It’s Week 2. There’s still a weird gender war, the tasks are simpler, and the prizes for the winners aren’t quite helicopter rides and champagne yet. This week, the teams were given a room each in the gorgeous, luxury Stoke Park Hotel to design, decorate and furnish on a budget of £13,000. They then had to pitch their rooms to the hotel’s manager and design expert, in order to turn over a profit.
To an outsider, it seems apparent that the two key aims of this task should be to A. Make it pretty, and B. Make it profitable. What could go wrong?
The boys’ team overspent, leaving them with a 12% profit margin, whereas the girls’ team underspent, finishing with a 56% profit margin. The designs were rejected by the hotel, who left the final call to Lord Sugar. He gave the girls the win, warning them not to be too pleased as he only “hated it less”.
While the result appeared to be decided by the design work, we’ll take a closer look at the financial fails we witnessed last night, which teach the same project management lesson: careful cost estimation is an essential process that should be repeated at various project stages.
The girls’ PM allowed a very small, £5,000 budget for furniture. The team also had to accommodate a designer’s fee of 20%, and purchase a centrepiece for their rooms. Theoretically, were they to spend an absolute maximum of 2K on decorating supplies and their centrepiece, they’d likely still come well under their 13K budget. The girls scrimped on the furniture for their golf-themed room, and based on the hoteliers’ reaction, it showed.
The lesson? Last week, we saw you can pretend a burger isn’t packed with cheap meat. However, this week proved that low-budget furniture in an upmarket hotel can’t be disguised as luxury. It’s not always a bad option to spend a little more. A project manager should be able to make decent estimates of what costs are necessary to uphold the quality of the project. The APM Body of Knowledge acknowledges the uncertainty of estimation, but recommends making estimates carefully and repeatedly to produce the most accurate figure possible.
The boys told the hoteliers they had spent a massive £11,725, and claimed they could sell their room for £750 per night.
Ok. Was it against the rules to use search engines? A quick look on booking.com confirmed that Stoke Park Hotel’s most expensive room on the episode’s air date was priced at £750 for 2 adults. We can also guess that this room probably wasn’t crafted by a group of non-designers with a small budget and collective reluctance to take charge of costing. It isn’t too surprising that the hoteliers didn’t go for it.
When calculating your costs, you need to be realistic, reasonable and do your research. As breakdancing banker Jeff pointed out, they should all be capable of “doing the numbers”, but it helps to put someone who knows their stuff in charge. The APM Body of Knowledge recommends looking at examples of similar projects (usually ones you’ve executed) for more accurate estimations. Researching the hotel’s price structure could have provided a much clearer target for the boys’ costing.
For two weeks in a row the teams have seemed to underestimate the importance of getting their costing right. We’re hoping to see the teams carefully calculate initial estimates based on real-world research, and then continue to re-assess these estimates based on the development of their projects.