4 Tips to Make Your Estimates More Valuable at Your Creative Agency

Have you ever worked on a project where you found yourself approaching the deadline but not even close to finishing the work? You know, your costs were far beyond the initial budget and the client was asking about the progress and even adding things to your plate?

There is nothing fun about this type of pressure-filled situation, and we’ve all been there. Your success as an agency requires you to build better estimates and stick to them.

Unrealistic budgets, unprofitable projects and missed deadlines are a common problem in the fast-paced environment that most creative agencies work in. It is essential to do things right the first time, plan your work and be clear about what represents scope change. Re-doing work and adding to the scope of a project (without a proper change request process) are things that can kill the profitability of an agency.

Many agencies ignore the importance of creating estimates before closing a deal and starting a project. Moreover, some create rough estimates but do not spend enough put enough value on the key metric of estimated vs. actual.

Estimates should work like a milestone: you have to keep all the variables under control so as to not run out of time and money. This will help keep your agency profitable and ultimately allow you to stay in business.

When I talk about estimates I mean predicting the amount of time and money that will be spent. The two main things that cost money are materials and human capital, which can be incurred as inside or outside costs to your agency.

Here Are Some Tips on How to Build Better Estimates:

1. Be Reasonable

Estimates have some subjectivity, so your view of the costs/time should be “realistic to negative” to ensure that you meet your client expectations. Remember that there will always be unpredictable factors affecting your work, so you should have a buffer or include terms that specify what factors are subject to change and what constitutes a change in scope. This will not only help you avoid any conflict or legal issues with clients, but it will also ensure that expectations are set on both sides and help build a trusting relationship.

2. Associate Your Budget with the Billing

This will make the billing process easier and add more responsibility to the individual who is creating and working with estimates. Once you compare the estimated values with actuals and then finally what gets invoiced, you can keep track of costs, identify your largest expenses and where more operational efficiency is needed, and ultimately ensure that you are charging enough. Remember that in most cases you cannot bill a client for an item that you don’t include on the estimate or budget.

3. Be Accurate

Associate the services you provide with the appropriate rate for who will be doing the work. For example, you may provide research, planning, copywriting, proofreading and art design on an estimate, but always remember that the cost for your agency can differ substantially if the work is done by a junior or a senior person. For outside direct costs, make sure to keep on top of your invoices and add an appropriate markup. Doing all this will ensure that financials are tracked consistently throughout the length of the project and that any potential issues that may affect profitability will be easily identified.

4. Manage and Control Your Key Resources

Time can be measured constantly when your team does their time sheets and expenses daily. Do not just control these resources but find ways to manage them well, trying to improve your efficiency and how you handle different tasks. Each task has its own level of importance and urgency, so it is also a question as to when you should work on them. For a project team to efficiently manage time/money, they must be aware of the items in an estimate as well as the tasks that need to be completed, and also have easy access to the information. Understanding their estimates and the planning that went into them will help ensure that the entire team is working towards the same goal.

Time can be measured constantly when your team does their time sheets and expenses daily. Do not just control these resources but find ways to manage them well, trying to improve your efficiency and how you handle different tasks. Each task has its own level of importance and urgency, so it is also a question as to when you should work on them. For a project team to efficiently manage time/money, they must be aware of the items in an estimate as well as the tasks that need to be completed, and also have easy access to the information. Understanding their estimates and the planning that went into them will help ensure that the entire team is working towards the same goal.

Your business practice and efficiency will determine your profitability. For that reason, the whole process must be interlocked. It all begins by adopting a planning and estimating workflow that will act as a guide your work, offering standard parameters and putting limits on items that really need them.

We want to hear your opinion and answer your questions, so feel free to leave comments!

Please book a demo with us and we’ll show you how to plan and estimate your work using Function Point.

This article was contributed by former Function Point employee, Isabelle Costa Lima de Almeida.