Project Margin
Profit margin on individual client projects after all direct project costs
What is Project Margin?
Project margin is the percentage of project revenue left after direct project costs. It shows how profitable a project is.
For project-based firms, margin is the main way to judge whether pricing and delivery are working.
How this KPI is measured
- Function
- Operations & Supply Chain
- Sub-function
- Project Delivery
- Industry
- Professional Services
- Type
- Lagging
- Impact
- Financial control
- Unit
- %
- Measurement frequency
- Monthly / Per project
- Formula
- (Project revenue − Direct project costs) / Project revenue × 100
How to calculate it
Subtract direct project costs from project revenue, divide by project revenue, and multiply by 100.
For example, if a project earned 200,000 and cost 150,000 to deliver, the margin is (200,000 - 150,000) / 200,000 x 100 = 25%.
Include all direct costs such as staff time and subcontractors, and track by project type and client.
Where it is used
Judging profitability
See which work pays.
Improving pricing
Set prices from cost.
Choosing work
Focus on profitable clients.
How to improve it
Tips and common mistakes
- Include all direct costs or margin will be overstated.
- Compare with the margin you priced for.
- Watch for scope creep.
More Operations & Supply Chain kpi library
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