Among all the diverse projects you run, do you know which projects are most profitable? For professional services firms, this remains a very important question one needs to find an answer for.

1. Top 10Ways to Improve
Project Profitability

2. Let’s discuss
these 10 ways
you can use to
improve your
project
profitability:
Prioritizing and improving project profitability in 2018 is
more important because they Service companies are
facing greater pressure on project margins, sharp
competition, and harsh labor market.

3. 1.Tracking
the correct
metric
First, you need to determine and keep track of the
metrics that play the most important role in your
company’s profitable meter. One can consider these
five KPIs for services companies:
 Billable utilization
 Project overrun
 Project margin
 Annual revenue per billable consultant
 Annual revenue per employee

4. 2. Investing
time in the
detailed
analysis
Apart from ensuring the right metrics, a detailed analysis
is required to be able to take correct and timely
decisions. According to a PWC survey, top-performing
finance organizations spend 20 percent extra time on
analysis versus data gathering.

5. 3. Determine
actual fixed-
fee project
costs
As the trend toward fixed-fee projects and value-based
pricing accelerates, Service companies can drill down
from P&L reports into costs by projects, employees, and
customers. That will have better insights into project
profitability.

6. 4. Partner
with project
managers
Focusing on cross-functional collaboration is a major
step for the successful finance function. Collaborating
with project managers can be prioritized to ensure that
information sharing is practiced and better efficiency can
be brought into the business.

7. 5. DATA is
more
important
than you
know
There is a huge opportunity in 2018 for CFOs to be
strategic, stride in, and play a critical role in fostering
data-driven decision processes throughout the firm.
CFOs are becoming strategic advisors – especially in the
project and Service-based Organizations.

8. 6. Keeping a
check on
Budget and
Time
Keep track on the time spent and proper utilization of
resources so that the profile margin can be well balanced
against it. Cost planning and control goes a long way in
establishing control over operating costs and improving
profit margins for your projects.

9. 7.Tracking
committed
costs along
with
Budgeted
Costs
No clear visibility on what the committed costs look like
or the purchase orders that have been raised can be
problematic. If this is done manually and through
different systems, it is often hard to see what the
committed costs looks like and can be a leading cause in
projects running significantly over budget and reducing
profitability.

10. 8.Utilization
Understanding where your key resources are spending
their time, particularly the time spent on chargeable
activity as opposed to non chargeable activity such as
internal meetings, proposal writing etc. Too often many
companies will recruit additional expertise, bringing in
more cost to the business, without reviewing utilization
and making sure it is hitting key levels.

11. 9.
Automation
Automation can not only save time but a lot of additional
costs as well. It could be as simple as being notified that
a project is about to go over budget or a reminder that a
key deadline is nearing; automated notifications can
eliminate inefficiencies.

12. 10.Single
source of
Data
Best practice for any project based business should be to
create a single source of truth. Whether you are looking
in the finance system or your project system, you should
be seeing the same data. There must be a single solution
that allows us to track time, expenses, procurement and
all the key areas that finance and project managers need
to keep track of.