Peeling an Onion with No Tears

By Brian LaMee

Is my firm profitable? This is a question that is asked over and over again by consulting firms. To find this answer, it is very simple—look at financial statements and see if revenue is higher than expenses and if profit has been generated for the firm. If that number needs to be adjusted, it is easy—just cut cost or generate more revenue, right? Don't we all wish it was that easy? One might pursue more business, but there are costs of pursuing business and while it might bring in more revenue, it could also increase costs, and profitability could remain flat, or the growth is not as high as expected.

A few months ago, Deltek teamed with Consulting magazine to conduct an Efficiency and Automation Survey to give consulting firms a better understanding of what drives profitable projects. You'd be surprised with what we discovered: 50 percent of firms find at least 1 in10 engagements isn't as profitable as they'd hoped! And 1 in 5 firms don't know how often their projects miss expectations! As the old saying goes, the first step is admitting there is a problem, the next step is figuring out how to fix it.