Project profit visible at any time, with overruns spotted about 6 weeks earlier

The company provides engineering consulting, technical implementation and professional services to corporate clients. Its project teams kept growing, and so did the number of client projects running at the same time.

Sales managed opportunities in a CRM, project managers planned work in a separate task tool, staff logged hours in Excel, and finance managed project revenue from contracts and invoices.

Each tool did its own job, but none of them could show the true commercial position of a project while it was being delivered.

The company knew how much it had signed, but not necessarily how much labour cost each project had already consumed, how much work remained, or whether it would ultimately hit its target margin.

The challenge

Contract value is not project profit

When signing, salespeople usually estimate the person-days and delivery costs a project will require.

During delivery, however, changing requirements, extra coordination, rework and scope creep can push actual costs steadily away from budget.

Timesheet data did not support management decisions

Hours were logged mainly for administrative reporting and were not fully linked to project phases, tasks or cost centres.

Revenue recognition was detached from delivery progress

Some projects were billed by milestone, some at a fixed price, and others on actual time spent.

Without a common way of managing these different commercial models, finance found it hard to assess unbilled revenue and true project profitability in good time.

SHEPHARD's digital solution

Step 1: Unify the process from sale to project

We linked CRM opportunities, client contracts, quotes, projects and delivery tasks.

Once a contract is confirmed, the matching project structure, delivery phases and budget are created according to project type.

Step 2: Build a project cost model

A project costing framework was built from staff roles, hourly cost rates, external supplier fees, travel and other direct expenses.

It distinguishes between budgeted cost, cost incurred to date and estimated cost at completion.

Step 3: Introduce task and time management

Staff record the time they actually spend against project tasks.

Project managers approve the hours, ensuring the records reflect real project activity.

Fixed-price and time-and-materials projects follow different billing and profitability rules.

Step 4: Put change and scope management in place

Requests outside the contracted scope go through a change request, effort estimate and approval process.

Additional work is tied to the corresponding commercial agreement, so project teams are less often left absorbing new work for free.

Step 5: Build a project performance dashboard

The dashboard brings together budget, actual hours, cost incurred, remaining effort, invoicing and collections to show where each project currently stands.

Owners are alerted proactively to cost overruns, schedule slippage and change requests that have not yet been commercially agreed.

Implementation approach

We first established a single, consistent relationship between contracts, projects and cost centres.

Time recording and project budgeting went live next, followed by project performance analysis.

Before any profit is calculated, the allocation of staff costs, overheads and revenue recognition rules has to be agreed with the finance team.

Business value

Project managers no longer manage only the schedule; they also manage delivery cost and commercial risk.

Management can identify projects with deteriorating margins early, instead of discovering budget overruns only once a project has closed.

Results (approximate): Overrun risks identified approx. 6 weeks earlier; budget-to-actual hours variance approx. −40%; on-time project invoicing approx. 95%.

Metrics tracked on an ongoing basis: Project gross margin, budget-to-actual hours variance, project cost overrun rate, change request conversion rate, on-time project invoicing.

What this case teaches us

In a professional services firm, the core productive resources are people's time and expertise.

Only when project, people, contract and financial data are truly connected can a firm move from managing tasks to managing the economics of its projects.

*To protect client confidentiality, company details in this case study have been anonymised; screenshots are illustrative and results are rounded approximations.*