Project Profitability Report
The Project Profitability Report helps organizations measure the profitability and resource utilization of projects based on employee timesheets. By combining information from Timesheets, Salary Slips, and Sales Invoices, the report provides valuable insights into project performance, employee contribution, and overall profitability.
This report is particularly useful for service-based businesses that bill customers based on employee working hours and want to understand the actual cost and profit generated from each project.
To access this report, navigate to:
Home > Projects > Reports > Project Profitability
1. Information Available in the Report
The Project Profitability Report consolidates data from multiple sources and displays:
- Timesheets submitted by employees.
- Salary Slips generated based on timesheet records.
- Sales Invoices created from billable timesheet entries.
2. Employee Utilization Calculation
Employee utilization indicates how much of an employee’s available working time has been billed to projects. The report calculates utilization using:
- Total Billed Hours from Timesheets
- Working Days from Salary Slips
- Standard Working Hours configured in HR Settings
The utilization formula is:
Utilization = Total Billed Hours ÷ (Working Days × Standard Working Hours)
A higher utilization percentage indicates that more employee working hours are being allocated to billable project work.
NOTE
Utilization is calculated only from billable hours recorded in employee timesheets. Accurate timesheet entries are essential to ensure reliable utilization and profitability calculations.
3. Profit Calculation
The report calculates project profit by comparing project revenue against the employee cost associated with the billed work.
The calculation uses:
- Grand Total from the Sales Invoice
- Gross Pay from the Salary Slip
- Employee Utilization
The profit formula is:
Profit = Grand Total - (Gross Pay × Utilization)
This calculation helps determine how much profit was generated after accounting for the proportional employee cost associated with the project.
4. Fractional Cost Calculation
Fractional Cost represents the portion of an employee’s salary attributable to the billable work performed on a project.
The calculation uses:
- Gross Pay from Salary Slip
- Employee Utilization
The formula is:
Fractional Cost = Gross Pay × Utilization
This value helps organizations understand the actual employee cost incurred for project delivery.
Benefits of the Project Profitability Report
- Tracks project-level profitability.
- Measures employee utilization based on billable hours.
- Provides visibility into project revenue versus employee costs.
- Helps identify high-performing and low-performing projects.
- Supports better resource planning and project pricing decisions.
- Improves financial analysis of service-based operations.
TIP
For the most accurate profitability analysis, ensure that employee timesheets are submitted regularly, salary slips are generated correctly, and billable hours are linked to the corresponding sales invoices.
Related Topics
- Projects
- Timesheet
- Sales Invoice
- Salary Slip
- HR Settings
- Project Costing
SUMMARY
The Project Profitability Report helps organizations evaluate project performance by combining data from Timesheets, Salary Slips, and Sales Invoices. It calculates employee utilization, fractional costs, and overall project profit, enabling businesses to make informed decisions about resource allocation, project pricing, and profitability management.
