INDUSTRIES / ARCHITECTURE & ENGINEERING
Architecture & engineeringLong projects need
project accounting
A design project runs for months and bills in phases. Revenue arrives on a schedule that has little to do with when the work happened, and without work-in-progress accounting your monthly numbers are driven by invoicing dates rather than by anything real.
Billing dates are not
the same as progress
Design and engineering work is delivered continuously and billed at milestones. If you recognise revenue when you invoice, a month where two phases completed looks exceptional and the following month looks alarming, when in reality effort was steady across both.
Percentage-of-completion accounting fixes this by recognising revenue as work is performed, with unbilled work carried as an asset and over-billing carried as a liability. That's the standard treatment for professional services with long project cycles, and it's what turns monthly financials into something you can manage against.
Project profitability is the second problem. Fee is agreed at the start, effort unfolds over months, and scope creeps almost invariably. Without hours tracked against project budget, a project that consumed forty percent more effort than planned looks identical in the accounts to one delivered cleanly.
Utilisation matters more here than in most sectors because staff are the entire cost base. Billable hours against total hours, by person and by discipline, drives every hiring and capacity decision the firm makes.
And sub-consultants — structural, MEP, civil, survey — need to be costed to the projects they served rather than pooled. Where they're passed through at cost, they inflate revenue without adding margin, which distorts every ratio unless separated.
What usually goes wrong
- Revenue recognised on invoice rather than on progress
- No work-in-progress or unbilled revenue tracking
- Hours not tracked against project fee budget
- Scope creep absorbed without a fee conversation
- Utilisation unmeasured, so capacity planning is guesswork
- Sub-consultant costs pooled rather than costed to projects
- Pass-through costs inflating revenue and distorting margin
Bookkeeping from $299/month · Cleanup from $200 per month behind
Project accounting
for long cycles
Revenue matched to effort, and effort matched to fee.
Percentage of completion
Revenue recognised as work is performed, with unbilled work and over-billing both visible on the balance sheet.
Project profitability
Hours and costs against fee per project and per phase, so overruns surface while the project is still running.
Utilisation tracking
Billable versus total hours by person and discipline, so hiring decisions rest on measured capacity.
Sub-consultant costing
Structural, MEP and civil costs allocated to the projects they served, and pass-throughs separated from fee income.
Phase billing
Milestone invoicing tracked against progress, so billing keeps pace with delivery rather than lagging it.
True hourly cost
Fully loaded cost per person including taxes, benefits, software and non-billable time — the basis for every fee you quote.
You'll recognise this if...
Design firms carry the same accounting challenges as construction with none of the tooling, and the errors below are near-universal in firms under fifty people.
Lumpy months
Revenue swings with invoicing milestones rather than with the work your team actually did.
Overruns found late
You discover a project went over budget when it finishes, not while it's running.
Utilisation is instinct
You'd estimate your team's billable percentage rather than look it up.
Scope creeps quietly
Additional work gets absorbed and the fee conversation happens rarely, if at all.
What project accounting
makes visible
Monthly revenue starts reflecting work performed, so comparisons across months mean something and you can see whether the year is tracking to plan while there's still time to act.
Overruns become visible mid-project rather than at completion. A project at sixty percent of fee and eighty percent of budgeted hours is a conversation you can have now — about scope, about additional fee, about resourcing — rather than a loss you discover afterwards.
Utilisation becomes a managed number. Most firms find they're either running staff harder than they realised or carrying more unsold capacity than they thought, and both change hiring plans.
And fee proposals improve. With fully loaded hourly cost and historical effort by project type, you can price new work from evidence instead of from what the last similar job was quoted at.
BOOK A FREE CALLEvery client gets
- Replies within 48 hours, guaranteed
- Books closed by the 15th, every month
- Flat monthly pricing, no hourly billing
- A plain-English summary with every report
- The same team every single month
- Cancel any time, files handed over cleanly
Architecture & engineering accounting questions
Yes. Those handle time, project management and often billing; we reconcile them against the accounting records and produce the financial reporting on top.
If your projects span months and you bill at milestones, the principle matters regardless of size. How formally it's applied depends on who reads your accounts — lenders and acquirers expect rigour, an owner-managed firm may need it applied sensibly rather than exhaustively.
Tracked separately from fee income, since they're pass-through rather than revenue. Blending them inflates revenue and makes your margin percentage look worse than it is.
Yes, and it's usually revealing. Firms often find one sector — a certain building type or client category — consistently delivers better margin, and that shapes business development.
Tracked so you can see how much unbilled effort is going into pursuit. Most firms underestimate it substantially, and knowing the figure changes how selectively they chase work.
It limits precision rather than blocking it. We'd start at project level, which is more forgiving, and tighten as tracking improves. We'll be clear about which numbers are solid and which are indicative.
See your projects while
they're still running
Thirty minutes, no pitch. We'll look at how your project revenue and costs are recorded and quote you a flat monthly price.
BOOK YOUR FREE CALL