Production Manager: “If you spend more than you got, you are not going to have a good time.”
There it is! Sounds simple, yet it happens every day. Production manager said specifically “not going to have a good time.” The financial result of our jobs is the revenue stream supporting the business operation. We are doing rewarding and meaningful work, but when we fail at managing our jobs to profitability, it is not fun, it is not good, and it puts the business in jeopardy.
In the 2018 Restoring Success, Managing Job Profitability, you will find a list of a variety of considerations in managing the profitability of a job with a couple of brief notes about the budget:
By definition, a budget is the income and planned expenses of a project. How much are we going to receive, spend, and profit (gross profit)? Consider it a profit plan. If the profit plan goes off track, you have two choices to hit your target:
In the following simple example, please note there are many ways to approach a budget.
We analyze job outcomes and find:
The solutions to this problem that is a plague in our industry relates to a variety of complexities. We can make an expansive list: price fluctuations, scheduling pressures, scope changes, workloads, pressures, and more. There is no alternative but to buckle down and fix it.
Based on reviewing job outcomes for over 20 years, I have observed a few issues that can be addressed by using a job budget. I call them the “Golden Rules.” Click the image below to download Job Golden Rules. You can use for training and job reviews.
Find the Root Causes and figure out what you Need to Do. As you evaluate what your organization needs to better manage job profitability and employ the use of budgeting, consider the following based on the following approach: Download Needs Analysis
The reasons we consider a High Performance Learning Journey for managing a budget are:
Some quick tips to employ a High Performance Learning Journey in your organization, you can start by breaking down the performance objectives. Create a journey that includes training, practice, mentoring, and feedback. (This is a very compressed version to get to help create action.)
When job budgets go off track, it is easy to get frustrated by the outcomes that at the surface seem easy to control. Our operations are complex and there are many challenges and strains in the day to day. Regardless, if you identify the issue, there is opportunity in the challenge, but it requires action. Using budgets can help you improve the profitability of the jobs. If this seems daunting, consider the resources and consultants in our industry that can help you make a meaningful change and impact in this area. May budgets bring you much Restoring Success.