PM News by ProjectManagerNews.com.
Forecast, the leading AI-native platform for project and resource management, has released exclusive data on the hurdles in process, operations and company culture that hinder project profitability for agencies. Only 9% of all agencies surveyed feel they are ‘nailing’ project profitability; this figure drops to only 5% for agencies with less than 50 employees.
The survey of 163 agency leaders was carried out between May and July 2021 in partnership with Cactus Agency Growth Consulting. The research looked at the various barriers that exist when it comes to agencies maximising profitability and making operations efficient. Overall, agencies pointed to inefficient delivery processes (39%) and too much time spent on project admin (31%) as the primary speed bumps.
Where time is being most spent
Reporting and managing how employee time is being utilised was found to be a significant challenge for agencies. 67% of agencies surveyed with 100-199 employees cited status and update meetings, resource management and timesheets as the areas of client management which absorbed most of their time. This figure dropped to 50% for agencies with less than 100 employees.
Barriers to accurate forecasting
With forecasting having a bearing on so many decisions, including investment in talent and tools, it needs to be as accurate as possible. However, only 40% of agencies surveyed said they are able to very accurately forecast the revenue of client and project work.
Across all agencies, the two most dominant forces holding back forecasting were lack of visibility and lack of time (40%). Inaccurate or disparate data was the third most common cause identified (18%).
Forecast’s research indicates that agency staff believe client processes slow them down and take up time. In turn, these processes mean agencies don’t have the time – or the right information – to accurately forecast future revenue.
Other key findings:
● 47% of agencies said less than 25% of revenue came from retained clients
● 60% of all agencies surveyed felt they could make ‘some improvements’ to maximising project profitability – whilst 35% felt they could make ‘significant improvements’
● More than a quarter (28%) of agencies described themselves as having no set process methodology
● Smaller agencies are less likely to know their billable utilisation rates – with 34% of all agencies surveyed not measuring this metric
Rob Massa, chief revenue officer at Forecast said: “The sudden move to remote working caught everyone off guard. No one was prepared for such a drastic change and agencies had to immediately shift their working model to cater for a fully remote workforce. There were challenges felt by not just managers and leaders needing to keep on top of their employees’ workloads, but also for employees who had to deal with this sudden shift. We speak to a lot of agencies on a day to day basis and the challenge of accurately forecasting revenue and project profitability is always number one. What it comes down to is a lack of visibility. If agencies don’t have sight of how much time their people are spending on tasks and track historic metrics, how can they possibly forecast future projects?”
Spencer Gallagher, co-founder and CEO of Cactus said: “Most agencies cannot find the right talent right now and this is only going to become harder, so they are going to have to work at retaining talent and doing more with fewer people – which doesn’t mean overloading staff but making sure they are more efficient in how they use their time.”
Founded in 2016, Forecast is an AI-native Project & Resource Management platform built to connect people, projects, and profit. Forecast’s proprietary AI-native platform represents the most advanced technology ever applied to managing projects, resources and finances. Businesses can now automate busywork, predict outcomes, guide projects to success, and most importantly empower every team member to do their best work.
Companies including Red Cross, Distributed, O2 Web and PeakActivity use Forecast to unify project operations and increase profitability.
Investors include Crane Venture Partners, Heartcore Capital and SEED Capital.
About Cactus Agency Growth Consulting
Cactus are the UK’s leading corporate finance and agency growth consultancy. Having supported over 2,500 agencies globally over the past 10 years, many of which are recognised as some of the fastest growing agencies in their territories.