Project Gross Margin
The gross margin earned on project work after labor and direct costs, measured per project and across all projects in a period.
Formula
(Project service revenue − Project labor and direct costs) ÷ Project service revenue × 100
Why Track It
Projects are where scope creep and underquoting quietly eat profit. Per-project margin shows which kinds of work to quote higher, standardize or stop selling.
How It Is Measured
For each completed project, subtract labor at loaded cost (from PSA time entries and payroll rates) and direct costs (subcontractors, project-specific tools) from project revenue, excluding hardware and software resale. Divide by project revenue. Report the portfolio total and the worst five projects. Source: PSA project billing and time, with loaded rates from accounting.
Constraints
Requires every project hour logged against the project and a loaded labor rate. Resale hardware in the revenue line inflates the margin, so keep it out.
Measurement Note
Excendio, citing Service Leadership, puts best-in-class project services margin at about 37.5%. The Service Leadership Index reported MSP project services margins at 23% in Q4 2023 and 12.9% in Q4 2024, driven by lower project team utilization. The danger line uses that 12.9% low.
Referenced In
Related KPIs
Glossary and Answers
More in Service Delivery
Whether the MSP keeps its service promises and delivers projects and support at a sustainable labor cost. These numbers show where contracted commitments and technician capacity are drifting apart.
- Average Hands-On Time per TicketService Manager
- Endpoints per TechnicianService Manager
- SLA AttainmentService Manager
- Tickets Closed per Technician per DayService Desk Manager