In the world of project management, backlog is a term that frequently comes up in discussions. But what exactly is a backlog, and how can you calculate and manage it accurately? In this article, we’ll break down the concept of backlog, discuss how to calculate it, and explore strategies to efficiently manage it. We’ll also touch on the importance of client communication, scheduling, manpower allocation, material selection and storage, economic factors, and mechanics liens in the process.
What is Backlog?
A backlog in project management refers to the list of projects or tasks that have been contracted but not yet started or completed. It’s essential to have a clear understanding of your backlog as it can significantly impact your project planning, resource allocation, and overall business performance. To calculate backlog accurately, you can use the following formula on all pending work:
Backlog Value = Initial Contract Value + Contract Value Changes – Inception-to-Date Revenue
Having an accurate backlog calculation allows your organization to make informed decisions related to revenue in the coming year. It may also re-prioritize the order in which you begin to work through your backlog if given the opportunity.
Now, let’s delve into how you can effectively manage your backlog.
Managing Your Backlog
- Client Communication – Regular Meetings and Updates
Effective client communication is the cornerstone of successful backlog management. Regular meetings and updates with your clients are essential to keep them informed about the progress of their projects. This not only builds trust but also allows for the identification of any changes or additional requirements that may impact the backlog calculations. Keeping your clients in the loop ensures that expectations are aligned and any issues can be addressed promptly.
- Accurate Scheduling
Accurate scheduling is crucial for managing your backlog effectively. Creating and maintaining a project schedule serves as a powerful forecasting tool for dates and milestones. It’s advisable to have a master schedule that includes all backlog projects, prioritized based on your strategy and client priorities. This master schedule helps you visualize the order in which projects need to be completed and aids in resource allocation. Training on scheduling is highly recommended.
- Manpower Allocation
Properly allocating manpower is key to ensuring that your backlog projects run smoothly. Assess the workload of your ongoing employees and make adjustments to set them up for success. For example, consider reserving a highly skilled project manager for an extra month rather than immediately assigning them to the next project. By strategically placing them in a project with high demands forthcoming on your backlog list, you can optimize your resources and increase project efficiency.
- Material Selection & Storage
During the downtime of the backlog period, you have an opportunity to proactively manage material selection and storage. Use this time to your advantage. Long lead items, in particular, should be ordered well in advance to prevent delays. Collaborate with your team to stay ahead in the material selection process and place orders accordingly. Additionally, consider temporary warehousing or open lots near project sites to store materials until they are needed. This approach minimizes last-minute rushes and potential project bottlenecks.
- Economic Environment
The economic environment plays a significant role in backlog management. Pay close attention to market trends and economic conditions, as they can influence the order in which you tackle backlog projects. Economic shifts may also impact the time projects spend in backlog. Being adaptable and responsive to these external factors is essential for efficient management.
- Mechanics Lien
Mechanics liens can be complex, but they are a valuable tool for managing cash flow during inactive periods of projects. In simple terms, a mechanics lien provides an unpaid party with a security interest in the property. This means that if you are not paid for your work, you may have a legal claim on the property, which can help ensure that you receive the compensation you deserve. Understanding mechanics liens and how to use them can be an essential aspect of backlog management, especially when dealing with slow-paying clients.
By accurately calculating and implementing effective management strategies, such as client communication, accurate scheduling, manpower allocation, material selection and storage, economic monitoring, and mechanics liens, you can optimize your operations and enhance your chances of success. Remember, an efficiently managed backlog not only benefits your organization but also leads to satisfied clients and sustainable long term growth .
