Project Management, Finance + Profits
I’ve seen plenty of busy consulting firms. Busy doesn’t always mean profitable.
The pipeline looks healthy. Project managers are juggling deadlines. Staff are working hard. Clients want everything yesterday.
Then someone looks at the project figures and asks: “How did we spend that much time on this?”
That’s the uncomfortable part. A project can look busy, productive and well managed while quietly using up its fee.
In an engineering consultancy, it might be the extra work that starts with, “Could you just…?”
In a surveying firm, the fieldwork might go to plan, but the office time takes longer than anyone allowed for.
In an architectural practice, another design revision seems reasonable enough - until several reasonable requests add up to a substantial amount of unpaid work.
Nobody has been sitting idle. The client may be delighted. Yet the return on all that effort is disappointing.
Before asking people to work harder, I’d want to know where their effort is going - and whether the fee still covers what’s left to do.
The small decisions that eat into a fee
It’s easy to recognise a major scope change. The smaller ones can be harder to manage.
An extra meeting. Another revision. A little more coordination. A task that takes twice as long as expected, but nobody raises it because everyone is focused on getting the job finished.
Of course, not every extra hour needs to become a variation. Sometimes you choose to absorb a cost to look after a client or put something right.
That can be a sound commercial decision.
But choosing to absorb a cost is different from discovering afterwards that you’ve absorbed it.
What would you want to know while there’s still time?
For me, a few questions cut through:
- How much of the fee have we used - and how much work is genuinely left?
- What are we doing now that wasn’t included in the original agreement?
- Which project needs a conversation this week, rather than an explanation next month?
These aren’t just questions for the finance team. They matter to the people promising delivery dates, allocating staff and agreeing to client requests.
Project managers don’t need to become accountants. They do need enough reliable information to recognise when a project is drifting - and the support to do something about it.
That might mean discussing a variation, changing the resourcing, clarifying what’s included or revisiting an unrealistic estimate.
Better information won’t rescue every project. But it gives people a chance to act before the options disappear.
A full workload is only part of the picture
Winning work matters. Keeping good people productively employed matters. Delivering work you’re proud of matters.
But so does having a worthwhile return on that effort.
I’d put less weight on “Is everyone busy?” and more on “Do we know which projects need attention before the fee is gone?”
Because finding out after the final invoice that a project lost money may help with the next quote. It won’t recover the margin on this one.
What's one change you've made to the way projects are managed that has made a noticeable difference to profitability in your business?
I'd be interested to hear what's worked well for you.
