The services industry’s mandate: project profitability

In fast-paced services industries, savvy CFOs are tracking numerous key metrics like net income, current ratios, working capital, cash balance, DSO, gross margins, and more. But the one metric that may matter more than any other for long-term growth for professional services firms: project profitability. 

The nature of the “project” can range from a technology implementation or ad campaign to a marketing event, research study, or countless other outsourced services. But the one constant? Each project typically has a beginning, an end, and employees and contractors assigned to deliver the service. Contracts can be short-term or last for years. Billing terms can also vary widely such as time and materials or fixed fee based on milestones. Since every project is unique, it’s essential for you to clearly and quickly understand an individual project’s profitability as well as the profitability of different classes of projects. After all, once you sign that contract, you own the outcome, whether it’s profitable or not.