Jewell, CPANote: Join June Jewell, CPA and President of, for the Deltek webinar, “ Learn how to take control of your projects and realize greater financial success!There are many ways for your business to spend money, but only one way to make it – through your projects. Therefore with growing competition and squeezed margins, as a professional services firm you must seize every advantage to ensure your projects are profitable. There are many things that will erode the margins on your projects including bad estimates, runaway scope and poor resource utilization.

• How To Increase Profit Margin In Distribution

How to Increase Your Profit Margins. Now that you have a better idea of the amount of profit that retailers are taking in, it’s time to look at the specific ways that you can increase your profit margins. Here are 8 things you can try: 1. Avoid markdowns by improving inventory visibility.

How To Increase Profit Margin In Distribution

But by putting a few good processes in place you will be able to control project costs more effectively and realize greater financial success with your projects.Working with hundreds of professional services firms over the past 23 years has helped me understand what makes some organizations more successful than others. Follow the 5 best practices I’ve outlined below to increase the profit margins of your projects:#1.

Create a solid process for developing project estimates –Making sure your estimates are accurate is the first step in assuring your projects will be successful and make money. Do you have a standardized process for creating project estimates? If you are relying on spreadsheets for estimation there’s a good chance your project managers are using old rates, inconsistent terminology and poor assumptions in their forecasts. Your estimate become the proposal and then the contract.

Therefore a bad estimate will lead to a bad budget. The way to fix this is to establish a rigorous process and standard templates for your estimation process – setting your projects up for financial success.#2.

Enforce stringent timesheet entry and approval processes –In a professional services firm, time is your inventory, and needs to be secured just like a physical asset. By creating a rigid timesheet entry process, ensuring everyone understands it, and consistently enforcing it will lead to an increase in timesheet and billing accuracy. Strict timesheet approval processes by managers will help reduce budget overruns and lead to better resource management. I recommend daily timesheet entry, and weekly review of timesheets by managers to ensure the best results.#3. Define a standard process for approving and billing of extra services –Scope creep kills project profit margins.

Learning too late about excess work that has been done can sink the budget. After the work has already been done it can be difficult to go back to clients and justify additional payment. Instead define a standard process now how all additional services will be approved, billed and tracked moving forward. Ensure everyone (your project teams and clients) understand how additional services will be handled.

Include this information in the contract. That way everyone will be on the same page and understand that extra services will be billed outside the original project scope.#4. Ensure PMs have access to the information they need –Your project managers have a lot on their plate and the key to improving their financial management of your projects is to make their job as easy as possible. They need easy processes for creating and managing their project budgets and schedules, and accessing project information to check status frequently.

Ensure they understand how to read the reports, and have the training and authority to do something about it. When you empower your managers with information they not only will be more successful, but they will also be happier, and less likely to leave the firm.#5. Review project status at Monday morning meetings –There is a popular expression that people do what is measured, and project management is no exception. By reviewing project profitability, opportunity pipeline, AR aging, and utilization reports at your Monday morning meetings each week, you will put focus on the most critical factors in your company’s financial success, and signal to your staff the most critical metrics of the business you expect them to pay attention to. Give them visibility into how you’re tracking deliverables.

This has the desired effect of not only training them but showing them the importance of keeping the system up-to-date. When they know you will be scrutinizing the numbers and their performance each week, they are more likely to keep the data up to date.In summary, there are processes and controls that you can put in place to minimize scope creep and ensure that all extra services are approved and paid.