+++ How to Consistently Carry Out Your Service Projects – from Quotation to Invoice +++
By Johann Strasser Read article in German
When managing service projects, you already know that projects in this sector differ from others in many ways, for instance:
- The customer defines the project start
- Monthly accurate invoicing is essential
In this article, you will find out how to handle these factors. You will learn what to focus on and which steps to take in order to guarantee a smooth handling of your service projects.
1. The Customer Determines the Start
Your sales pipeline contains projects that are interesting to your service company. Nevertheless, placing the order depends on the customer’s decision. Hence, you usually need flexibility in starting the project.
With many parallel offers, you are up against many demands in terms of estimating the probabilities of commissioning as well as juggling with the necessary resources – always depending on your customers’ decisions.
2. Monthly Settlement
With service projects, you need to send regular invoices to your customer. Regarding the cash flow, this should happen as fast as possible, of course. With big projects, the speed of payment can even be a question of survival for your company.
To get it right, you need a working process such as the following:
- The project manager allocates order numbers or order positions to tasks while planning in the project and portfolio management system (PPM).
- The team members enter their actual hours as proof of performance regularly (daily / weekly).
- The project manager verifies the actual hours and approves them.
- The project manager makes a monthly report. This serves as a template for payment with all actual hours according to the order positions.
- The monthly statement should be provided for the accounting department in the ERP system as soon as possible.
- The accounting department creates the invoice based on the monthly report and sends it out with the proof of performance from the ERP system.
It is important to execute the entire recurrent process chain quickly every month. In the following figure, you will clearly see the complete process from entering the actual hours to payment.
Other Particularities and Tips
Besides the characteristics mentioned above, there are other aspects to consider with service projects. Here are some important tips:
- Please ensure that your schedule is well structured and updated according to the supplies and approvals by the customer – for easier project management.
- Agree an internal budget with the project manager, as he or she was not involved in the selling price.
- Determine the internal budget according to the supply packages – also with lump-sum orders.
- Please always distinguish between billable and non-billable services in the project plan, in order to control the billing all the time.
- Travel times and expenses should be listed separately. Please decide if they are billable or not.
- Please provide your customer with detailed proofs of performance including comments, so that the single positions on the invoice are clearly understandable. These comments can be ideally placed, when entering the actual hours.
Forward Planning in the Project Portfolio
As already mentioned, your customers determine the start of contract projects. Thus, you need a flexible, forward reservation of the resources even before the offer phase. This is an essential basis for a successful project.
These are your benefits from a professional portfolio planning:
- Knowing how many new projects you can be start and what you can deliver in addition
- If you can immediately detect bottlenecks in commissioning and resources, you can react according to your corporate strategy
Well-balanced benefits and contributions are important. If you really plan all projects in detail during the quotation phase and also allocate the resources exactly, but the project is not going to be commissioned, the planning was for nothing.
On the other hand, if you do not plan in enough detail and the project is going to be commissioned and you lack the necessary resources, this is not a good precondition for a successful project either.
It is a matter of optimizing your project conditions properly – as roughly as possible, but as detailed as necessary.
Multi-Project Management with Microsoft Project
Many companies still work with the desktop version of Microsoft Project. But approximately 20 projects is the threshold at which the portfolio is no longer easy to control without the server version.
Note: Are you still without a Server? Find the reasons for Microsoft Project Server / Online here.
What follows is a short excerpt on the topic of multi-project management with Microsoft Project Server and Project Online. This technology will store your projects in the database of the Project Server instead of storing them as files. A central resource pool is also available as well as the actual hours of the team members.
Therefore, Project Server is a very good foundation for multi-project or program management. In flexible scenarios, which are often necessary in service projects, it shows a few weaknesses, however.
Some of these weaknesses are:
- There is only one project version on the server.
- The projects are not directly movable in the overview, e.g. by drag and drop.
- There is no combined multi-project view with bars and resource histogram.
But additional tools can can compensate for these weaknesses really well.
- Differentiation between ongoing and planned projects.
- Various resource histograms for different teams.
- A graphic display, in which you can identify overload from ongoing and planned projects.
- Option to easily move whole projects on the timeline by drag and drop.
- Option to save various scenarios to coordinate them with the decision-makers.
In the resource histogram, you can see the capacities of several teams in a single view, including the difference between ongoing and planned projects. By moving the project bar using drag and drop, you can manage the overloads quickly and easily.
In this way, you have planned the situation of your coming projects in a simple way, so that in case of commissioning you could conduct them with an optimized resource capacity.
Planning Data for Proposals
Your sales team will create offers for service projects in the related CRM and / or ERP system. Ideally, all information regarding structure, contributions and costs of the project will come from the PPM system right at the beginning.
With the help of a fully-integrated environment, the process will run as follows:
- Transferring the master data of chosen sales options into the PPM system
- Project planning as a basis for the proposal in the PPM system
- Transferring the structure from the PPM into the CRM / ERP system
- Transferring the plan values from the PPM into the CRM / ERP system
- Creating the proposal with valid planning data in the CRM / ERP system
Step 1: Creating the Projects with Master Data
The figure below shows how to proceed when creating projects, e.g. from a SharePoint or CRM system. First of all, the project will be set up in the ERP system, in order to be allocated a project number. Afterwards, the project will be created in the PPM system, while transferring all other header data at the same time. In this way, you ensure a correct allocation across all systems in an automated way.
Step 2: Structural Alignment between the PPM and CRM / ERP Systems
Having planned the project, you can automatically define which parts of the plan should be created in the ERP system using the integration tool. This gives you a rough outline of your proposal as well as the basis for payment later on.
Step 3: Transferring the Planning to the Sales Team as a Basis for the Proposal
The proposal structure and the later payment in the ERP system are complete. Now the plan values of appointments, work and costs will be transferred into the ERP system. The synchronization happens fully automatically with one click. Your sales team now has everything it needs from the project plan to create a firm proposal.
Actual Contribution for the Payment
After the commissioning of the project, you need a reporting process with which the actual contribution can be recorded and paid regularly. In most cases, payment will be provided every month and has to happen quickly. The most important conditions are a closed tool chain and a well-established process, through which you can guarantee a smooth procedure.
Note: Please be aware of the fact that the process will probably never really work without permanently “pushing” people. There will always be people who are on vacation, ill or somehow not available or tied up with business, so that they could not report in time. It is the responsible person’s duty to control the process and remind them regularly.
Microsoft Project Server and Project Online offer the opportunity to record the actual hours in the Project Web Access by the team members and to get them approved by the project managers. Through the suitable system integration your updated project information from Microsoft Project Server can be transferred to your ERP system. On that basis, your accounting department is enabled to easily generate accurate invoices within a very short time.
Like this, you can also proceed with invoices from external co-workers. The ERP system will send them to the project manager, who will retransfer the costs after approval with a simple click.
The advantages of system integration for payment in brief:
- Transferring the actual hours to the accounting department as the basis for payment
- Transferring the actual costs to the project manager to pilot the project
- No double data entry
- Timely provision of data
- High data quality
Conclusion – How to Manage Service Projects in a Successful Way
In this article, you have learned which factors and particularities are important for carrying out your service projects and which measures and processes will lead to success.
You are now aware that:
- Service projects differ from other projects in the sense that customers determine the project start and monthly payment is essential.
- Proactive planning of the project portfolio is the basis for your successful project management.
You now know the process for billing and have also received valuable tips for internal processing.
In addition, you have learned how to consistently manage your service projects with suitable solutions and thus make them significantly more efficient:
- Microsoft Project Server and extensions help you to optimally manage your resource capacities.
- And: with a fully-integrated environment (with a smooth data transfer between PPM and CRM system) you can handle offers and invoices much more efficiently.
What has been your experience in service projects? What are your recipes for success? We really appreciate your comments!
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