Full Sail Partners Blog

Are Zombies Eating your Profits from Fixed Fee Projects?

As a fan of zombie movies, you can probably guess that The Walking Dead is one of my favorite shows. If you’ve never watched it before, it’s a series that follows a group of survivors as they learn to adapt in a world overrun by zombies. Now, I’m going to let you in on a secret – don’t become attached to any of the main characters, because they are more than likely going to die. It’s the unfortunate reality for any zombie themed flick. Although your firm isn’t facing a zombie apocalypse, they do face several threats that can affect profit margins on fixed fee projects. Let’s find out if any of these classic zombie types are lurking in your fixed fee projects.

The Runner Zombie

Runner zombies are always sprinting after survivors, and often only injure the victim as they frantically run to attack another survivor. You can probably identify these frightening zombies and know how hard it is to avoid them.

These are clients with awesome project opportunities, but they rush to send out multiple request for proposals (RFPs) in a relatively short amount of time. As a result, each RFP contains incomplete plans and poorly explained specifications that go unnoticed until the project has launched. These overlooked mistakes often result in change orders and unpaid work time as these zombies take bites out of your profit.

The Surprise Zombie

The surprise zombies hide in the shadows and pop out periodically throughout the movie or show for quick surprise attacks on the survivors. They appear randomly in order to keep the audience on the edge of their seat. In a project management scenario, this zombie type may sound like subcontractors who love to surprise you and keep you on the edge of your seat.

The fact is, your firm develops project proposals and budgets based on the estimates provided by the subcontractors. But far too often, these estimates contain errors due to omissions and incorrect assumptions. Now the overlooked permit fee or low estimate on a materials allowance increases the budget and eats away at your profit.

The Exploding Zombie

All of a sudden, boom! It’s the loud explosion of a zombie exploding, or was that the cost of the materials pricing for your project skyrocketing? The cost of materials changes and we all understand this, however the supplier is supposed to be the expert.

Some RFPs are for projects that start right away and in other cases, some RFPs are for projects that won’t start for over a year. Even more, project durations can be as short as a month to multiple years. Knowing what the materials are going to cost at the time of the project and throughout the project lifecycle is essential to making a profit. Not being able to predict these changes can cause your materials costs to explode.

The Crawler Zombie

Crawler zombies are more of a nuisance and like to cause disruptions to the survivors as they escape to safety. These zombies are the slow movers and the problem with them is they lurk everywhere, from within your own firm to the subcontracted help.

Every project plan is susceptible to these slow movers who can’t complete a task within the designated time period. Consequently, another task can’t start until the crawler zombie finally completes their task. This sets off a chain reaction of delays that eventually affects the entire project timeline.

The Spitter Zombie

This is a total different type of zombie than the others. What makes them unique is their ability to attack from medium to long range with their toxic spit. Since they attack their unsuspecting victims from afar, the survivors must rely on their reflexes to survive. You might not see the spitter zombie often and that’s with good reason. The spitter zombie in your project is the micro-managing client who doesn’t have a pulse on the project since they are not on site. 

These clients present two types of threats to the project. Firstly, these types of clients might be slow to respond to approvals and requests since they are not on site and easy to find. Secondly, they inject slight modifications to the plan without understanding the real effects of those changes. Working with off-site clients isn’t always horrifying, as long you’re able to react fast to minimize the damage to your profit, and keep an open and effective line of communication with the client.

Protecting Your Profit

Like the survivors in The Walking Dead, you can never let your guard down when taking on a fixed fee project. Protecting your profit starts during the proposal process and doesn’t end until the project is complete. Every project faces several threats to the bottom line, but learning to adapt to changes can increase your firm’s survival chances if you should ever encounter an apocalypse or in your case, a daunting project.   

The Profitable Project v2

 

Latest Posts