Your calendars are full. Nobody has a spare afternoon, the timesheets come in healthy every week, and then the quarter closes and the money isn’t there.
The usual first guess is that the work was priced too low. Sometimes that’s it. More often the hours went somewhere nobody was looking.
Two projects from the same quarter
Halstead is the retainer everyone knows about. Weekly calls, a client who replies in four minutes, plenty of back and forth. Over the quarter it took 96 hours. Sixty of them went on an invoice.
Revenue 60 hours × $150 = $9,000
Cost 96 hours × $77 = -$7,392
───────
Profit $1,608
Margin 18%
Calder was a small fit-out. Tight scope, one decision maker, finished a week early. Twenty-seven hours, twenty-four of them billable.
Revenue 24 hours × $150 = $3,600
Cost 27 hours × $77 = -$2,079
───────
Profit $1,521
Margin 42%
Halstead brought in two and a half times the revenue. It took more than three and a half times the hours. It produced about six percent more profit.
What utilization shows, and what it leaves out
Halstead got 62.5% of its hours onto an invoice. Calder got 89%. The gap does turn up in the utilization figure, so this isn’t invisible. But on that number alone Halstead reads as a scheduling problem: too much time going somewhere that isn’t billable, so tighten up the calendar.
A billable percentage tells you how much of the week reached an invoice. It says nothing about whether the invoice was worth the hours. That only shows up once the hours carry a cost. Every hour worked on Halstead returned $16.75 of profit. Every hour on Calder returned $56.33.
Where the other 36 hours went
Nothing went wrong on Halstead, which is most of the reason it ran a whole quarter without anyone noticing.
There’s the Tuesday check-in that has been in the calendar so long that nobody remembers agreeing to it. The revision that was faster to do than to scope. The Slack thread that took twenty minutes and then took the rest of the afternoon. The handoff document. The phase-two kickoff that was really a sales call. And the one every services business knows by heart: while you’re in there, could you also.
All of it was work. None of it reached an invoice, and the invoice looked the same either way.
What those hours could have done
Two Calders would have taken 54 hours, a little over half of Halstead’s, and returned $3,042.
You can’t always make that swap. Retainers pay the rent, and small clean jobs don’t arrive on a schedule. It’s still worth knowing which way the trade runs while there’s a quarter left to do something about it. Left alone, this surfaces at close-out, if anyone goes looking.
Doing something about it
Cost every hour, including the ones nobody billed, and look at margin next to hours whenever you look at a project. The arithmetic is the same as above. Keeping it current is the hard part, because it depends on timesheet data that changes every day.
That’s the job Fini does. It holds a cost rate for each person alongside the project’s billing rate, costs every hour logged whether or not it was billable, and reports profit and margin by project, client and person. The Halsteads show up while the quarter is still running.
Try it on your own numbers
Pull your two busiest projects from last quarter and your two quietest. Cost all the hours, not only the billed ones. The order they come out in is rarely the order anyone expects.