Loaded labour cost
Salary or contractor cost, employer taxes, benefits, and an overhead allocation, applied per person and per role rather than as a blended rate across the team.
Platform · operations
Project profitability is an accounting calculation that happens to need a schedule as an input, which is why it so rarely lives in the project tool. It needs loaded labour cost from payroll, pass-throughs from AP, write-offs from AR, and recognised revenue from the ledger — four systems, one spreadsheet, produced quarterly at best.
What it does
Salary or contractor cost, employer taxes, benefits, and an overhead allocation, applied per person and per role rather than as a blended rate across the team.
Subcontractors, travel, software, and production billed to the client, coded to the engagement as the vendor bills arrive rather than reconciled at closeout.
The gap between what was planned and what was actually invoiced — courtesy discounts, disputed lines, and written-off time. Usually the least-tracked input and a material one.
For fixed fee, revenue earned on progress rather than on billing, so margin is measured against what was earned rather than what was invoiced.
Recalculated on every posted timesheet and vendor bill, including committed cost from open purchase orders and subcontracts.
By engagement, phase, client, service line, and person — because the pattern is usually concentrated in one of those rather than general.
Every service firm we work with runs a competent project tool and still cannot say, without a spreadsheet, which of last quarter’s engagements were profitable. That is not a discipline problem. The calculation requires four inputs and the project tool holds none of them.
So the honest framing is that project profitability belongs in the ledger and needs the schedule as an input, rather than belonging in the project tool and needing the ledger as an input. That inversion is why we read from Jira and Asana rather than replacing them.
A margin figure built on billed rates measures pricing. One built on loaded cost measures profitability, and the two frequently disagree about which engagements are worth having — particularly where a project is staffed heavily with seniors or leans on subcontractors.
Blending cost across the team makes it worse in both directions: engagements staffed with juniors look less profitable than they are, and senior-heavy ones look better. Per-person loaded cost is more work to set up and it is the difference between a number you act on and one you argue about.
In professional services, write-offs commonly run five to seven percent of revenue and most firms discover the figure annually. It is almost never spread evenly — it concentrates in one client, one phase, or one pricing assumption, which means it is fixable once visible.
Including it in project margin rather than treating it as a separate revenue adjustment is what makes the concentration obvious. It is the single input most often missing from a hand-built margin spreadsheet.
The value is in the timing. A project trending fourteen percent over at week five is a scope conversation you can still have. The same project discovered at closeout is a write-off and an awkward renewal, and the analysis is identical — only the date differs.
Limits
Margin computed from reconstructed Friday timesheets inherits their inaccuracy. We will say when the input quality does not support the precision of the output.
Headcount, revenue, or direct labour — there is no correct basis. We apply what you configure and show it on every report rather than pretending it is objective.
We show margin, capacity, and over-commitment. Solving the staffing puzzle across constraints is a different product.
Questions
A project list, timesheets, and a ledger export is enough to produce true margin by engagement.