Professional Services Project Management: Complete Guide

Professional services project management involves the entire process of delivering client work, from start to finish.

Key Takeaways

Project management in professional services includes various types of projects, such as design, consulting, marketing, development, etc.

In many professional services firms, it also includes handling multiple projects (that provide the same or different services) at the same time.

Professional services organizations meet different challenges than product-oriented industries — instead of considering materials and equipment, agencies need to know how to best manage their staff, time, and finances.

We can see the end-to-end project management process as spanning several key phases:

Let’s go through each in more detail.

The project lifecycle begins with winning the sales deal, or converting a lead into a paying client.

Why do we start with this step? Because working in silos can often lead to various misunderstandings and miscommunications. Additionally, it hampers your financial growth.

According to research from the Aberdeen Group, aligning sales and marketing and help you generate 32% higher revenue, retain 36% more customers, and achieve 38% higher win rates (find out more in our guide to revenue operations).

So, what do you need to keep an eye out for? That information gathered and provided during the sales process is translated into your project planning and execution.

This includes project budgets or resourcing bookings (if you’ve made them ahead of time).

Additionally, keeping track of key emails and prospect details helps professional services teams seamlessly transition to the project management stage.

Software that integrates your sales CRM with project managing processes, such as Productive, can be very useful in this stage. Learn more in our list of the top consulting CRM platforms.

Once a deal is closed, the project manager and his team will move onto the planning phase. This includes setting a high-level overview of the project, such as the project scope and main milestones.

It also includes dividing milestones into smaller tasks and ensuring that individual employees understand who is accountable and their deadlines.

There are many popular tools for managing your project schedules: one of them is a Gantt chart, which visually depicts milestones and project tasks and their deadlines.

For example, Productive also offers different project views, such as the Workload view (which includes employee availability and utilization insights), Kanban boards, and more.

For task management, the basis is a tool that can help you manage dependencies between tasks and break them up into even smaller chunks (to-dos, subtasks).

Another useful feature includes custom Automations for setting up workflow sequences, for example, sending a message to a Slack channel once a task is updated.

While project and task management helps you keep track of project deliverables, resource management is crucial to ensuring that your resources are being utilized optimally.

This means that:

To optimize your capacity planning process, you’ll need to set up a resource planner.

A resource planner is an overview of your employees and their schedules, which can be easily modified by drag-and-dropping different bookings, extending them or even reassigning them.

Your resource planner should also include indications of approved time off and holidays across team members for more accurate allocation of project resources.

Resource planning is also very important to a professional service provider’s strategic decision-making.

If you understand how utilized your employees are, you can make better decisions on accepting new projects, hiring staff, and even prospecting for clients.

Learn how to create a capacity planning template in Productive.

Source: 2024 Digital Agency Industry Report by Promethean Research

Time tracking is essential to T&M projects, but it’s also important for other agency pricing models.

It helps agencies provide accurate estimates for tasks, evaluate work efficiency, and control costs.

The main challenges of time tracking in agencies are usually that:

The second of these issues requires clear guidelines on an agency and project level. Project managers need to ensure that everyone understands how to track their time accurately.

Otherwise, you can also lean on billable hours trackers to help you out.

For example, with Productive’s Time Tracking, you can:

While projects often have a fixed budget, it’s not rare for them to go over that allotted amount. According to McKinsey, large IT projects run 45% over budget on average while delivering 56% value than expected.

The main resources for this includes a lack of focus on project objectives, unrealistic schedules, shifting requirements, technical or skill issues, and others.

One big part of the issue is that many agencies are unable to catch the moment at which their projects will go over budget.

This can lead to decreased profit margins and impact relationships with clients, who might wonder why additional costs weren’t anticipated or communicated earlier.

With Productive, you can not only monitor your budget burn, revenue, and profit in real time (according to your cost rates i.e. salaries, billable rates, and billable hours), but you can also predict them.

Productive’s Forecasting uses your resource planning data to provide a visualization of your key performance indicators for future periods. This supports timely risk assessments and proactive project changes.

You can also include your overhead and external expenses into these overviews for more accurate insights into profitability.

This type of financial oversight also supports efficent professional services billing.

Learn how you can support your project plans with Productive.

Reporting is essential throughout the entire project lifecycle, which includes post-project completion and project post-mortems.

During the project management phase, regular reports help keep all project stakeholders in sync with the most important updates, such as completed milestones, budgeting information, and time tracking.

After completion, reports provide transparency and closure to both clients and project teams, so that any potential issues can be discussed and improvements implemented for future projects.

With project management software, make sure to evaluate its reporting capabilities. Productive offers real-time reports that can be created via template or fully from scratch.

You can also customize your data by switching up visualizations, changing various data fields, grouping metrics differently, and even creating custom formulas.

Learn more about Productive’s Reporting.

Here are some of the most common challenges faced by project managers when they manage professional services projects across various project phases:

As mentioned, time tracking can be a stumbling block for various reasons. This includes forgetfulness, misallocated time, or resistance to tracking due to cubersome software or feeling micromanaged.

To improve time tracking, you can:

Without proper visibility into a project’s progress, it’s difficult for stakeholders to know whether a project is on track. Lack of visibility can lead to missed deadlines, cost overruns, and client dissatisfaction.

To improve project visibility, you can:

Scope creep is a frequent issue, even in the most organized projects. Causes may vary, including inaccurate estimations, unclear project requirements, and poorly managed client expectations.

While it’s often difficult to outright prevent scope creep, there are some ways to handle it.

To handle scope creep better, you can:

According to research by the PwC on professional services project management, effective communication is associated with a 17% increase in finishing projects within budget.

When communication in a professional services firm breaks down, it can lead to misaligned expectations, missed deadlines, and dissatisfied clients.

To maintain effective communication, you can:

The benefits of effective project management practices include:

You can compare this to the benefits of project management software.

Taking all of these things into consideration, here’s our list of the top five best practices for delivering projects on time, within budget, and expected quality standards.

Throughout the project lifecycle, it’s important to remain focused on both the project’s goals and the client’s desired outcomes. When making decisions, make sure to address key questions such as:

Finally, make sure to conceptualize decisions and potential changes by keeping in mind the impact they will have on your agency’s operations and other projects.

Make sure to consider your priorities and what you’re doing with your organization’s finite resources carefully.

There are two useful frameworks for conceptualizing your project organization: SMART goals and the RACI matrix.

SMART goals uses a set of standards to help you set clear, actionable goals that guide your client projects towards success:

The RACI matrix is used to clarify team roles and responsibilities. Each initiative should have a person that’s:

These frameworks reduce ambiguity and allow for a structured approach, helping team members understand their roles and what is expected of them.

While they don’t need to be followed religiously, being aware of them can help the project management office (PMO) create the best approach for its own specific needs.

Keep in mind that roles should be regularly revisited and reviewed to ensure positive project outcomes.

So, you know that you need to keep track of project data, but which metrics exactly should you focus on?

Here’s an overview of some of the most important project management metrics:

Learn more in our article on the most important capacity planning metrics.

Maintaining consistent communication through proactive reporting is vital for keeping stakeholders informed and engaged.

Regular updates on the project’s progress, including key metrics and potential risks, build trust and provide transparency.

Rather than waiting for issues to arise, proactive reporting ensures that problems are addressed quickly and openly, reducing misunderstandings.

Two ways to improve your project reporting include establishing a reporting schedule and making sure that your reports contain relevant and easy-to-interpret information.

Finally, implementing PSA software has been associated with various benefits for project management teams.

The top four include: improved timeline estimation (60%), more effective use of project resources (55%), enhanced team communication (49%), and improved budget communication (48%).

However, finding the right software can be a bit more challenging. There are many potential solutions to consider, but you can focus on three main considerations:

1. Feature scope: There are options that offer collaboration tools mostly, and there are more all-in-one platforms that provide financial management, reporting, and resource planning.

2. User friendliness: A user-friendly platform ensures that team members can quickly learn and navigate the system, reducing the time spent on training and improving overall productivity.

3. Scalability: Scalable platforms can grow with your business, adapting to increasing project complexity, larger teams, and expanding requirements without requiring a system upgrade.

Learn the best tips and tricks for how to select project management software.

Industry best practices suggest that rate cards need to be reconsidered and updated at least on an annual basis to ensure that your business is competitive.

Pricing hikes can be tricky when it comes to retainers, and many agencies have significant revenue from recurring projects.

To communicate price increases, try to frame the discussion by focusing on how you’ve increased value, and make sure to provide ample notice for the transition.

Additionally, consider the impact of discounts on your bottom line. Offering ad hoc discounts can undermine the perceived value of services and make future price increases more difficult, especially for long-term retainers.

Standardizing rates across clients using agency management tools like Productive helps eliminate internal confusion and ensures everyone is aligned on current pricing.

Find out more on how to best manage your agency rate cards.

There are a lot of factors involved in managing complex projects in professional services.

It often requires handling cross-functional teams, having timely budget and expense tracking, overcoming various challenges, and balancing agency and client needs.

However, project management tools can be a great help in this process. Throughout the article, we’ve seen how you can get more reliable data, streamlined workflows, and improved communications by using software such as Productive.

If you want to learn more, you can book a demo with Productive today.

Or, if you want to keep reading, check out our guide to project management for marketers.