Project margin

Project margin is the core economic metric of every engagement: it measures how much net value the single project brings to the P&L. It is computed as (revenue - direct costs) / revenue, where direct costs include cost rate of allocated people, subcontractors and non-rebilled pass-through expenses.

Industry benchmarks: strategy consulting 50-65%, IT advisory 35-50%, body rental 15-25%. Margins below target signal scope creep, below-market day rates or low utilization. A PSA computes margin in real time, distinguishing planned, recognized and cash margin, feeding project portfolio review dashboards.

Margin drifts for a small number of recurring reasons, and each of them has a leading indicator available weeks before the accounts show anything: a seniority mix heavier than the one sold, non-billable time growing quietly, rate increases due and not applied, and overrun hours absorbed instead of negotiated. Tracking those four is what turns a margin miss into a series of small corrections.

Margin is also the only metric in this list that is safe to compare across people, and only if the comparison stays within similar work. A consultant on a chaotic client with a weak sponsor will show worse project margin than one on a well-run programme regardless of how either worked, so the assignment should always be examined before the individual.