Loss-making projects: track margin before the work is finished

Context

The work is delivered, the invoice has gone out and your diary is already full of other commitments. Then the last timesheets and the consultant's invoice arrive. The margin you expected has shrunk, or turned into a loss. The revisions seemed minor, the calls too short to record, the supplier's help essential to get the work finished.

If you're responsible for profitability in a professional practice or service business, that's the difficulty: by the time you know what a project cost, you've already made the decisions that determined its margin. A final cost report is useful, but it comes too late to change that project.

This is a representative scenario, not a report of one client's results. We look at how connecting quotes, hours and costs during delivery helps you see what's using up the budget and what you still need to spend to finish.

The challenge

1. Costs arrive whenever someone has time. With spreadsheets, hours, purchases and invoices are allocated whenever someone has time (talete365.com, 3 July 2026). You may already have incurred a cost that doesn't yet appear against the project. If allocation waits until month end, you're making decisions using a margin that excludes it. Your accounts team then has to work out which project it belongs to.

2. There are three files, and all of them are "final". Budgets, hours and purchases sit in separate spreadsheets, often with competing "final" versions in circulation (kaora.it, 27 July 2023). Before assessing a variance, you have to establish which file to use, whether the hours are current and whether a particular cost is included. The meeting becomes an exercise in checking figures, while the decision about the project waits.

3. Timesheets rely on memory. At month end, you remember the main tasks. A call, a correction or an internal handover is harder to recall. Those forgotten hours may not all be billable, but they all carry a cost. Leave them off the timesheet and a project can look profitable precisely because some of the work hasn't been counted.

4. A project losing margin doesn't alert anyone. A spreadsheet can have formulas and thresholds. But unless someone updates it, checks the variance and tells the person responsible, the information doesn't reach whoever needs to act. Finding out that you've used the hours budget with work still outstanding is useful only if you can revise the plan, clarify the scope or agree an additional charge.

The numbers worth looking at

Before changing software, we use these questions to establish which data you have and which you still need to collect. Each answer needs a defined reporting period and consistent criteria.

• How many hours worked have gone unrecorded? Reconcile attendance with timesheets, allowing for absences and including time spent on internal activities. Time outside a project isn't necessarily missing time.
• How many billable hours have yet to be invoiced, and on which projects? Separate work charged by time from fixed-fee engagements, and account for the agreed billing schedule.
• What is the average delay in submitting timesheets? Measure the gap between the date of the work and the date it was recorded, and check which timesheets are still missing.
• How many open projects have exceeded their hours budget, and by how much? For each one, how many more hours do you estimate the remaining work will take?
• How far apart are planned and actual margins on completed projects? How many show a negative variance when you compare the same cost categories?
• How many days does it take to produce a reliable progress report? How many people have to gather, correct or reconcile the data before you can use it?
• What is the margin by client and type of work? How does it change when you include revisions and support covered by the fee, even when they don't generate a separate invoice?
• How long does it take to allocate a supplier order to a project? Which costs are still waiting to be assigned?

The approach

1. We connect the project to the accepted quote. We carry the agreed fee, scope, tasks and estimated hours into the system. We establish how staff time will be costed and which costs the margin will include, so you can compare the estimate with actual performance. We retain the original budget and record approved changes separately: repeatedly overwriting it would hide the variances.

2. We make time recording part of the working day. We set up logging against tasks, including from a phone, asking only for useful information. We agree when timesheets are due, who follows up missing entries and how errors are corrected. We support your team as they use the system on real work. Configuration alone won't establish the habit, and getting started takes your team's time too.

3. We allocate external costs from the point of purchase. We assign supplier orders, consultancy and travel to the project without waiting for the final reconciliation. We distinguish committed spend from actual costs, so an order and its invoice aren't counted twice. We also agree who handles uncertain allocations: an unassigned cost needs to stay visible until someone resolves it.

4. We add a forecast of the cost to complete. We compare recorded hours and costs with the budget, then ask how much work remains. The forecast margin at completion must account for costs incurred, existing commitments and further costs expected, without double counting. We agree alert thresholds and who will review them. An alert prompts a decision; it doesn't fix the project.

What changes

You can distinguish a project that has used most of its budget because it's nearly finished from one that has used it with much of the work still to do. You can see whether the margin depends on costs that haven't been recorded or additional fees the client hasn't approved.

Additional requests become easier to trace: what was included, what changed and how much time it took. Raising them during delivery gives you a chance to discuss them before absorbing further costs. It doesn't guarantee the client will agree to pay. It makes the choice explicit: renegotiate, reduce the scope or accept the cost.

Completed projects also give you evidence for future quotes. If a particular activity repeatedly takes longer than allowed for, you have grounds to revise the estimate. The system makes the variance visible; we help you establish the review process, while the commercial decision remains yours.

What people fear, and what we say

"Timesheets become a way of monitoring people." Recording hours does make people's use of time visible. The concern is reasonable, and saying that the data is for project costing isn't enough. Before rollout, we agree with you who can see it, at what level of detail and for which decisions. That requires discussion with your team and boundaries you continue to respect afterwards. Reward people for declaring fewer hours and you encourage incomplete records, making the margin less reliable.

"The data will be incomplete, so the margin will be wrong." At the start, the data will be incomplete, and you'll need to spend time on checks and corrections. We first look at timesheet coverage, unallocated costs and whether estimates of the remaining work are current. While significant information is missing, we show the margin as provisional and make the gaps visible. Waiting for the system to fill up isn't enough: someone must chase entries and check that the figures reconcile.

"Cost accounting is too much for a firm our size." It can be. Every extra category means more decisions, more entries and more upkeep. We start with costed hours, external costs and agreed revenue, making clear which overheads are excluded: project margin doesn't automatically equal business profit. We add detail only when it supports a specific decision. If maintaining the data takes more effort than it's worth, we simplify the setup. Some recurring work will still be needed.

How we approach it today

At Gitogi, we set up this process in Odoo around how you prepare quotes, organise work and record costs. Before building reports, we establish which data is needed, who enters it and who acts when a variance appears.

You can explore the relevant parts here:

• Project management software
• Attendance, shift and timesheet software
• How we work with Odoo

If your project margin only becomes clear after delivery, let's talk. We'll start with how you manage a project today: where the quote sits, when hours are recorded and which costs surface at the end. From there, we can identify which information arrives late and where the process needs to change.