Free management webinar: 5 metrics your business can’t live without

October 3rd. 2pm, Eastern Time
Register now!

In the world of professional services, time is your product. There is no inventory, no production line, and no factory. It can be hard to know how well (or how poorly) you’re really doing.

  • Money might be coming in, but are your turning a profit?
  • Is Mr. Big Client really bringing in big profits?
  • Is Miss BigShot Employee really billing enough to be worth her salary?
  • Are you sticking to your budgets on project spending and billing?
  • How much can you expect to bill at the end of the month?
  • Does a big project really bring in more profit than a small one?

The only way to know the answer to these questions is metrics. Metrics are measurements that one can establish to assess their performance and progress. For example, the percentage of billable hours per month can be a good metric to establish the level of profitability of a resource.

Learn more about business performance metrics at our free webinar!

October 3rd. 2pm, Eastern Time
Register now!



Abak is a business management solution for time sheets, project management and invoicing. Contact us for more information.

Workflow management, a must

Remains of a FestivalIn order to improve your business efficiency and to standardize your processes you have purchased a time and billing system which enables you to invoice and to manage your projects through various financial reports.  So now you have a solution that centralizes the different stages of your project management.

However, the system is dependent on your goodwill. It is your responsibility to manage your employees’ timesheets, to follow the evolution of your costs, project by project, to manage status changes in your projects, to manage completion dates of projects … and the list goes on.

Abak is a proactive software that manages these important elements for you and keeps you informed through alerts. Abak’s workflow module enables you to configure alerts in various situations.

How does it work?

The principle is simple; various rules relating to specific situations are set in Abak. Those rules are customizable (frequency, description, trigger parameters). The administrator creates templates for custom alerts. Alerts can be applied to one or more projects, and a number of customers or employees. The alarm activation results in sending an email to interested parties.

Some types of alerts:

  • When you reach a certain percentage of the budget,
  • When the project status is changed,
  • When you approach the planned completion date of a project,
  • When a timesheet is incomplete, etc.


Example of a customized alert:

Hello! A phase of a project is over budget:

Project WLAFL-01F-CONSULAR – Training and Documentation

Phase 1.1 – Meeting client. Actual amount of hour in phase: 40h – Budget Phase: 30 pm.

Attention is required.

Good day! Abak, your friendly business management system.

Do not hesitate to contact us for more information on Abak’s workflow module.

Introducing free management webinars: managing and estimating project expenses

In August, we are proud to introduce a new monthly feature with Abak: free management webinars.  Our Beyond Billing webinar series are short presentations of about 30 minutes that cover a variety of subjects, from project management to business metrics and cost tracking.

Our first Business Management Webinar, on August 9th, will focus on managing and estimating project expenses.

Do you sometimes feel like project expenses are out of control? How can you budget project expenses accurately and then ensure that actual project expenses remain within the budget? What should you do when project expenses threaten to go over-budget?

Find out with our Beyond Billing Webinar, August 9th, 2pm Eastern Time.

Free webinar: estimating and managing project expenses
August 9, 2pm Eastern Time
Register here!

Why not? It’s free!

Project-based accounting: how to find where your highest margins are hiding

Margin's logo: "Make mine Margin's"

In the world of a service-based business, like any business, you have to know where the money is coming from. More than that, you have to know where the profits are coming from. After all, running a charity is not the intention, so why take on contracts for clients that are barely breaking even? Why work with clients that always end up costing more than they bring in revenues?

With project-based accounting, knowing where the money comes from and where the money goes can be done in real time. With a centralized time and billing system like Abak, you can charge all costs to the proper project or contract. You can also attribute all revenues to the relevant project. Once the data is there, figuring out where the margins are highest is kid’s play.

When costs and revenues are associated with a project, a client, an account manager, a project manager, a business line, or even a partner, it becomes easy to analyse your business performance. For example:

  • Do margins differ significantly from one project manager to the next? What about account managers? Partners?
  • Is there a specific client type where margins are higher?  What about project types?

With quality business performance data on project margins, our clients were able to identify where they were successful financially, and where they were not. The next question would then relate to business strategy:

  • Are you willing to tolerate a lower margin on some projects, because they bring in other higher-margin project?
  • Are you willing to keep a low-margin client because of the visibility it brings to the business?

What do you think? How to you evaluate profit margins with your projects and clients? Tell us in the comments!

Including operation costs in projects: For or against?

IBM 403 Accounting MachineThere are two schools of thought when it comes to project costing:

  • Charge only direct costs to the projects. In a second step use the project’s contribution margin to cover operation costs, also called overhear costs. This method makes the global profit margin more visible.
  • Charge all costs, including the operation costs, to the projects, and get net profit directly from each project.

How does it work?

Computing net profit globally

When charging only direct costs to the projects, the profit is called a contribution margin. It’s normal, since operation costs are not paid for yet.

At the end of the project, I compute my contribution margin:

  • I invoiced $50,000.
  • Direct costs for the project, including employee work, supplier invoices and contractor costs, are $23,000.
  • My contribution margin is $27,000.

By adding this contribution margin to that of my other projects, I create a reserve to pay for operation costs. At the end of the quarter, for example, I can total my operation costs and subtract them from my contribution margin, to get my net profit for the period.

  • I have $103,000 in contribution margin from my projects this quarter.
  • I have incurred $60,000 in operation costs.
  • My net profit for the quarter is $43,000.

Charging operation costs to projects

Project direct costs are easy to charge: supplier invoices, expense reports, time sheets and contractor costs are already associated with a project when logging them in Abak. When we want to add operations costs, it gets tricky. How can we decide how much of the operation costs to charge to each project? We’re talking about rent, administrative staff, computers, etc.

The simpler method is to add an extra amount to the hourly cost of resources.

Here’s an example:

  • My operation costs are $100,000 per year. This includes all costs not charged directly to my projects.
  • I have 10 employees who work on projects, on average 2,000 hours per year.
  • My total worked hours for the year is 20,000 hours.
  • I can divide my operation costs by my worked hours: $100,000 / 20,000 hours = $5.
  • This $5 is the amount I will add to my hourly costs for all employees that charge to projects. If my employee has an hourly cost of $32, including salary and benefits, then I’ll us a cost rate of $37 per hours to include operation costs. I can do this directly in the employee’s cost rate in Abak, or I can configure a $5 cost mark-up in the employee functions.

With the adjusted hourly costs, I can include my operation costs in my projects. This operation cost mark-up can be computed on a yearly basis by accounting and finance teams.

At the end of the project, I can see my net profit easily:

  • I invoiced $50,000 for my project.
  • My costs, including the operation costs mark-up on hours worked, total $37,000.
  • My net profit is then $13,000.

Good sides, bad sides

Charge only direct costs to projects, compute net profit globally.

Charge operation costs to projects

Benefits Costs a more accurate and allow analysing the contribution margin for each project. This method ensures all costs are covered by projects revenues.
Drawbacks Contribution margins can provide a false sense of profitability, and influence decision-makers to accepts projects that a less profitable. This method can influence decision makers to turn down projects that have strategic value but may not cover operation costs.

What do you think?

In or out, operation costs? Tell us in the comments.

Find the margin thieves in your projects

James WilliamsProjects can easily start off with a good profit margin, and end up at a loss. Even if the billable rate is twice the cost rate for a consultant. Even with plenty of margin for error when the contract was quoted and signed.

As the project moves along, margins thieves get into the project and eat away at that comfortable padding we added to the contract. These margin thieves can go undetected until the end of the project, when it’s too late. Margin thieves often take the form of non-billable items that are not logged correctly to the project. For example, it can be time logged in an internal project or not logged at all, or an expense mistakenly absorbed in the overhead costs of the business. When the project closes, the administration team corrects those mistakes, and our profit margin melts away.

How can we fix this and prevent the margin thieves from going undetected? Here are 5 suggestions:

  1. Make sure all expenses are logged to the project. This includes non-billable expenses, like parking fees or employee’s expense reports.
  2. Make sure all time worked on the project is logged to the project. This includes non-billable time, such as technical support time or administrative time.
  3. Make sure to log all supplier and contractor costs to the project, even if it’s non-billable.
  4. Run your budget control report religiously. If all expenses and work hours are logged, the report will tell you, in real time, how much the project has cost so far.
  5. Set up a workflow alert to email the project manager when budgets are in danger.

Would you like to know more about these 5 tips? Let me know!

Basic budgeting principles for engineering projects

Portrait of Felix Nadar (1820-1910), Photographer and Aeronautical ScientistBlog posts are not great for long document, so we’ll focus on basic principles to use when preparing a project budget.

  • Is the project part of series of similar projects? In this case, project history can be used as a reference. For example, if I need to perform an assessment to automate an assembly line for a canned food factory and I’ve done similar assessments  in other factories, the data from previous projects would be invaluable to prepare the new project’s budget. Not only will the budget be more reliable, but we’ll be able to plan where potential problems may arise.
  • Is this project for an existing client? Do we know this client well? A client’s history allows for more accurate budgeting, since we know how to work with the client, their preferences and requirements. If we don’t know this client, we’ll want to add a risk factor in the project budget, to allow for adjustments to the new client’s unknown requirements.
  • Once we know the project and client, our next step is detailed planning of the tasks that need to be completed to deliver the project.
  • When tasks have been defined, we can assign them to the people who have the optimal expertise and experience. For example, we can assign junior employees to less technical tasks, and senior engineers to critical steps of the project. This way, we’ll be able to control our costs.
  • We also need to estimate the time required to complete the tasks, including “slack,” additional reserve time to address problems or “surprises.”
  • We’ll also want to plan for contractors and equipment needs, along with other expenses, such as mileage or other travel expenses.
  • If we have many tasks in our project, it may be logical to group them under phases, which creates a structure for the project and also facilitates invoicing: when a project phase is complete, we can invoice it. No need to wait at the end of the project.

With a detailed budget like this, we’ll be able to provide a much more accurate quotation and also increase our control over costs. With a cost management system like Abak, it will be easy to prevent and address cost overruns at the phase or even at the task level, rather than for the entire project.

12 questions to answer before choosing a time and billing system

Tommy Dodgen, age 4, standing by the largest lamp in the world: Tampa, FloridaBefore starting your search for a time sheet, invoicing and project cost management system, several requirements must be established to help you narrow the choices down and make sure you look for what you really need.

Besides the software’s features and pricing, several other criteria should be included in evaluating solutions: usability, scalability, customer service, etc.

Twelve questions you should answer before choosing a time management solution

  1. Do I only need a simple time sheet and expense report application, or a centralized, integrated solution?
  2. How reliable is my current time sheet and expense report system? How do I control my projects’ profitability?
  3. Should the solution allow for project management and project budget control?
  4. Should the solution allow complex projet structures, with phases and sub-tasks?
  5. Should the solution allow for setting budgets at the task level within a project?
  6. Should the solution allow for both billable and non-billable items, should it support cost and sell rates?
  7. How flexible should the software be when it comes to rates? Should it allow special rate per project, per task, per employee, per time period, per role?
  8. Should the solution integrate with your accounting system and payroll?
  9. Which reports will you need to manage your projects? Can the solution provide those reports?
  10. Can your invoice formats be reproduced within the solution?
  11. How closely should your software vendor work with you? How will you add/remove licences, customize reports and invoices?
  12. Will you need a web-based interface to log time and expenses?

Project Management Features in Abak [Video]

Abak offers a wide range of project management features, from detailed budgetting and planning to team assignation, cost control and tailored invoicing.

Want to know more? Take three minutes to watch this video!