All Collections
Projects
Projects
View the profitability of your projects
View the profitability of your projects

Understand how profitable your project is

Claudette Albers-Reid avatar
Written by Claudette Albers-Reid
Updated over a week ago

Updated 27th December

A profitability report uses a calculation to determine whether a project is profitable over a given period of time.

Important: Your profitability report is also leveraged in the PSOhub OData feed for custom reporting.

It is the project manager's responsibility to report to their management and project team on the profitability of their projects and customers. This is the evidence of a successful project - did you make profit or a loss? What can you learn from this profitability report?

  • Did Sales under-sell the project?

  • Why did your resources exceed the budgeted hours - was the work effort under-estimated?

  • Did your resources meet the desired skill set(s) to work on the project or were they assigned because they were available according to your resource planning?

Important: When setting up your project team, your resource's hourly Cost rate (internal cost) is required along with their hourly Selling rate. Without the cost rate, you cannot calculate your actual profitability against your estimated or predicated profitability:

In PSOhub, you can see your estimated profitability in the project's contract. The profitability is only calculated if you have entered the contract line's budget sales and budget cost, either manually or from the budget and workload.

In the contract, you will find a drop-down where you can select the option Estimated Profitability:

The contract view will appear as shown below. You will notice that Budget, Profit and Margin data for hours and expenses are available:

Here, is an explanation of these fields:

Field

Description

Selling

Represents your budget based on your selling rate. In the case of
a Fixed Fee, Retainer and Expense Fixed fee contract lines, that would be your internal budget (based on your selling rate)

A T&M contract line or Expense contract line would represent the budget/estimate you have agreed upon with your client.

Budget (Costs)

Represents your budget based on your cost rate. Whether this is a Fixed Fee or T&M contract line, the Budget (Costs) represents your internal budget based on your cost rate.

The budget can be entered:

  • Manually as a bulk amount.

  • Via the Workload sheet. In this case, the number of hours will be multiplied with the selling and the cost rate of the role and the totals will then be posted in the Budget (Sales) and Budget (Costs) fields respectively.

Profit

Represents Budget (Sales) minus Budget (Costs).

Margin %

The calculated profit margin.

If you enter it manually, simply click the contract line and set up the values including the profitability attributes and click Save:

When you project is Active, time and expenses can be logged and will be seen in the Contract view.

As a project manager, you can review your Actual Profitability, by selecting the option in the Contract drop-down list:

So, how do we understand the actual profitability of your project?

The Used (Costs) column, reflects the total value of logged hours based on the cost rate (Cost rate per resource x logged hours). Therefore, you can see the profitability between your resources selling rate and the actual cost rate value.

Your overall Profit and Profit Margin is displayed.

Related articles

Did this answer your question?