From Good to Great: The Month End Process

Pick a project and consider this: at the end of the month, do you send an invoice? Or does the project manager review the job with the principal? The only way to increase profitability is to manage the project like the business that it is.

Too many firms spend all their time at month end focused on getting an invoice out the door and think this somehow is managing the project.  Invoicing is important for cash flow and needs to be a priority but it is a poor substitute for in depth analysis of project progress.  Contracts may be negotiated with billing terms that are front end loaded which is great for cash flow but inaccurate for evaluation of project progress and revenue recognition.  Most contracts in the industry today are either lump sum or time and materials with a contract maximum.  Without a thorough analysis of progress against contract deliverables each month, you run the risk of project overruns and projects that are delivered late.  This does not help client satisfaction or project financial performance.

Progressive A/E firms make the month end review of project progress an important event.  Project managers that need to articulate project status under the watchful eye and questioning of experienced principals each month end are less likely to be unaware or hide project problems.  By identifying challenges immediately there are additional options to discuss scope with the client or strengthen your team before the project spins out of control.  Use of robust project budgeting and planning tools also provides performance visibility across the organization.  Strong planning tools also provide a framework for project managers to develop and enhance their contract management skills to provide better project performance and improved margins.


About Bob Stalilonis

Bob is the Senior Solution Architect at Deltek with 34 years of AE industry experience. He has both his CPA and MBA. Additionally, Bob is a speaker on AE best practices.
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