Profitability Habits CFOs Use to Steer Project Success
By Paul Johnson
CPA, CGMA, MBA
No two service companies are identical, but they do find common ground when it comes to guiding a project’s profitability. So, what do successful CFOs do to help steer project profitability, that you can start using today? Glad you asked!
1. They prioritize time for analysis.
According to a survey done by PWC, top-performing organizations spend 20 percent more time on analysis versus data gathering. You can have all the best data to use toward a solid project strategy, but if you don’t set aside enough time to analyze that data, it will do you no good.
2. They focus on the right metrics.
The most influential CFOs use their time wisely by sharpening their focus on the data that delivers the most value. Here’s a list from Services Performance Insight of the top 5 KPIs for services organizations:
- Billable utilization
- Project overruns
- Project margins
- Annual revenue per billable consultant
- Annual revenue per employee
3. They support their project managers’ success with dashboards.
Dashboards are the modern CFO’s go-to when it comes to task management and information analysis.
From Ernst & Young’s research, 67 percent of surveyed CFOs believe a top priority for finance is to improve cross-functional collaboration.
The most effective CFOs support their project managers by guiding them to the data and information most critical to making effective project decisions in the shortest amount of time by using dashboards. They conveniently showcase the most pertinent data, all on one screen, for fast access and analysis.
4. They apply analytics to drive company decisions.
According to Forrester Research, 74 percent of businesses want to use data to drive their decisions, but only 29 percent say they can successfully apply those analytics.
When data is easily accessible, consistent and accurate, CFO’s can more effectively encourage company decisions to be driven by data.
5. They know the value of fixed-fee project costs.
Fixed-fee project cost trends are still going strong. 50 percent of professional services projects that TSIA analyzed are sold on a fixed-price basis, industry-wide, according to their research.
That said, whether you currently bill based on time and materials, or on fixed-fee basis, to understand your true project profitability, you need to know your cost details –And not just by way of spreading costs evenly over the project.
When your teams can see detailed labor costs, decisions become more insightful. Cost margins become clearer.
Sage Intacct, a best-in-class cloud-based financial management solution, offers data consistency, accuracy and data access for everyone involved in your projects.
Dashboards, highly customizable reporting features, and detailed chart of accounts tagging options streamline your analytics, and simplify the complex. A strong financial management solution like Sage Intacct can leverage your data to work harder and smarter for you.