A project generating revenue doesn’t necessarily mean it’s profitable. Imagine your business charges $10,000 for a project. That sounds great, but what if the project requires twice as many employee hours as expected?
What if the client keeps requesting changes?
What if the project goes over budget?
The actual profitability may be much lower than expected.
Start With Revenue
The first number to look at is project revenue.
For example:
Project Revenue: $10,000
But that’s only the beginning.
Track the Time
Now consider how much time your team spent delivering the project.
Estimated: 50 hours
Actual: 75 hours
Your team has spent 25 additional hours on the project. That’s valuable information.
Find Out Why
Projects can exceed estimates for many reasons:
- Scope creep
- Poor estimates
- Client changes
- Rework
- Technical problems
- Unexpected complexity
Tracking time can help you identify the reason behind the difference.
Compare Revenue and Effort
Suppose another project generates $8,000 but takes only 35 hours. Even though it generated less revenue, it may be considerably more efficient. This is why looking at revenue alone isn’t enough.
Monitor Projects Before They’re Finished
Project profitability shouldn’t only be reviewed after the work is complete. If a project is already consuming significantly more hours than expected, managers should know while there is still time to respond.
Vluxeo brings project management, time tracking, budget monitoring, payment tracking, and reporting together to help businesses gain greater visibility into their operations.
Want to understand where your project revenue is really going? Explore Vluxeo.