The three numbers you need
Useful job profitability starts with recorded hours, loaded labour cost and customer bill rates. Revenue is billable hours multiplied by the applicable bill rate. Labour cost is recorded hours multiplied by the employee or labour-category cost rate. Gross labour margin is the difference.
This is intentionally simpler than full project accounting. It gives managers an early operating signal while the work is still in progress.
Avoid misleading margin reports
Use effective-dated rates so historical reports do not change when an employee receives a raise or a contract rate is renegotiated. Separate billable and non-billable time, and decide whether overhead is included in the cost rate.
Missing time is another blind spot. A margin report is only trustworthy when the expected hours have actually been recorded, so show incomplete time next to the financial result.
Turn reporting into action
Review hours, revenue, labour cost and margin by project every week. Highlight unusual rate combinations, projects approaching a funding limit, and margin changes that are large enough to require a conversation.