According to a study, only 2.5% of companies are successful in their projects.
We’ve prepared a list of 5 real-life critical project success factors that will help you see the difference between good and bad in project management. If you want to take a closer look at each of them, keep on reading!
Definition of Project Success Factors
Contrary to popular opinion, project success factors are not some vague ideas. In fact, they can be easily defined as parts of the projects that directly impact the final result.
As you can see from this definition, critical success factors highly depend on the project and must be redefined whenever a new operation begins.
However, particular project success factors can be defined by the deliverables included in the project. 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 the main objective. What are the most common project success factors, and how can project managers improve them?
Profitability
The definition of “good profitability” varies depending on the industry — some companies are happy with just a few percent of profit margin, while others wish for margins of over 60%.
These numbers also differ depending on location and are, of course, subject to change.
However, as we discuss the typical critical project success factors for the professional services industry, we will focus on their profitability here.
What is good profitability?
Based on our experiences, the profitability rates for professional services 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, the more successful the project.
How to Improve Profitability
If your project profitability leaves much to be desired, a project manager can improve it with various processes. These include:
- Cutting costs by, for example, outsourcing or using cheaper team members.
- Expanding your offer to find a 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 projects to find the project scopes that tend to bring more money to the business.
- Creating more accurate allocations in the project planning phase, which is particularly important for fixed-price projects.
- Careful allocations of employees and/or team members based on their experience, cost, and profit rate.
- Bill the customer for working days instead of tracked hours in time and material projects.
Naturally, providing 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 overtime can turn the opportunity into a loss of money. That’s why accurate estimations are so important.
How to Create Estimates for Working Hours
To correctly estimate the number of hours needed to complete a project, a project manager needs to create an exact plan. In most cases, it should include:
- A list of resources and employees necessary to complete the project.
- A detailed schedule of the project.
- Information on the technology 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.
Estimates for Working Hours: Practical Approach
Of course, the estimate is not enough by itself — after project launches, you also need to make sure the plan is being put into practice. To do so, we recommend using time tracking and advanced reports.
Tip: To achieve up to 95% estimation accuracy, map all key phases of your projects and analyze the time that your specialists have historically spent to deliver them. By taking the average number of hours and understanding why it took that amount of time, you will be able to estimate future projects and their phases with incredible accuracy.
Risk Management
If you have been working for a services company for quite some time, you certainly know that almost no projects are executed exactly as planned. Still, there are several things project managers can do to ensure that the plan will be completed faster — and risk assessment is one such critical project success factor.
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. This should be the base for further risk management.
Use resource management software like BigTime — 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
Clearly Defined Project Goals, Responsibilities, and Accountabilities
Are all your project tasks ready? Sadly, that’s 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.
These are all critical success factors a project manager needs to consider. Such a plan should also include stages, due dates, managers, milestones, and more.
How to Determine the Key Objectives for the Project
Sound complicated? It is — but it’s 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 schedule, losing money, or even losing the customer altogether.
Effective Communication
Endless meetings, emails with infinite threads, and conversations that seem to have no end — as despised as these things might be, they are all part of efficient communication, which is one of the success factors in a project.
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.
How to Improve the Effectiveness of Meetings and Communication
How can you make meetings as effective as possible? In our experience, one of the biggest time consumers is that every stakeholder has a different perspective and input.
To save time, you should have a single source of truth about your projects, resources, finances, and general project management. Thanks to that, everyone can be up–to–date, see actual data, and think about solutions rather than trying to merge different disconnected spreadsheets or data during the meeting. Your time and energy are among the most important assets.
Thanks to that, you can check a person’s availability, monitor projects, and manage operations without calling your colleagues every few minutes and wasting time ensuring the data is correct. Instead, you can focus on finding solutions and removing any obstacles to delivery.
Management Support
Even with the best of plans, programmers and testers cannot complete a project independently. That’s why 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 — one person responsible for the project as a whole.
The management 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 previously mentioned, project success factors are different for every project. While some stay the same in all cases, 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 need to complete to be successful.
- Create an outline of the project management plan. Define the main deliverables, divide them into stages and tasks, and determine 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, minimum viable products, 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 become a part of your victory.
Why are critical success factors so important?
Critical success factors are not just another list you must make before launching a project and never look at them again.
They are the backbone of the project plan. That’s because they can serve as a roadmap for critical objectives and key tasks that must be completed for the project to succeed.
Apart from that, project success factors can also minimize risks related to the project. Since they are 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, which are responsible for most project failures.
