How much are unsuccessful online projects for the studio?

In the sector of intellectual work, in particular in the field of web development, failure projects are quite common. The subjective and human factor in our area is so high that the probability of failing a project is often higher than the probability of successful completion. Causes and perpetrators may be completely different. From an inexperienced manager to a too picky customer. As a result, for the one and the other side, the final is a huge loss. Why huge?

Unsuccessful project for the studio

Consider the possible costs of the studio with increasing neglect of the project. Description cited for projects with budgeting on a fixed-payment model.

The cost of the sale. Projects in the middle and high price range suggest fairly long sales. Sometimes, before concluding an agreement, you have to travel several times to the negotiations with the client, take part in the discussion of the graphic idea, options for technical implementation ... in general, show the client their readiness to solve the problem professionally. Almost no one considers these preliminary costs, but often, already at the stage of concluding an agreement, the planned budget of the project can be exhausted. Naturally, no one stops at this work, because so much time has already been spent, not to refuse.
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Final tuning costs. Projects have the properties of “failing” in the final stages of each of the stages. As a rule, at the final stage, it turns out that the client was expecting one, and the developers assumed another (you can’t register everything in the contract). The client is not ready to additionally pay for work that he expected to receive under the contract, and the manager cannot go to a meeting in a minus project. The tuning bickering time is present in almost all projects, and can be comparable in duration with the duration of the entire development. It is good if everything ends successfully at this stage (although this cannot be called successful, since it is no longer necessary to count on long-term cooperation in such cases). Even worse, when everyone goes to the principle and begins to clarify the relationship.

The cost of finding out the relationship. Stage of breaking the contract. At this stage, the leaders of both sides come into play, correspondence rises, meetings are organized, in an attempt to find the truth and agree. The team is expanding, and the total project time is growing. With the connection of directors - the cost of studio expenses is growing exponentially.

Total On average, according to the experience of any projects in view of the above, the time of the unsuccessful project (in hours) is 4 times longer than the successful one. So instead of one “failed” project, we could make 4 successful ones. What does this mean in money?

Unsuccessful project for the studio in numbers

Consider the alignment in the average web studio, which makes 4 projects a month worth 150 thousand rubles a month. Take a period of 4 months and see how much “failed” projects cost to the studio. All data is averaged for ease of calculation.

Alignment 1. Everything is done on time. In this case, 16 successful projects have been completed in 4 months. Provided that all projects are made on the scheduled date and profitability is 33% (50 thousand from the project) - we get the maximum possible profit of 800 thousand rubles.



Alignment 2. One project was delayed by a factor of 2, but we received payment. In this case, we lose almost 20% of the maximum possible profit in 4 months.



Alignment 3. The project failed and we did not receive payment, or received partially. In this case, we did not receive 75% of the possible profit in 4 months! 4 months of vain work.

The second “failure” project for an average studio, which makes 4 projects per month for 150 thousand, is likely to be disastrous, since already incurring direct losses.

The calculation takes into account only financial losses and lost profits. There it is worth adding the lost recommendations (well, if they are simply lost), a decrease in the overall satisfaction of employees, a decrease in motivation, etc.

You can try variations with different prices and different number of projects - this does not change the situation. Tightened deadlines and failed projects are huge losses.

findings

• Profit and timing are very closely related. Delaying the deadline carries a lot more losses than it seems at first glance.
• Think about the importance of your managers. They can take the company to the leaders, and can ruin it in two accounts.
• You should not take up non-standard projects for you, especially if, in addition to money, they do not carry development in the direction that you have taken for yourself as a priority.
• Use project management techniques aimed at the timely execution of projects.
• It is necessary to remove the dependence of your budget on a small number of projects.
• If possible, work using the hourly rate system.

The above observations were one of the reasons for us to focus on typical solutions, to develop a conveyor production technology, significantly reduce production costs and throw all our efforts into offering our customers high-quality results as soon as possible. Not completely, but we managed to reduce the risks and increase the percentage of successful projects.

How we achieved this, I described in the articles “12 000 rubles for a site. Is there a business outside the Moscow Ring Road? ” And “ Optimization of web-studio work. Application of the theory of restrictions in the production of sites "

I wish you all successful projects!

Vasily Churanov and the web-canape team