Although a project profitability report may seem like an obvious choice in regards to an essential report, you would be surprised how many companies cannot give you an answer on which of their projects was the most profitable as quickly as you may think.
In order to have a true profit & loss report by project, this means that you are able to allocate all revenues, expenses and overhead charges to a specific project. Easy enough, right? The tricky part is when you have expenses that touch more than one project or overhead charges that need to be distributed over a group of projects. It is these types of transactions that may reduce the accuracy of your project profitability reports as the expenses may not get fully ventilated across all the necessary projects or the expenses may even get allocated to a general account therefore reducing the accuracy of your different projects' profitability.
So why is it so important to ensure that you have an accurate calculation of your project profitability? Because with a profitability report, it will allow you to quickly review your margins. This is one of the best ways to help your organization evaluate which of your current projects are trending well and worth trying to duplicate. Then on the flip side, this report also lets you know which types of projects you may want to avoid or that would need to be better evaluated in the future in terms of budget.
This is just one of the 7 reports that we feel can help you more efficiently manage your project-based business. Download our eBook to learn more about the other reports on our list at https://www.jovaco.com/en/library/how-to-measure-your-projects/.
By JOVACO Solutions, specialist in project accounting solutions for the professional service firms in Quebec
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