Project Managers: Charge for Performance to Increase Profits

    October 12, 2006

You’re a stellar project manager, yet you’re only making an average wage. Well, it’s about time you make more. This article digs outlines my approach to a performance-based fee structure It won’t work for all clients, but for those it does work for you’ll see your profits soar.

So how can you make more money?

Simple: Structure a good deal, have a magic formula for success, take control, and use good project management software.

STRUCTURE A GOOD DEAL UP FRONT: At all times, businesses measure return on investment (ROI) for major spending. For example, company management may ask, “If we hire a project manager for a 6-month contract and pay them $50,000, will we get $100,000 value back?” This is where your ability to take risks comes in. I call it the entrepreneurial model.

Here’s how it works next time you interview for a project management gig with a company you trust to make great use of your project work, don’t settle for a flat fee rate. Instead, tell the prospective employer that you are going to make a certain amount of money for them on this project and that you want a piece of the ROI pie.

Set the deal up this way from the get-go and the higher the ROI, the more money you will make when all is said and done. This way you have a vested interest in seeing to it that the client makes a huge return.

Although most people do not operate under this kind of model out of fear of missing a mortgage or a car payment, it is by far the most effective way I know for a project manager to make the most money on a job. Sure, a flat fee is safe, guaranteed, but it’s not going to yield the kind of money you really want to make. So the next project, take the risk and reap the reward!

DETERMINE YOUR MAGIC FORMULA TO SUCCESS: In conjunction to structuring a project-performance deal up front, you need to clearly state where the return is going to come from. What are the metrics you’re going to use to measure this ROI?

Success has a number. Make sure that your key metric ties directly to the prosperity your clients reap from your work.

Your magic metric is what will yield the ROI, which in the end will yield higher returns for you. It will also serve to gain you more confidence from your employer. If they see a formula that works, they’re more willing to give you all the control on the project as you need, as well as agree to your cut of the ROI pie.

TAKE CONTROL: When I was in the business of doing project management for companies, I kept the schedule under my direct control. This does not mean, however, that I would necessarily do any of the extra work. I controlled and directed others by assigning tasks to people with the right skill sets. When you have guaranteed authority and control, you will be able to successfully manage and control your project and deliver on your set success metrics.

USE GOOD SOFTWARE: If you need help, get a good project management program. The best program is one that can help you plan all kinds of projects from small to large-scale deployments. I also recommend one that seamlessly integrates with Microsoft Office, and task-manager Outlook.


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Ray White is the Founder and Chief Executive Officer of Scoutwest, Inc., the developers of Standard Time Project Management Software. Ray’s involvement in software development and project management began over 26 years at Eastman Kodak company and since then he has worked with approximately 30 executives, 90 project managers, 300 engineers, and 10,000 customers. By project managers, for project managers – his project management products help thousands of international customers plan and track time for their mission critical projects.