Drawing upon more than two decades of experience collaborating with professional services organisations in the Nordics, our project management maturity model is finely tuned to deliver relevance and effectiveness within the industry.
It consists of four levels, and for each level, we describe the specific processes and key performance indicators (KPIs) you must master to elevate your project profitability.
In this blog, we focus on the intermediate level of project financial management, also known as:
When the company has processes related to daily (or almost daily) time tracking implemented and high-quality data comes in, you’re ready for the hero level. This level is all about utilising the data to budget and forecast.
Also read: Comparing the best project management tools
When you create a budget with real-time data, you can see early on if the project should be adjusted in scope, budget, and/or resources.
Make a habit of comparing the progress to the expectations and total hours consumed weekly or bi-monthly.
Also read: What is a project scope? A complete guide
Another process at the hero level is budget quotation. A budget quotation is like a rough estimate of the project done as part of the client proposal before the project is begun.
Budget quotations allow you to understand how you saw this project before (or when) it began.
It sounds simple, but we see many customers start projects without a quotation and then, well into the project, try to reach a forecast and gain control of the project.
Another benefit of budget quoting on all projects is ensuring you have thought projects properly through.
When the data and process are in place, you can do “light” forecasting, constantly comparing the project's expectations to reality.
Also read: The effective project plan - the project manager's ultimate guide
The third process, budget transparency, is more about transparent communication than actual budgeting.
When you have the budget in place, the data is coming in, and you follow the ups and downs closely, a core process as the project manager is to communicate with transparency:
Also read: Stakeholder Analysis
And that brings up to:
The completion rate, which is also known as the budget at completion (BAC), measures how much of the allocated budget has been expended or utilised relative to the total budget for a specific project.
It gives you insights into the financial health of your project by assessing whether spending is on track with the planned budget.
The forecasted project factor gives you an indication of the profitability of the project once completed.
The forecasted revenue is the expected income or revenue, while the forecasted total costs are all the anticipated costs, including working hours, materials, and administrative expenses.
As the project manager, this KPI gives you vital insight:
This metric helps project managers and stakeholders evaluate the financial success of individual projects and make informed decisions for future projects.
This is a true power KPI and helps you identify if your project is getting out of control.
Measuring the average hourly rate requires getting that information for every time registration in the project, which you can do with TimeLog PSA.
When you start measuring this KPI, you’re able to:
Also read: Intro to project financial management and the 9 KPIs you need to measure
TimeLog offers a cutting-edge Professional Services Automation solution that prioritises project financial management. With our platform, you can easily monitor the profitability of consultants, projects, and clients.
Are you interested in learning more about how TimeLog PSA can help you achieve profitable and successful projects? Schedule a 20-minute meeting with us today.