Get a Grip on Project Profitability

What You Need to Know about Profitable Delivery

The most successful professional services organizations do three things really well:

  1. They deliver great work
  2. They know how to use their people
  3. They focus on increasing profit margins

You ever hear someone say ”…let’s just focus on selling and delivering great work, the rest will come…”?

You probably won’t hear from them again. To succeed in professional services, the bottom line is you have to have to know how to deliver profitable projects. We have a secret that can help you become more profitable.

Let’s demonstrate through an example.

Amazon gets your order and a mini profit and loss statement is created based on a few key questions:

  • How much was the item?
  • Where is it shipping to?
  • How much does shipping cost?
  • How much are our marketplace fees?
  • Is it an Amazon item or a 3rd party reseller?

Each of these questions gets answered instantaneously when you order a new sweatshirt. Amazon then decides on the right warehouse to ship from to optimize revenue, costs, margin and customer experience. What does this have to do with professional services?

A project has a sale price, a cost to deliver, revenue and margin. Just like that sweatshirt.

But if Amazon only focused on marketing and selling the sweatshirt…well, they wouldn’t be Amazon. What makes them SO successful is the efficiency of their business. The same holds true for services organizations, we cannot lose sight of optimizing our operations. That starts with measuring project profitability. What is measured is managed.

 

Profitability analysis starts with visibility.

When measured together, resource management & project accounting create true visibility from your entire project portfolio down to the day-to-day projects. Why is that important? Visibility is a critical element to drive outcomes for professional services organizations. We care about outcomes:

  • Client References
  • Billable Utilization
  • On-Time Project Delivery
  • Project Margin

When looking the difference between organizations with little visibility vs. organizations with excellent visibility, the results speak for themselves:

project profitability

Skip math. Focus on benefits. Profitability should be owned at every level; project management, project operations, and across the entire organization.  Through project accounting, within project management tools, right up and into management software.

project profitability

PRO TIP: SEND THIS to your project operations team member to get them on board with project accounting.    

But wait, there’s more

Getting disciplined at measuring project profitability will create other benefits over time:

  1. No more project overruns that impact the business
  2. A clear picture of individual project and portfolio health
  3. The confidence to hire and resource ahead of projects
  4. An understanding of the financial health of projects against each other (we know, mind blowing)

Whether you’re looking to drive greater profits, deliver better work, or use your staff more efficiently, it all starts with measuring your projects and project operations. To learn more about project accounting read our detailed blog post here.

Learn more about what Projector can do for you.

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