Applying Project Management principles to Agencies

This is the latest of a series of blogs about the importance of project management and operations for agencies. To check out the others have a look at our blog page.

Ad agencies must recognize that they are project-based businesses. We are not saying that they can’t be creative as that is fundamental, but they are businesses that need to sell enough work to cover all their costs and return a profit. Once they recognize that, they can start applying project management principles.

It is important to understand these principles because many people (this also applies to people outside the industry) don’t understand them. Most people fall into two broad categories:

The over simplifiers

They believe that project management is managing a timeline and making sure that everything is done on schedule. “As long as you know how to manage excel, MS Project, Smartsheet (just fill in the whatever software tool you use) then you can manage a project. If only it were that simple.

The over complicators

This group may have had some negative experiences with projects. They may have had some projects go terribly wrong because they:

Ran over budget
Missed crucial deadlines
There were errors in the delivery
There was no control of revisions etc.
And so on

A lot of people in this group work in advertising.

The fact of the matter is that project management is a simple discipline, but not as simple as managing a schedule. What ‘complicates’ it is a lack of understanding. A good project manager is skilled at identifying and juggling 6 constraints. These are as follows:

Cost

The project needs to be delivered to the client budget. You will see that all the constraints are interlinked, meaning that the scope of the project (see below) needs to fit the client’s budget. This is a big challenge for agencies, especially when they are pitching against others, but you must avoid cutting the hours/resources out of an estimate to win it. The correct way to do this is to clearly show a discount. This is not just internally but also to the client.

We have worked in agencies, so we know that the temptation is to cut the estimate to meet the client’s budget and hope that nobody notices. The problem is that they do notice…… when it’s too late and the project is making a loss. Worse, the client thinks that you delivered at a lower cost so will expect lower costs going forward.

Time

This is where the time schedule comes in and is an important part of project management. It should be prepared in conjunction with the scope as the time required will depend on what is being delivered, the number of revisions, etc. Of course, it helps if you have a tool that has all the dependencies that show the impact of changing various dates/milestones.

Resources

The project manager will typically work with the resource/traffic manager to ensure a plan is put together and that the correct resources are allocated to work on the project. For example:

Who will work on the project?
What skills and experience do they need?
Does the agency need to bring in freelancers?
Etc.?

This is where a decent tool helps to make sure that the resources are available and have the right skills for each part of the project.

So far, we have covered the ‘simpler’ constraints. The management of the next 3 constraints separates great project managers from the good ones.

Scope

A project is defined as “a temporary endeavor undertaken to create a unique project service or result.” Projects are temporary and close down on the completion of the work they were chartered to deliver.”*

You should be able to see a few clues as to why its scope is so important. Firstly, the project has a result or outcome that everyone is working towards. Secondly, a project is temporary and has some work that was chartered/agreed to be delivered.

If the outcome of the project or the work ‘chartered to be delivered’ is not clearly defined, then it is impossible to say when the project should be ‘closed down.’

Translating this to this to agency terminology we say: The project is doomed to fail if the scope agreed in the brief and client estimate is not clearly defined and signed off by the client.

Quality

This constraint is rarely covered when it comes to ad agency projects. This is because there is an assumption that they need to deliver top-quality work to clients, whatever the circumstances. This can be easily demonstrated by asking the following question:

What would you do differently for a client with an ad budget of $60k vs $50k?

If the agency struggles to articulate the answer, then you know that ‘quality’ is an issue. The quality constraint works against the others. For example:

If cost is a constraint, then quality needs to be flexible
If time or the skills of resources are a constraint, then quality may be impacted

Risk

We typically get blank expressions when we ask agency PMs to explain how they manage risks on their projects. It’s just not something that’s considered at all! The definition of a risk is “an uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives.”

We’re not going to bore you with the details of “known unknowns” and “unknown unknowns” but the risk of every project should be evaluated during the project duration. These can be simple things like:

Identifying the critical events that may cause the project to be delayed.
Reviewing similar projects to see how likely this one is to meet the target
Identifying key resources to the success of the project

Once these risks are identified, they need to be addressed. You should decide whether they are going to be avoided, mitigated, transferred, or just accepted. Again, we won’t go into a lot of detail in this blog, but we can write another one if you’re interested in reading more.

You must be comfortable with the management of all 6 of these constraints to be able to apply Project Management principles in your agency. You need to understand how they are interrelated and incorporate these into your agency’s operating procedures. Well, that’s really the job of the PMO.