When creating the business case to implement enterprise project management tools such as Primavera P6, there are many savings that are often not taken into account. The list below is not meant to be exhaustive, but can be added to the list of savings that you may already have in preparing your business case. A stronger business case with an improved ROI not only creates additional savings, but also can lead to additional funding opportunities for an enterprise project management implementation.
Quite often, as an organization starts reaping the benefits of their enterprise project management system, additional savings can be had in out years as the organizations project management matures further.
You can extrapolate all of the estimated costs below out to an annual cost to utilize in a business case. Here’s some tips for calculating ROI for project management tools.
1. Opportunity Cost – Late Delivery of Strategic Projects
- Delayed mission critical projects cost significant revenue opportunity and market share
Costs: Estimated strategic revenue potential per month and loss of market share
2. Reduced Management Time Fire-Fighting
- Better control and timely information equates to less time wasted handling problems
Savings: Estimated management hours spent
3. Cost of Overtime
- Improved planning and control will mean less overtime scrambling to meet deadlines
Savings: Average overtime hours per week
4. Cost of Increased Contractor staff
- Due to not optimizing internal resources
- Avoid the last resort of throwing contract bodies at the problem
Savings: Average cost of increased contractor staff
5. Cost of Project Failure
- Plan projects better
- Spot issues earlier
- Take corrective action sooner
Savings: Estimated cost of project failure rate improvement
6. Cost of Over-Committing Resources
- Staff attrition due to burnout
- Recruiting costs
Savings: Ramp-up time and recruitment costs
7. Cost of Information Inaccuracy – Cost Overruns
- Decisions based on inaccurate data lead to cost overruns of projects
Savings: Estimated percent overrun improvement per project
8. Reduction of Redundant Work
- Reduced duplicate effort and improved focus on priority projects
Savings: Estimated staff hourly savings and headcount reduction
9. Reduction of Re-Work
- Work quality improved through standard processes and access to reference documents in Project Plan
Savings: Estimated percent time savings in hours
10. Productivity Cost from Mismatch of Staff Skills to Requirements
- Roles and skills required are inherent to the plan and mismatches are avoided
Savings: Percentage of staff affected
11. Reduced Status Meeting Time
- Meetings are more focused with concise information on project/portfolio and resource status information
Savings: Estimated number of staff hours saved per meeting
12. Information Gathering Time for Status Meetings & Reports
- Meeting preparation is much easier, faster and reports focus on areas of concern
Savings: Estimated hourly time spent in information collection and preparation
13. Increased Productivity Based on Consistent Practices
- Gartner equation
Savings: 1% of hours per year times number of personnel times the hourly rate
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