Effective project budget management is one of the most critical components of successful projects. As many as 27% of projects go over budget, which can negatively impact client relationships and profits. One in six of those over-budget projects nearly doubles the original estimate.
In this article, we will discuss average profit margin expectations and how to bill for professional services. We'll also explain what is meant by professional services, as well as investigate a few different methods for measuring project management efficiency. We'll also list some practical ways Wrike can help supercharge your project budget management process.
What is professional services performance and how does it relate to project budget management?
First of all, what is the professional services sector? This industry includes any job that offers a specialized service to others, from accountants to engineers. Professional services performance indicates how well resources (including budget, time, and talent) are being used.
When you efficiently monitor your budget, it’s easy to compare current expenses with projected estimates in real-time. When you efficiently monitor your time, you can solve possible roadblocks before they come up or cause timeline and budget extensions. And when you efficiently schedule your talent, it’s easy to keep everyone on track regardless of what comes up.
All of these elements combine to ensure the best possible project budget management so that professional service managers can stay within their profit margins.
What are the profit margins in professional services?
In professional services, measuring profit margins is an important way firms can assess whether their resources are being efficiently managed or if they are taking on projects that are too large or costly.
A professional services profit margin typically averages 20% for total business under one organization. The range for profit margin in project management varies greatly but can equal anywhere from 15%-50% of the total project revenue.
For example, an events firm may charge a fee of $50,000 to a client looking to plan a business conference. If it costs the firm $30,000 in total to execute this project, the gross profit margin is 40%. Project budget management is crucial in this instance because it helps direct revenue toward the bottom line, rather than simply covering project costs.
Boost profit margins by measuring project management efficiency and overcoming roadblocks before they even happen.
How can I measure project management efficiency?
Project management efficiency describes how well a manager can allocate resources within given limitations for budget, team, and timeline. Striking a balance between these key elements and ensuring high-quality output can be a challenge. This is especially true if you don’t already measure, record, and learn from your own efficiency practices.
Luckily, you can measure project management efficiency by using the right metrics and finding new resource leveling techniques with a little help from Wrike. Here’s how:
1. Measure your project budget in real-time with Wrike’s custom fields
Add fields such as dollars, budget totals, and budget categories to your own personalized Wrike reports. Edit settings to include important team collaborators so they can update expenses in real-time and help keep tabs on how much funding each project has left.
2. Track task assignments, updates, and changes to prevent scope creep
Use Wrike’s task management system to add all team members to the project timeline. Create and arrange task blocks that each have their own individual priority settings plus expected time. Add task dependencies that automatically notify other team members who are waiting for certain list items to be crossed off before they can move to the next phase. Modify or reassign tasks that threaten the project budget or timeline.
Plus, build trust among clients by giving them access to relevant Wrike summaries (such as customized reports and personalized at-a-glance dashboard reviews) so they can stay informed throughout the entire process.
3. Monitor your project timeline, accurately predict delays, and work to prevent them within Wrike’s user-friendly dashboard
View big picture project tasks using Wrike’s gantt chart tool. Turn to-do lists into actionable steps with concrete due dates. Track progress at-a-glance as team members update or complete task statuses. Keep everyone on the same page without having to send out an email or instant messenger updates every step of the way.
How can I measure the total project cost?
Learn how to calculate project cost through proper forecasting and real-time expense monitoring in Wrike using three easy steps:
- Track budgets versus key metrics such as hours by creating a custom field for planned budget and another custom field for the actual budget.
- Have team members manually enter their expenses at the end of each workday in the actual budget spreadsheet.
- Evaluate these numbers side by side to determine if you’re still within profit margins at any given point throughout the project and tally cost estimation before committing to unexpected purchases.
Master project budget management with Wrike
Now you understand the relationship between professional services performance management and project budget management. You also know what your profit margin in project management is, some practical ways to measure project efficiency, and how Wrike can be used to measure total project cost. See for yourself how Wrike helps professional services managers increase performance and efficiently monitor budgets with our free trial.