How We Minimize Cost Creep: Part 2
by Jason McIndoe, on Apr 1, 2020
3 minute read
"We'll need you to pay more money." A sentence that no customer wants to hear months or mere weeks after placing a purchase order. You believed that the project was well-defined. The budget has already been approved, the first payment has been made, and the project is already underway. No new requirements have been added, yet the project can't move forward without additional funds. How could you have seen this sooner?
At Testek Solutions, we have an approach of over-communicating with our customers to update you on project progress and to identify and mitigate potential risks. Part 2 of this blog series focuses on some of the ways that we proactively communicate with you throughout the project to minimize risk once a project has started.
Single Point of Contact
To facilitate easy communication, a single project manager is assigned and serves as the customer interface throughout the project. Internally, this person will be managing the team, schedule, and resources required to execute your project.
By proactively, frequently, and clearly communicating with our customers, we are able to identify cost-inducing risks early and suggest cost-saving alternatives before it's too late. Our structured project launch process helps with early identification of any ambiguities and information needs from the customer. At the beginning of every project, the program manager identifies any items that have the potential to negatively impact adherence to cost, schedule, and performance requirements. A mitigation plan is developed for each risk and executed to avoid letting these risks become a reality. Throughout each project, we closely monitor these items and update you on their status, as necessary.
As soon as a project begins and a team is selected, the project manager will host a project kickoff meeting with the team. In this meeting, the engineering and manufacturing teams will again review the requirements to ensure complete understanding and to resolve any remaining questions. The project manager will go over the customer's deliverables, review the schedule and key milestones, assign personnel and material resources, and draw attention to potential risks. A kickoff meeting with the customer may be held, if requested.
Routine Schedule Updates
We create a detailed schedule at the beginning of every project. This schedule contains everything from major program milestones to minor tasks. Throughout the project, the schedule is actively updated to reflect the current status of each task. If a task is at risk of becoming delayed – or worse, delaying the entire project – we will notify our customer and provide a mitigation plan.
For each project, we have a series of design reviews with encouraged customer participation that include, at minimum, a preliminary design review and a critical design review. These design reviews allow the customer see the design, ensure there are no questions, and issue approvals for go-ahead.
Route 66: Our Internal Stage Gate Process
Internally, we have a structured gated project review process to help ensure we capture all customer requirements throughout the project and to minimize the opportunity for surprises near the end of the project. Each stage gate is a pass or fail point - if the project does not meet the necessary requirements to continue onto the next stage of the program, work continues to ensure these requirements are met.
In some cases, an expanded scope with additional costs can be a benefit to our customers (e.g., increased efficiency, additional test capabilities). Our philosophy is to minimize additional costs to include only those that the customer elects to incur in order to provide additional return on their investment of Testek products and services.
To our current customers, which of these over-communicating methods have helped to save you money in the past? To those of you interested in purchasing test equipment, which of these would make you feel most confident? Let us know in the comments!