Guide · Getting paid
Once a month, after the books close, compare what each project has cost so far with the share of its budget that matches how complete it is.
A project that has spent more than its percent complete gets a conversation that week, about scope, staffing or fee, while there is still budget left to fix it.
Start from the fee. Take off consultants' fees and the profit you planned to keep. What is left is the budget for your own team's time and direct expenses. Split it by phase if you can.
Timesheets and receipts need a project code, or the numbers below cannot be trusted. The month-end close guide covers how receipts reach each project.
Run the check on closed numbers, so everyone argues about the same figures.
For each project, multiply each person's hours by their cost rate, then add direct expenses. A cost rate is what an hour of that person costs the firm: pay plus benefits, divided by hours worked. Your accountant can help set it.
Ask for it per phase and tie it to the deliverables list. Use the same number you bill on, if you bill by progress.
Planned cost is the budget times percent complete. The gap between cost to date and planned cost is the variance. Cost to date divided by percent complete estimates the cost at completion.
Any project over your threshold gets a named decision that week: raise a scope change, change who works on it, or have a fee conversation with the client.
Copy the month's figures to a new tab before next month's close. A project that drifts a little every month is easy to see across three snapshots and hard to see in one.
Free tool
Enter each project's budget, cost to date and percent complete. It works out planned cost, variance and an estimate at completion, and flags what needs a decision. Nothing leaves your browser.
| Project | Budget | Cost to date | % complete | Planned | Variance | Estimate at completion | Status |
|---|---|---|---|---|---|---|---|
Estimate at completion is cost to date divided by percent complete: an estimate that assumes the rest of the work goes like the first part. The 5% band is our suggestion.
"We have used 60 percent of the budget" sounds fine. It is not, if the project is 40 percent complete. The check in this guide puts the two numbers side by side. It is a simple version of what project managers call earned value: planned cost is the value of the work done so far, at budget.
Three projects at the end of a month, no currency.
| Project | Budget | % complete | Cost to date | Planned cost | Variance | Status |
|---|---|---|---|---|---|---|
| Project A | 60,000 | 50% | 28,000 | 30,000 | -2,000 | On track |
| Project B | 40,000 | 40% | 24,000 | 16,000 | 8,000 | Over |
| Project C | 25,000 | 80% | 19,500 | 20,000 | -500 | On track |
Project B has spent 60 percent of its budget at 40 percent complete. At that pace it will cost about 60,000 against a budget of 40,000. That is an estimate, and it assumes the rest of the work goes the way the first part did. It still gives a reason to talk now rather than at the end.
Each cause has a different decision. Write it down in the decision note below, with an owner and a date.
Billing and cost use the same percent complete. If you bill at 50 percent and the cost check says 40, one of the two numbers is wrong, and the client will notice the billing one first.
For firm-wide numbers built on the same data, such as utilization and the net multiplier, see the financial scorecard.
A sheet layout with the formulas, the monthly request to project leads and a decision note. Replace everything in [square brackets].
Download the templates as a plain text file, no signup needed.
When: Set up once. One row per project, refreshed after each monthly close.
Subject: Columns A to I, data from row 2
A Project | B Budget | C Cost to date | D % complete (as 0.40) | E Planned cost | F Variance | G Estimate at completion | H Status | I Decision E2 =B2*D2 F2 =C2-E2 G2 =IF(D2>0, C2/D2, "") H2 =IF(D2=0, "", IF(F2>B2*0.05, "Over", IF(F2<-B2*0.05, "Under", "On track"))) The 5% band in H2 is our suggestion. Set your own and keep it the same every month.
When: The first working day after the month closes.
Subject: Percent complete for [month], by [date]
Hi [name], For the monthly cost check, could you send percent complete for each active phase on your projects by [date]? [Project]: [phase] [%], [phase] [%] [Project]: [phase] [%] Please base it on the deliverables list, not hours spent. If something has changed in scope or the client has asked for extra work, note it here too. Thank you, [your name]
When: In the project file, the same week a project is flagged.
Subject: [Project]: cost check [month]
Budget: [budget] Percent complete: [%] Cost to date: [cost], planned [planned cost], variance [variance] Estimate at completion: [estimate] (an estimate, based on cost to date) Cause: [scope added without a change / late client information / more senior staff than planned / consultant added / other] Decision: [raise a scope change / change staffing / fee conversation with client / accept and record] Owner: [name] By: [date] Review again: [next month]
Your own team's time at cost, plus direct expenses you will not pass on to the client. Leave out consultants' fees you pass through and the profit you plan to keep. Those come off the fee before the budget starts.
Take a person's yearly pay plus benefits and divide by the hours they work in a year. It is an estimate. Your accountant can refine it, and it only needs to be close enough to compare projects fairly.
Because it hides the timing. A project that has used 60 percent of its budget looks fine until you learn it is 40 percent complete. Percent complete turns spent into should-have-spent.
There is no published benchmark we would quote. We suggest a band of 5 percent of the budget, applied the same way every month. A small overrun that grows for three months in a row matters more than one large month.
Partly. On hourly work without a cap, the client pays for the hours, so the check is whether hours are being billed. With a cap, treat the cap as the budget and run the same check.
Archon & Partners