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Improve cashflow with project milestones
August 28, 2006
One lesson we learned while balancing multiple clients was the importance of staying on task - and helping the client to do the same. This isn't always easy.
Milestones keep you honest. Your team has to meet the goals that were defined internally, and the client has to meet their own objectives if they apply to that project. (providing content, logos, images, etc)
My focus, however, is not the benefits of milestones in terms of project management. There are plenty of other sites that do just that. Instead, I'd like to share a bit of what I learned from a cash-flow perspective.
I'm certainly no authority on the subject, but we have had our fair share of slow projects and I've made some observations along the way.
In my opinion, slow projects are a result of communication breakdowns more than anything else. Whenever this occurs, it's very easy for me to see where we were at fault, despite any of the factors that were out of our control.
Slow projects aren't simply a nuisance. The longer a project takes to complete, the longer it takes to get final payment. Period. If a 4 month project ends up taking 8 months, it also becomes less profitable. A longer project means more phone calls, design comps, copy revisions - and worst of all - changes of opinion. The last thing a web developer needs is for the client to change their objective!
Bottom line - complete projects as quickly as possible.
However, there is hope should you find yourself in a slow project!
Don't merely assign milestones for the project to make sense chronologically or pragmatically. Assign a value to each milestone that is due upon completion. This will ensure that payment is always due after a significant stage in the project is complete. With many web developers using a 'down payment' system, this prevents a majority of the payment from being delayed. There's one thing worse than a slow client, and that's a slow client who is in control of the remainder of the contract value.
A simple example might look like this:
• Design. 1-2 weeks. $X
• XHTML. 2-3 weeks. $X
• Install Content Management System. 3 weeks. $X
• Embed content. $X
• Launch site. $X
We've found that many projects get delayed while the client prepares content. No matter whose fault this is, I'm sure most web developers would vouch for this. In the milestone/payment scenario, however, you can be assured that when most of the project is done, most of the payment is in your wallet. If 20% of the project is delayed for 6 months, you're only waiting for 20% of the payment. This is not an ideal situation by any means, but it's far better than waiting for 75% of the payment when 75% of the work is complete!
Posted by Paul at 11:56 PM | Comments (0)
