A project being finished is not the same as a project being profitable. Tracking profitability is how a business knows which projects genuinely earned. This piece is about tracking project profitability in Odoo.
Finished is not the same as profitable
It is easy to know whether a project is finished; the work is done. It is harder, and more important, to know whether it was profitable, whether the revenue from it exceeded what it genuinely cost. A project can be completed, delivered, the customer satisfied, and still have lost the business money, because it cost more in effort than it earned. For a service or project business, knowing which projects genuinely made money, and which did not, is essential, and that is what tracking project profitability provides.
The two halves: revenue and cost
Project profitability is the comparison of two things: the revenue from the project, and the genuine cost of delivering it. The revenue is what the project earned, from the customer, by whatever billing approach. The cost is, substantially, the cost of the time and effort that went into the project, plus any materials or other costs. Profitability is revenue against cost. Tracking it means having both halves, and the cost half is the harder one, because it depends on the genuine effort being captured.
How Odoo makes profitability trackable
Odoo makes project profitability trackable because it is a connected system that holds both halves. The revenue side is on the Sales and billing side. The cost side comes substantially from the time recorded against the project, through the connection to Timesheets, and the cost that time represents, gathered, through analytic accounting, against the project. Because Odoo connects the project, the time spent on it, the cost, and the revenue, it can set the project's genuine cost against its revenue and show whether the project made money. Project profitability is trackable in Odoo because the connected system brings the revenue and the genuine cost of a project together.
What tracking profitability reveals
Tracking project profitability reveals which projects genuinely earned and which did not, and that is genuinely valuable. It can reveal that a project assumed to be fine actually lost money, because it consumed far more effort than its revenue justified. It can reveal which kinds of project, which customers, which work, are genuinely profitable and which are not. It gives a service business the truth about where it genuinely makes money, which is the basis for decisions: what work to pursue, what to price differently, what to do less of. A business that tracks project profitability manages its work on the truth; one that does not assumes that finished projects were good projects, which is not always so.
It depends on the time being recorded
An honest note. Tracking project profitability depends on the genuine cost of a project being known, and that depends on the time spent on the project being faithfully recorded. If the time is recorded honestly and against the right projects, the cost side is genuine and the profitability picture is true. If the time recording is poor, the cost side is unreliable and the profitability picture is too. So tracking project profitability rests on the discipline of time being faithfully recorded. With that discipline, project profitability is one of the most valuable things a service business can see.
The takeaway
Tracking project profitability in Odoo sets a project's revenue against its genuine cost, substantially the cost of the time spent on it, to see whether the project actually made money. It matters because a finished project is not necessarily a profitable one. Odoo makes profitability trackable because the connected system brings the revenue and the genuine cost of a project together. Tracking it reveals which projects and which work genuinely earn, the basis for sound decisions, and it depends on time being faithfully recorded. For how we approach Odoo, see our ERP practice.