The Problem: You deliver a project, calculate its profitability, and use the data to adjust your pricing and processes. However, a few months later, warranty work appears — consuming additional hours that weren’t initially accounted for. Waiting months to evaluate profitability isn't ideal in a dynamic business. So what can be done?
Our Solution: Calculate an average warranty workload based on statistics and factor it into project budgets. For instance, if warranty efforts typically account for 3–5% of total project hours, you can multiply your cost base by 1.05 to cover the risk.
Additionally, it's wise to analyze warranty issues by team or manager to identify patterns. Sometimes, an excessive amount of warranty work points to deeper issues — poor planning, development, testing, or project management.
Real-life Example: During a routine audit, we noticed warranty-related work accounted for about 20% of project time across several projects. Investigation revealed that one project manager lumped all kinds of post-delivery tasks into a single "warranty" task, without proper filtering. This highlighted the need for better classification and control of warranty work across the organization.
Finance
12 February 2025