Have you ever had that project or account that you just had to have? One that, for some reason, you saw as a make-it-or-break-it client initiative. Do you have a ‘succeed or die’ mentality? It’s probably a good thing if you don’t.
I realize there are times when we say, “I need to get that business or I may be in trouble.” That’s the nature of business. As an independent consultant, I’ve reached that crossroad a few times….I’m sure most consultants do. But do you go at it with that win-at-all-cost mentality? Or do you get creative? I vote for creative. A CEO of one company I worked used the win-at-all-cost approach….and it was not successful.
The organization I was working for was a small professional services company located in the Midwest; I was responsible for leading and growing the staff in Las Vegas. I was responsible for leading projects for one of their gaming/hospitality clients and as well as leading a project to perform a complete re-write of the software system that basically ran a local Las Vegas hospitality firm’s entire organization.
For the software re-write, we determined that the software would need to be completely abandoned as it had become a bad patchwork of software and add-ons. For some reason, our CEO wanted the contract badly and bid accordingly – low enough to win the business. However, we were much smaller than our well-known competition causing the client organization some anxiety. The client CIO felt that we would likely introduce change order after change order to recoup the revenue we were giving up in our winning bid. So our CEO pulled out the showstopper…he guaranteed one price (which was in the $1 million-plus range) and no change orders…period. None. No matter what. Well, that sealed the deal.
The problem, of course, is that it became a budgetary nightmare for me as the project manager because it was priced too low and there was no way to add revenue through change orders. The client was understanding enough, but everything within reason that they asked for, we did. The work was eventually completed, but by the end of the project, it was more than 60% over budget and my hands were tied from finding ways to add any revenue to the project. I know that the CEO’s hope was that eventually more work would come from the customer, but both organizations eventually failed – the client’s from the economy and the vendor (my organization) from poor management and fraudulent tactics by the CEO.
As a project manager and as an independent consultant, I’ve never been in favor of a win-at-all-cost strategy. The go-for-broke mentality is not likely to win you long-term business and it can certainly cause your financial infrastructure to become shaky by betting everything on one project going perfectly and not breaking the bank.
As we all know, every project hits bumps…every project experiences some sort of issue or critical point. And nearly every project struggles to some degree to stay on budget. Plus, more than 50% of all projects fail to some degree. Putting too much hope in everything going perfectly on a project is a recipe for disaster. It is far better to strategize, and pick projects and clients that match well with your long term organizational plans and financial goals. It’s the best decision to price work to profit, not just to win no matter what. A win-at-all-cost mentality at the top of your organization can bring a company down fast - leaving everyone else to pick up the pieces with the clients you were faithfully trying to serve.
About the Author: Brad Egeland is an IT/Project Management consultant, business strategist, and author with over 25 years of software development, management, and project management experience leading initiatives in Manufacturing, Government Contracting, Gaming and Hospitality, Retail Operations, Aviation and Airline, Pharmaceutical, Start-ups, Healthcare, Higher Education, Non-profit, High-Tech, Engineering and general IT. He has been highly recognized for his ability to work with C-level business leaders in both startups and established organizations to create best practice processes for business management and project management and has overseen the creation and execution of multiple project management offices. He is a married, father of 7 living in Las Vegas, NV. He can be reached at brad at bradegeland.com or you can visit his website at www.bradegeland.com.