Where fixed-price projects lose money
The losses are familiar:
- Milestones billed weeks late, because nobody told accounts the stage was reached.
- Scope creep absorbed without a change request, because the budget was only checked at the end.
- Hardware, licences and travel bought for the project and never charged.
- A budget that is known to be blown only once the project closes.
Budget, burn and forecast
Set a budget in hours, money or both, for the whole project and for each phase. Actual is approved time at each person’s cost rate, plus approved costs and expenses. Burn is actual as a share of budget.
The forecast at completion adds pending time and the work left, each open task’s estimate less the hours already logged, costed at the project’s blended rate. Variance is budget less forecast. The budget turns amber when the forecast passes 90% of budget and red when it goes over, early enough to raise a change request while the customer still remembers asking for the extra work.
The billing plan
Each project’s billing plan lists its fixed-price payments. A milestone has a description, an amount and a trigger: on a date, or when a task reaches a Done column. ProjectSmith checks the triggers every night and marks due milestones ready to bill; a manager can also mark one ready straight away.
Ready milestones are sent to the project’s Autotask contract as contract milestones, and Autotask invoices them in your normal billing run. Milestones Autotask has billed show as billed. A by-month table adds up planned, ready and billed amounts, so you can see the revenue coming.
A milestone can be edited while it is planned. To stop one being billed, cancel it in ProjectSmith; one already sent to Autotask is then corrected in Autotask.
Writing a billing plan that bills on time
The plan is only as good as its triggers. Four habits make the difference:
- Write the billing plan with the statement of work, not after the project starts.
- Give every milestone a trigger that is a fact: a date, or a named task such as “Client acceptance received” reaching done. “Substantially complete” is an argument, not a trigger.
- Link the project to its Autotask contract on day one, so ready milestones have somewhere to go.
- Price every change request as its own milestone instead of folding it into an existing one.
Charges, time and what stays in Autotask
Approved extra costs and expenses become Autotask project charges, billable or not as the approver decides. Time and materials work on the same project arrives as approved, billable time entries.
Bill rates, contracts and invoices stay in Autotask. Cost rates live in ProjectSmith, because Autotask does not expose resource costs consistently. For the practice side, read running fixed-price projects in Autotask without billing late.