A successful engagement that made no money
The client loved the work. The sponsor has asked about a second phase. Then the finance review at close shows the engagement barely broke even: the team was more senior than planned, an associate was brought in at a high day rate for four weeks, and the last month was spent on rework after a scope misunderstanding. None of this was hidden. It was just never added up while the engagement was running.
The partners agree to look at margin more closely next time. Without a tool, they will not.
Why margin is invisible until the end
- Fee, time, costs and forecasts sit in different systems.
- Consultant costs by grade are known to finance, not engagement managers.
- Associate and expense costs arrive late through accounts.
- Effort to complete is not forecast, so current spend tells only half the story.
- Margin reviews happen at close, when nothing can change.
Culture plays a role. Engagement managers are rewarded for client satisfaction and delivery, and margin is seen as the partners' concern. Without visibility, managers make reasonable delivery choices, such as bringing in a senior consultant to fix a problem, without seeing the cost.
What late margin visibility costs
| Blind spot | Effect |
|---|---|
| Team mix drifts senior | Cost rises while fee stays fixed |
| Associate costs unnoticed | Margin quietly eaten |
| No effort-to-complete forecast | Overrun discovered in the final weeks |
| Patterns not seen | Same types of engagement underpriced repeatedly |
Pricing suffers most over time. If the firm never compares planned and actual margin by engagement type, it keeps pricing the same kinds of work in the same way, and the engagements that consistently lose money are never identified, let alone repriced.
How we build live margin tracking
- Fees and billing arrangements, fixed, time and materials, or capped, are loaded from each SOW.
- Time is read from your timesheet or PSA tool and costed at grade cost rates held securely by finance.
- Associate costs and non-rebillable expenses come from your accounts system as they are committed, not only when invoiced.
- Each week, the engagement manager updates the estimated effort to complete, by grade, in a quick form.
- Forecast final margin is calculated and compared with the margin planned at proposal.
- Partners see engagements drifting from plan, with the reasons visible: team mix, extra effort, associate costs.
- At close, planned against actual is recorded for each engagement type, feeding future pricing.
Cost rates are sensitive. We build access so engagement managers see margin percentages and drivers without seeing individual salaries, if that is how your firm prefers it.
We usually start by loading cost rates with finance and running the calculation over recently closed engagements. Comparing planned and actual margins across those engagements shows which drivers matter most, and shapes what the live view highlights.
What partners see during delivery
Halfway through an engagement, the partner sees that the forecast margin has dropped because of team mix, and swaps a senior consultant for a consultant on the next phase of work. Or raises a change request for the extra scope. Either way, it is a decision, not a surprise.
Over time, the firm learns which engagement types and clients earn their margin, which shapes pricing and business development.
Does this sound like your firm?
- Engagement margin is known only at close.
- Team mix drifts more senior than planned.
- Associate costs surprise the partners.
- Nobody forecasts effort to complete.
- Pricing does not learn from past engagements.