talking budget-2

How to budget for your web design project Pt.2

We’re taking your further down the path to creating your budget. In this video we are going to look at risk and complexity which will help you to determine whether the investment you make is larger or smaller. Complexity determines how technically difficult the project is whereas risk is how much impact the project could have on your business. Your project falls into one of four quadrants:

  • Low risk, low complexity – (Tick box) It might be a regulatory requirement or a requirement for your business to display key information on. You’ll want to invest as little as possible, as it won’t affect your business or be technically difficult to build.
  • Low risk, high complexity – (Moderniser), it’s typically improving existing projects and processes. It won’t be a big game changer for your business so make sure you look for online systems and solutions that have already been built.
  • High risk, low complexity – (Punt) It might be that a business wants to target a new part of the market or sell a new product and want to test out their messaging to see if it works. If it works it could result in a new part of your business but if it doesn’t you will lose your initial investment, so invest sensibly.
  • High risk, high complexity – (Moonshot) Involves launching new products into an unknown space. You should be making significant investment in this area. You need to control the risk, test everything and should invest more for custom functionality. Don’t cut corners here; you will be creating stuff that’s not been created before.

Hopefully this helps you to figure out what quadrants you are in and how much you should invest in your project. To find out more detail about each quadrant, watch the video below.

Transcript

00:00
WEB DESIGN IS BROKEN but it’s okay we are fixing it. Today we are gonna follow
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on from the last video and we’re gonna take you further along down that path to
00:15
that magical place called budget. Yes we’re helping you to create a budget, an
00:22
appropriate budget for your web design project. I’m still not gonna give you
00:27
some magical figure because it doesn’t exist;
00:30
it’s all relative. So I’m not gonna talk in terms of X pounds or Y dollars but I
00:37
will be talking in terms of high medium low investment what that means
00:42
only you can really know because a large investment for you might be a small
00:48
investment for the next business: a small investment for coca-cola it’s probably
00:53
gonna be most people’s annual turnovers! So only you will know what a large
00:59
versus a small investment actually is. So in the last video we laid down some key
01:06
things that you really need to be aware of when you’re thinking about a budget
01:10
not just for a web design project but actually for anything and these are
01:16
these are things, biases that that we all have as people that can really affect
01:22
how we determine what to invest in things. By understanding these biases we
01:28
actually reduce the chance of over or under investing in a project just simply
01:36
by being aware of them. So in this video we’re gonna look at two more very key
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things that are going to give you quite a reliable shortcut to determining
01:46
whether the investment you make is larger or smaller. These two things are
01:52
risk and complexity. What do we mean by risk and what do we mean by complexity?
02:00
When we’re talking about risk we’re talking about the impact that it could
02:03
have on your business. Something that is high risk could have a significant
02:09
impact on your business. The way I like to think about risk is
02:13
that it’s whether it goes right or whether it goes wrong, so it’s not just
02:18
down side there’s also upside as well. If there’s significant upside then it’s
02:23
still gonna be high risk. Low risk means that it’s not gonna make a huge impact
02:30
on your business, it’s not gonna move the needle as they
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say. Complexity is really just about how technically difficult it is to actually
02:40
deliver this piece of functionality so if you look at, I don’t know, take bridge
02:47
making as an example: if you’re building a small bridge across a little stream
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then that’s probably going to be less technically difficult then if you’re
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trying to bridge the River Thames. So it’s how technically difficult it is to
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deliver and again it goes on a scale of low to high complexity so why risk and
03:09
complexity well if we plot them on a graph like so, we can see that they
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create four quadrants. Now each of these four quadrants represents a different
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type of project: a high risk, high complexity project; a high risk, low
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complexity project; a low risk, high complexity project and a low risk, low
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complexity project. Now just by exploring these four different types of projects,
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these four project characteristics we can actually start to make assumptions
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about what that project is going to be like and give you some shortcuts as to
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how much you invest in that type of project. Let’s jump into it: let’s start
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off with the easy one low risk low complexity. So this is what I call the
04:06
‘tick box’ this is a website project that is effectively just a tick box exercise
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maybe as a part of your business there’s a requirement that you have a web-based
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resource which goes over a whole bunch of
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really interesting things. Maybe it’s just a regulatory requirement, maybe
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you’ve gone for some funding and a website has to be a part of what you
04:36
deliver. It really doesn’t make a huge impact on your business if it’s just
04:40
informational as these things typically tend to be, then it doesn’t really
04:46
require groundbreaking programming skills and cutting-edge design to
04:53
actually fulfill its need. So in this type of project you really want to be
04:59
investing as little as you possibly can just as much as you need to to get a
05:06
reasonable job done. It’s not gonna make a huge impact on your business; it’s not
05:11
technically difficult to deliver you just want something that works and that
05:16
ticks that box. So if your project is low risk low complexity don’t bet the farm
05:23
on it there’s no point it’s not gonna bring you the return that you need pay
05:29
as little as you can to get a good professional job done but don’t go crazy
05:35
over it. So now we’ve got low risk high complexity. This is an interesting space
05:42
and I like to call this quadrant in this type of project the ‘moderniser’. With
05:47
something that’s low risk and high complexity typically we’re looking at
05:52
improving existing systems and processes using newly available modern
05:59
technologies. With this type of project what you really want to be doing is
06:03
looking at a provider that has thoroughly solved this problem so I’m
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thinking online payments companies like PayPal, like Stripe have thoroughly
06:15
solved this technical challenge. It’s not necessarily the type of project that you
06:21
think is going to completely revolutionise your business; it might
06:24
make things a lot more efficient and you’ll probably see some uptick in sales,
06:29
engagement things like that, but ultimately it’s not the big game changer for
06:34
your business. So you should be looking to invest a reasonable amount to get
06:40
some off-the-shelf solutions that can actually bridge this gap and help you
06:46
modernise. Let’s jump into my favourite quadrant: low complexity high risk this
06:55
is what I call the ‘punt’. So this is my favourite sector because this is
07:00
typically where a business has spotted a new opportunity maybe a new part of the
07:05
market maybe they want to spin off an existing product or service and they
07:11
just want to test it out. They want to see whether their offering or messaging
07:17
works. Why this is high risk is that if it works well then there could be
07:23
significant upside. It might be a whole new part of their business it might be a
07:29
new standalone business if it goes badly then they lose their initial investment.
07:35
Now what you want to do when you’re working in this quadrant you what you
07:40
want to be doing is thinking about multiple small investments and testing
07:46
religiously. Test absolutely everything because what you’re trying to do is
07:52
figure out if this thing, if this idea has got the legs to warrant a proper
07:58
investment. You want to be thinking landing pages; very simple to produce
08:03
very easy to iterate. You also want to be thinking about investing in things like
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pay-per-click advertising as well – literally buying the traffic to test
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against your multiple service offering variations. Don’t bet the farm on this
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it’s all about controlling risk at every single point every single iteration so
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be very purposeful be very deliberate about how you execute when you’re
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dealing with low complexity high risk projects. So the final quadrant is what I
08:42
call the ‘moonshot’. This is the stuff of startup legend. This is that entrepreneur
08:49
space where we are launching new products into unknown markets. This is an
08:54
area that is very similar to high risk low complexity in its approach but you
09:00
should really be making significant investments in this area:
09:04
you still need to control the risk and you still need to test fastidiously but
09:10
you might be needing to actually invest heavier and produce some custom
09:16
functionality. You might need to actually be producing working prototypes of your
09:23
product or service offering. You can’t cut corners when you’re in
09:27
this quadrant the risk is too high. Because the complexity is high you’re
09:32
probably going to be building things that have never been built before; you’re
09:36
needing to create technical capability within your business and understand how
09:42
that impacts the delivery of your product and/or service. So absolutely
09:48
never cut corners here. The key words that you should be listening out to when
09:53
you’re talking about the project is ‘no one else is doing this’, ‘this has never
09:58
been done before’, ‘this is brand new’, ”here’s why it’s different to the
10:02
competitors’. All of these things should be getting you thinking high risk high
10:07
complexity. Invest well, don’t cut corners and test and iterate and measure
10:15
absolutely everything you can. So those are the four quadrants and hopefully
10:21
this gets you a little bit closer to understanding where your project sits in
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those quadrants and the amount that you should invest relative to, well whatever
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that means to you as a business. Thus far we’ve understood things about the biases
10:37
and the psychology that can affect how we make investment decisions, we’ve been
10:43
able to identify where our project sits along an axis of risk versus complexity
10:50
in the next video we’re going to be looking at some pounds and pence
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examples for how you can start to create that budget or a range of that budget
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based on the perceived upside or the perceived
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savings that you’re gonna make or that you’re hoping to make in your web design
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project. That was heavy! My name is Aaron Taylor, I’m helping you
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to make better decisions and have better conversations when you’re buying a
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website. Till next time!
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