Companies applying the management by project business model should monitor their margins by project or product, based on multiple extremely finely-tuned criteria. The gain in productivity for the company is understood based on internal and external budgets, which must coincide with the contractual commitments accepted. This precise management of margins, customer by customer, enables the monitoring of the company's productivity and margins at every stage of a project.
To calculate a margin for each project, a company managed by project must pass on the following costs in the selling price of a service: the cost of purchases for the project in question, such as the outsourcing of certain tasks, time spent on each step, in hours/days and in euros, not forgetting a proportion of overheads calculated (unless these running costs are already factored into the price charged for your employees' time). These factors determine the potential productivity gain for the project.
The most accurate budget forecasts come up against the possible development of projects, which sometimes turn out to be less linear than expected. Monitoring of the margin in real time is therefore required to ensure an increase in productivity for the company. This monitoring is organised around four main pillars:
Management by project involves the real-time monitoring of numerous figures. Some integrated management tools enable the fine tuning of understanding via a detailed approach to aggregated information, also known as "Drill Down". This will provide you with immediate evidence of the components of a cost of time spent, of turnover, etc.
Also, if your accountant enters losses on completion as an MO and the information goes into this budgetary control dashboard, the project manager will want to know why and should take this into account.
Finally, what could be more reassuring for a CFO than to know that their sales people are compiling their offers based on similar completed projects?
Did we make a profit? How much time did we really spend on that project? In short, if you ask the right questions from the start, your margins will thank you!