Learning from Mistakes – Keeping a “Frozen” Baseline to Improve Future Projects
Things are coming along at our Allentown Rehab: 78 Mariner. As the exterior is pretty much finished up, our focus has shifted to interior finish work. Over the next 2 weeks, we plan to make significant progress by adding kitchen cabinets, counterops, and flooring.
One main goal of this initial investment is to use it as a learning opportunity. Although there was a great deal of research that went into our prospecting and planning processes, there is no substitute for real life experience. A key focus of this entire project is to track progress in the most accurate way possible. While it would be great to meet all budget and schedule projections, we realize that it is unlikely on our first rehab. It’s important to track our deviations from plan and determine what could be done to make improvements in the future. To accurately track our progress, I again turn to integrated business systems and tools.
Baseline vs. Actual
When managing any project, it’s important to differentiate your “baseline” from your “actuals”. This takes patience and discipline! It’s very difficult to set a budget or timeline and not change it after other variables are introduced or realized. However, that is the whole point! It makes no sense to set a “baseline” schedule and then change it after you learn that your cabinet delivery will be delayed by a week! That delay is the exact deviation from plan that you want to track. The main point is that you must know what went better than expected and what needs to be improved. Over time, your actual vs. baseline data will help you to improve your planning in the future. This is a common pitfall in project management. PMs always have a desire to change their projections after receiving additional data. Do what ever it takes to avoid this trap. Your interest must be in the long term success of your project or business. The more disciplined you are at baselining and keeping your plan “frozen”, the more accurate your projections will become in the future.
In our case, we really dropped the ball when scheduling and budgeting our tile floors. We made assumptions about our installer’s schedule as well as the price of materials. We later found that we wouldn’t be able to get the installer within the required time frame and that we would have to pay a bunch more for an alternative installer and for materials. When the dust settled on the situation, we ended up spending $750 over our tile budget! Did we go back and adjust our budget? No! You keep the budget “frozen” and track to actuals to see the deviation. We will go over in some areas, under in others, and analyze the data at the end. With each project, we will get more accurate with our budget and schedule estimates.
Leveraging Online Business Apps
NY Home Solutions operates entirely on a “Google Apps” platform. That means that virtually every tool we use for the business is somehow integrated with a web app available on Google Apps. One app that is absolutely crucial to keeping our financial status organized is Wave Accounting. Wave Accounting is an app very similar to Mint.com. It connects with our bank account and allows us to carefully track project expenditures. Not only does this app give us a real time view of our financial status, but it allows us to download data and compare it to our pre-project budget. We are able to see the financial health of the project in real time. We see that we went over budget in one area, but we saved in another. All this data helps us learn for future projects. While our goal is to hit our budgets, we know that it can’t happen. As we continue with subsequent projects, our expectations will continue to increase. We will expect the gap between our “baseline” and our “actuals” to continuously narrow. Wave Accounting is a great free tool that helps us to stay organize and track our performance. There are other apps available that have similar functionality. Freshbooks and Zoho Books are a couple examples. I’m currently sticking with Wave because it’s free. I plan to explore the other options in the future.
I’m very enthusiastic about our use of web-based tools and applications to make our business automated and scalable. I think its absolutely crucial for small businesses to embrace the power of the internet and take advantage of the low cost tools that can help you to grow your business. I recently wrote about what I’m calling “The Software Exodus” on my personal blog. We’ll discuss additional ways to take advantage of business apps in future posts.