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Project success factors - definition
Contrary to popular opinion, project success factors are not something vague. In fact, they can be easily defined as parts of the projects that have a direct impact on its final result.
As you can see from this definition, critical success factors highly depend on the project, and they have to be defined whenever a new operation begins.
However, particular project success factors can be defined by the deliverables it includes. Deliverables in this case are key objectives, requirements or milestones that have to be completed for the project to move forward.
What are the most critical project success factors? Examples
Projects may vary, but their success is, in general, very objective. What are the most common project success factors, and how can project managers improve them?
Profitability
The definition of good profitability may vary depending on the industry - some companies are happy with just a few percent of profit margin, while others wish for it to be over 60%.
These numbers differ depending on the industry and location of the company, and are, of course, subject to change.
However, as we discuss the critical project success factors typical for the service industry, we will focus on their profitability here.
What is a good profitability?
Based on our experiences, the profitability rates for IT industry, marketing and other similar businesses can be divided into the following categories:
- low profitability - below 20%,
- medium profitability - between 20 and 40%,
- good profitability - between 40 and 60%,
- excellent profitability - over 60%.
Of course, profitability can be calculated differently depending on the billing type chosen for the project. Still, generally speaking, the higher the profitability is, the more successful the project is.
How to improve profitability?
If your projects' profitability leaves a lot to be desired, a project manager can improve it with a variety of processes. These include:
- cutting costs by, for example, outsourcing or using cheaper team members,
- expanding your offer to find the niche in the market and attract new customers while increasing prices. To do so, you may consider analyzing the market trends regularly.
- keeping track of the profitability of different types of projects to find the project scope that tend to bring more money to the business. Of course, you do not have to do that manually - to do so, you can use Primetric’s profitability reports.
- creating more accurate allocations in project planning phase, which are particularly important for Fixed Price projects,
- careful allocations of employees and/or team members based on their experience, costs, and profit rates,
- bill the customer for working days instead of tracked hours in Time and Material projects,
- and more - take a look at our article on how to improve the profitability of a service company.
Naturally, providing the customers with exceptional services should be a base for all of these processes!
The right number of working hours spent on the project
In many industries, working hours are the main source of both costs and profits for the company.
As a result, they are also a critical success factor for project management. However, incorrect estimations, benches or overtimes can turn the opportunity into a loss of money. That is why accurate estimations are so important.
How to create estimates for the working hours?
To correctly estimate the number of hours needed to complete a project, a project manager needs to create its exact plan. In most common cases, it should include:
- list of resources and employees necessary to complete the project,
- detailed schedule of the project,
- information on technologies and software required to complete the project,
- your desired profit margin,
- key performance indicators.
To ensure greater accuracy, we encourage you to use one of our best practices, the ETC - Estimate to Complete, to create realistic plans for your projects. Its in-depth approach makes it easier for you to plan work. You can also see how Capco, one of our customers, has achieved 90% accuracy in its projects.
Estimates for working hours: practical approach
Of course, the sole estimate is not enough - after project launches, you also need to make sure that the plan is being put into practice. To do so, we recommend you to use time tracking and advanced reports - for example, the Project Progress Report available in Primetric.
Hint: To achieve up to 95% estimation accuracy, just like Capco did, map all key phases of your projects and analyze historical time that your specialists spend to deliver them. By taking an average number of hours and understanding why it took such an amount, you will be able to estimate future projects and its phases with incredibly accurate estimates.
Risk management
If you have been working in a service company for quite some time, you certainly know that there are almost no projects that are executed exactly as planned.
Still, there are several things project managers can do to ensure that the plan will be completed sooner than later - and risk assessment is one of such critical project success factors.
How to assess risk in the project?
First, start a project with an extensive risk analysis. Find any tasks, stages or operations that may go wrong, and prepare a plan to tackle those risks, should they appear in your case. They should be the base for further risk management.
Secondly, do not leave that risk analysis somewhere deep in your drawer. Use the tools you have - preferably Primetric - to monitor the progress of your project and spot the risks before they become a major problem.
To do so, you can use features such as:
- regular project progress reports,
- time tracking reports,
- business intelligence - i.e. for monitoring spendings,
- smart alerts, such as RAG status available in Primetric, showing the project status with colorful dots visible on the project list. RAG Status will inform you whether your project is within the budget and are there any delivery issues, making the project management much easier. Thanks to that, you can quickly react before it’s too late.
Clearly defined project goals, responsibilities, and accountabilities
Are your Jira tasks ready for the project? We are sorry to tell you that they are not enough to define project goals and find people responsible for them!
Before you launch the project, you need to:
- precisely define all deliverables,
- determine the tasks required to complete the deliverables,
- assign people responsible for their execution.
They are all critical success factors a project manager needs to keep in mind. Such a plan should also include stages, due dates, managers, milestones, and more.
How to determine the key objectives for the project?
Sounds complicated? It definitely is - but it is also necessary to avoid unnecessary risks and deliver the project on time, with all its key features on board. Without all of those variables in place, you risk your team members falling behind the schedule, losing money, or even losing the customer altogether.
Still, we need to answer the question: how to include all of these variables in your plan without getting lost in all the information?
We recommend using project scheduling software. With its features, project managers can flexibly manage their resources, stay within the budget and monitor the execution of the project without calling all its managers to your office.
Effective communication
Endless meetings, e-mails with infinite threads, and conversations that seem to have no end. As despised as they sometimes might be, they are all part of an efficient communication that is one of success factors in a project.
Their meaning is more than obvious: they allow interested parties and team members to exchange information, monitor their work and react to any problems that need to be addressed. In other words, they are one of the best practices for project management.
However, does the communication still have to take so much time?
Communication vs modern environment
The answer to this question is no. In fact, in the world full of new technologies, you can exchange information in a much more seamless way - and without calling every party into a small, crowded room where you can engage in lengthy conversations.
And don’t get me wrong - meetings are crucial for smooth cooperation, but… only the effective ones!
How to improve the effectiveness of meetings and communication?
So, how to make meetings as effective as possible? From my experience, one of the biggest time-consumers is that every stakeholder has a different perspective and input knowledge.
To avoid that, you should have a single source of truth about your projects, resources and finances, as well as project management in general. Thanks to that, everyone is up-to-date, can clearly see actual data and think about solutions rather than trying to merge different spreadsheets or data not connected with each other during the meeting. Your time and energy are one of the most important assets.
Tools such as Primetric allows employees, project managers, and executives to gather the information on a company's activities in one place and share it in the real time.
Thanks to that, you can check a person's availability, monitor projects and manage operations without calling your colleagues every few minutes and waste time ensuring that the data is correct. Instead of doing that, you can focus on finding solutions and remove any obstacles in delivery.
Management support
Even with the best of plans, programmers and testers cannot complete a project on their own. That’s why the management support is present on our list of critical success factors.
However, do not confuse management support with micromanagement! For a successful project, management support should be represented by a single voice of one person responsible for the project as a whole.
The managemental input should also be visible whenever things go sideways; people in charge should always step in whenever a conflict is about to begin.
How to identify other critical success factors in project management?
As we concluded before, project success factors are not the same for every project. While some stay the same all the time, others may differ. To find the right ones for your current operations, you need to:
- Identify project requirements. If you discussed the project with the customer, you are probably way past this step. If you haven’t - do that now and define all the main objectives your operations needs to complete to be successful.
- Create an outline of the project management plan. Define the main deliverables, divide them into stages and tasks, and figure out what resources are required to complete them on schedule.
- Choose milestones. Based on the information you have gathered in the previous steps, identify key actions that need to be taken or metrics that need to be achieved for the project to be successful. These may include dates, deliverables, MVPs, new hirings, and more.
- Use project management software to evaluate your plans. Make your project success factors a part of your operations. Include them in schedules, monitor them, and ensure that they really become a part of your victory.
Why are critical success factors so important?
Critical success factors are not just another list you have to make before launching a project and never looking back.
In fact, they are the backbone of the project plan. That is because they can serve as a roadmap for critical objectives and key tasks that need to be completed for the project to be successful.
Apart from that, project success factors can also minimize risks related to the project. Being defined individually for each project, they reflect its approach and goals, setting a clear path for both specialists and their managers.
Finally, critical project success factors can help managers stay on top of budgets and deadlines that are responsible for the majority of project failures.
What tools should I use to successfully deliver a project?
The ones that provide you with all the information you need, including finances, resource management and project management.
If you’re about to start looking for such a tool, let us stop you right there - Primetric has everything you need.
Book a demo, talk to our advisor and see what else we can do for you.
