Are Your Projects Profitable?

When is the last time you checked on the profitability of the projects you were working on? Things are continuing to be fluid in our industry and that can impact our profitability. Timelines, budgets, overruns, supply chains…all of these items, and more, affect our profits.

Stop and consider the following to see if you are still on track to make the profit you planned. 

• Have you increased your prices as vendor price increases have been given to you?
• Are you tracking the time spent on projects since in most cases it has increased?
• Do you know the current life cycle of your projects?
• Are you comparing actual costs to budgeted costs – and is the result what you were expecting?

There are many aspects to completing a project profitability analysis – and these will get you started. What matters is that we are not working so hard with our heads down that we miss the flags and opportunities to analyze where we are making money and losing money.

Just as important as the analysis is follow through. Don’t panic and don’t quit if you discover a project has gone awry. 

Take a closer look at where your money went and why it went there. Was it a misaligned cost estimate? Or did a portion of the project take longer than expected? Was there a reason, some type of extenuating circumstance, or is it worth reviewing a few other projects to see if you should alter your estimating technique?

We’ve all been there. We’ve all missed the mark - sometimes big and sometimes small. The most important thing is that you take the time to understand how and why it happened so you can avoid the same mistake in the future.

Okay, now it’s your turn. Take a little time to do some deep dives into your current and past projects so that you can adjust as needed before taking on a new project.