracy in the future.
The Solution
Professional service providers new to the industry still have options when it comes to accurately estimating their projects. The development of new software applications allow professional service providers to track their time on previous projects, project future cash flow and accurately forecast expenses for projects based on purchases they’ve made or product research they’ve completed. By implementing the right type of estimating and budgeting software, you can create more accurate estimates for clients- including those who demand an estimate on short notice!
To learn more solutions for Professional Services challenges, view this 30 minute On-Demand webinar or contact SBS Group for more information.
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