Open sourcing our project estimates at SXSW | Social Signal

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I'm hosting a conversation today at SXSW, Breaking it Open: Open Source Consulting Models. So this seemed like the right moment to return to the job of open sourcing our consulting materials.

As it turns out, the biggest challenge of open sourcing is actually organizing our materials in a form that is useful to share. Any programmer can tell you that documentation is often the most onerous part of sharing code, and we've found the same thing is true in our own open sourcing process. We could just dump a pile of documents onto the Internet, but we want to release them in a form other people can make sense of and apply to their own work. That takes time.

But time isn't the only obstacle: there's fear to battle, too. The attached materials were mostly ready in late October, so I suspect that the main thing holding me back is the prospect of people scrutinizing our bottom line. Releasing the behind-the-scenes cost estimating process for the Concept Jam isn't as much disclosure as open book accounting, but it is a lot of information about how we handle the financial side of our business.

And the financial side of the business has definitely been the most challenging piece. Strangely, Harvard's Political Science Ph.D. program did not include an explanation of terms like P&L, or instructions on how to structure consulting engagements. We've largely made it up as we go, learning from our (ample) early mistakes, and finally arriving at a formula that ensures our clients get good value on a model that is financially sustainable for us, our employees and our suppliers.

It's precisely because this part of the business has been so hard for us to figure out that we feel it's so important to share it. Every consultant and service company we've talked to about estimating has confessed to facing the same struggle: finding a way to do cost estimates that are competitive but still profitable. Our numbers and methodology won't work for everyone, but we hope that others can borrow from pieces of what we've done.

In particular, I'd like to recommend the fusion of cost estimating and project management. If you typically work on a fixed-cost estimate model -- where you give your client a proposal specifying a final cost of delivery, and have to stay within that budget -- then your solvency hinges on your ability to estimate effectively. Come in too high, and your proposal will be rejected. Come in too low, and you'll lose money on the project. You're bearing the risk if you estimate wrong, but you also reap the benefit if you beat your estimate while delivering to (or as we aim to, beyond) the client's expectations.

As you'll see from the spreadsheet and screencast we've released today, our cost estimates are based on a task-by-task breakdown of each project phase. This takes a lot more work than our old, largely gut-based approach -- and interestingly, the numbers aren't that different from what we used to do by gut.

But the payoff comes when you get to work on your project. We used to have a really hard time staying on schedule and on budget. Now we can see the specific hours we've planned for each task in a project, and our tasks start running longer than the anticipated time, we can identify that quickly, and develop a strategy for getting back on track.