Project economics
How to calculate project profitability before invoicing
A project can look busy and still be commercially weak. The useful question is not only how many hours were recorded, but what the work has earned, what it has cost and what remains unbilled.
The short answer
Before invoicing, compare the project's billable value and allocated invoice revenue with its delivery cost and project expenses. Read those figures beside budget use and work ready to invoice. Aeglio presents this as an operational project view, not statutory accounting profit.
Use three different views of the same project
Recorded time explains delivery effort. Billable value explains what that effort is commercially worth. Invoiced value explains what has already reached the client. Treating these as the same number hides delayed billing and non-billable work.
- Delivery: recorded hours, task and person.
- Commercial value: billable rates, fixed fees and eligible project expenses.
- Collection: invoices raised, payment state and remaining work ready to invoice.
Calculate an operational margin
For an internal project view, subtract the known delivery cost and project expenses from the revenue allocated to the project. Divide that result by project revenue to express the margin as a percentage.
Use a consistent cost basis. If employee cost rates are incomplete, label the result accordingly instead of presenting it as exact accounting profit.
- Operational result = project revenue minus time cost minus project expenses.
- Operational margin = operational result divided by project revenue.
- Budget use is a warning signal, not a substitute for margin.
Example: a healthy project with delayed billing
A project has €12,000 of billable value, €7,200 of time cost and €800 of supplier expenses. Its operational result is €4,000 and its margin is 33.3%. If only €7,000 has been invoiced, the margin is not the immediate problem. The €5,000 ready to invoice is.
This separation tells the team whether to protect delivery efficiency, correct missing rates or simply move reviewed work into an invoice.
How Aeglio keeps the source visible
The project detail view keeps budget progress, total time, billable value, invoiced value, expenses and work ready to invoice together. The cumulative graph makes divergence visible over time, while the activity, team, invoice and expense tabs preserve the underlying records.
Starting a normal invoice from the project selects the client and project. Starting from the ready-to-invoice amount also carries the reviewed date range.
Frequently asked questions
- Is project profitability the same as company net profit?
- No. Project profitability is an operational view of project revenue and known delivery costs. Company net profit includes wider operating, financing and tax effects.
- Should non-billable hours be included?
- Yes, when they were required to deliver the project. Excluding them makes delivery cost and capacity use look better than they were.
- What if employee cost rates are missing?
- Show the missing-data limitation clearly and use the available billable, invoiced and budget figures until the cost basis is complete.