To understand whether a project is financially on track, you need to know what the firm has earned, what delivery has cost, and how much work remains.
Accounting for architecture firms brings those details together. A regular project review can help principals address budget problems early and improve estimates for future work.
Here are four ways to make that review more useful.
Divide the agreed fee and planned effort into the phases covered by your client agreement.
For each phase, identify expected staff hours, consultant costs, and other direct expenses. Keep the original budget available and record approved changes separately.
This makes it easier to identify where actual effort is exceeding the estimate. It also helps you learn which phases need more allowance in future proposals.
Use a structure your project managers can maintain consistently. Too many tracking categories can make time entry difficult and reports less reliable.
A fixed fee still needs to cover the effort required to deliver the work.
Include principal time, internal reviews, client revisions, and consultant coordination. Ask staff to submit hours regularly so project reports reflect the work already completed.
Keep labor cost and billing value clearly defined. The amount you charge a client for an hour and the cost of providing that hour serve different purposes in your reports.
Your accountant can help establish consistent labor cost calculations and explain how overhead is treated.
Review costs to date alongside the effort still required.
Ask the project manager:
Combine costs already incurred with estimated remaining costs, then compare that total with expected project revenue. Clearly label whether the result includes allocated overhead.
Update the estimate as the project develops. Keep proposed additional fees separate from approved amounts so the forecast does not depend on income the client has yet to authorize.
Review work awaiting billing and invoices awaiting payment separately.
For unbilled work, identify what is holding up the invoice. It might be missing time entries, an expense report, a milestone, or a scope question.
For outstanding invoices, confirm the due date and whether the client has raised an issue.
Assign each unresolved item to someone with a follow-up date. That turns the review into a manageable action list and helps keep expected collections connected to your cash forecast.
Need a clearer view of project performance?
Accounting Frontier supports architecture firms with bookkeeping, project performance reviews, billable-hour forecasting, and cash flow planning.
If your current reports leave important questions unanswered, schedule a free consultation. We’ll discuss what you’re tracking today and what would help you make better project and staffing decisions.