Profitability Tab

The Profitability Tab will collate information from your Financial Tab, Items section, and Invoices to help you assess the relative profitability of your project. You'll notice that it somewhat resembles a more traditional Break Even chart, showing how your actuals are comparing to the estimates made at the beginning of a project.

The information entered on your Financial tab is reasonably critical, as it will determine broadly how you'll end up using your Profitability Chart.

Current shows the project as it stands(up to todays date), the solid colors seen in the red and blue. You'll note that these can be more sloped as they represent time tracked, and reflect the actual progression of your project.

The dotted lines are your forecast, and will generally increase linearly over the course of the project. Keep in mind that, depending on how if you bill your project on a fixed or variable basis, the billable total will either be a moving target or a set line. We'll talk more about that below.

There is a third line, Invoiced, that will show what you have actually sent to your client relative to your total billed amount/the amount you'll need to bill by the end of your project. By the end of your project, that gold line should meet to where your blue line ends. Each invoice will show a gold dot on the line, and will turn green once marked as paid. It may be however, that you end up billing slightly more based on unseen variables or similar, in that case, the gold line will slightly exceed the blue.

Your project profit margin will also be listed in this section; in the above example, it is 59%, down from a potential 61% on the basis of some tasks exceeding time allocation budgets.

Now we know roughly what each line refers to, lets talk about how you might use the chart. It is highly dependent on how you intend to bill your client, and what billing method you chose in your financial tab.

In the scenario where your entire project has a set cost, or the cost is fixed per phase (i.e. your agreed-upon price is $10,000.00 and is not subject to variation), you'll see that your Bill total line is fixed. This leaves you with a target, and at this time you can work backwards to allocate time to your project and determine where your clients budget is being used.

For instance, in our $10,000.00 example, we might elect that our first task requires 10 hours which will be billed at a rate of $120.00. This would be done from the Items page. Once that selection is made, we can go back to our Profitability tab and see how our budget line has shifted. We can keep making assessments on how we want to allocate our budget from there until we've allocated for all our tasks. Once our project is planned out, we can look back and see if we're satisfied with the distance between our bill total and costs. You may notice your budget and costs will get closer and closer to your bill total as you add more time to the project. If youre finding that your costs are climbing too close to your bill total and eliminating your margins, it may be that future projects need to be billed to a higher fixed value. This tool will help you identify that as early as possible, and plan around already agreed scenarios and where you might need to make conpromises if necessary.

In the scenario where you have quoted a certain value but agreed that variations may take place, you will be using Time Spent as your method of billing. In the above example, you might note the raised blip in roughly the middle of the graph. This represents time being tracked, and therefore, billable hours being added to the project. Similarly, because this time was spent by staff members we have to pay, costs also raised by a proportionate amount.

While a project is in progress, you may want to look at the dotted lines. While the solid colours represent continued activity, the dotted ones represent expected positioning as the project progresses towards completion. In that sense, they also show what your end total cost and revenues should be. They progress fairly linearly, although your project may not increase in such a steady manner due to the fact that time records will be slightly more irregular.

In this sceanrio, you'll constantly be comparing the expected value to the estimated/forecast values. As your time tracked increases, so will your costs, however, so will your total billed celing. This will mean that no matter how much time you track, your revenue will remain proportionate to your costs.