Project-based business

A project-based business earns its revenue from discrete pieces of work, each sold in advance and delivered by people over a period. Unlike a product business, what is sold is a promise about effort, and the margin is only known once that effort has been spent.

What characterizes a project-based business?

Revenue arrives in projects rather than in units. Capacity is people, and it cannot be stored, so an unsold hour is lost permanently. Each project has its own economics, and the company result is the sum of them rather than a figure of its own.

Which sectors are project-based?

Consultancies, agencies, software and engineering firms, architecture and planning offices, production companies, technical service providers, and the internal project organizations of larger companies. The model matters more than the sector. The common factor is that each sells discrete pieces of work in advance and delivers them through people over a period.

What makes project-based businesses hard to steer?

The result is decided before it becomes visible. Pricing fixes the ceiling, delivery determines the cost, and both happen before anyone can measure them. By the time the figures are certain, the decisions they should have informed are already made.

What figures does a project-based business live on?

Utilization, billability, project margin, and the gap between quoted and recorded effort. Revenue alone says very little, because a busy quarter and a profitable one are not the same thing. Each project has its own economics, and the company result is the sum of them, so these figures have to be read per project.

troi is built for exactly this model. See all features.