Whether your organization manages consulting engagements, product installations or events, ensuring the profitability of project-based business is a challenge if you don’t have the right tools. An ERP system, with integrated cost accounting and project management will allow you to plan and execute projects while keeping a close eye on profitability.
From estimate to project close, you need to track and report on the actual costs and revenues associated with every engagement.
When evaluating ERP systems that will help you manage projects, you’ll need:
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- Time and expense collection,
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- Task and milestone tracking,
- Cost and revenue allocation that will accurately measure profit.
To maximize the profitability of your projects, you will use the ERP system to:
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- Accurately estimate costs – An integrated ERP system will allow you to analyze the costs from previous engagements to estimate the total cost of your project precisely. With a clear understanding of expected costs, you can set a price that will ensure the profit you need.
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- Balance resources – When multiple people, specialized equipment or outside contractors are involved in a project, balancing resources gets complicated. Managing availability, timing and costs all at once shouldn’t be left to spreadsheets and hope. An integrated ERP system will automatically track project components and simplify coordination.
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- Monitor profitability over time – When projects span a long term, the risk of missed cost allocations and delayed revenues increases. With an integrated ERP system, costs can easily be tracked over time. Revenue recognition, including milestone billings will be managed automatically.
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- Use data to improve profits – With accurate reports from previous projects, you can compare the value of engagements to your organization at many levels. Analyze profitability over time, by size of project and type of customer to build insight into your best business opportunities.
- Analyze and report continuously – With an integrated ERP system, you will be able to analyze the financial results of internal and external projects in real time. Recognize problems to resolve issues quickly and focus resources on high return engagements.
Are you spending too much time on administration for your projects? Why not focus your attention on building profits instead? Give us a call and let’s build the profitability of every one of your projects.
Published with permission from TechAdvisory.org.
