Utilisation tells you how busy people are, not whether the work paid. Between the contract fee and what is actually realised sit unbilled hours, scope that crept, and write-offs nobody flags until the engagement closes. We cost work on the hour, by role and engagement, with TDABC, so the realised margin of every project and client is visible while there is still time to act on it.
Cost and Profitability Consulting · 150+ models since 2010 · TDABC
Most firms run on utilisation: the share of available hours booked to client work. It is easy to measure and easy to chase, and it says nothing about whether those hours were billed, billed in full, or billed at a rate that covered the cost of delivering them. A team can be fully booked all quarter and still hand back margin through the side door.
That side door is realisation. Unbilled hours written off to "relationship", scope that grew without a change order, the junior who took three times as long, the discount agreed to win the work and never recovered. None of it shows in a utilisation report, so the engagements that lose money look as busy as the ones that pay.
FEE TO REALISED MARGIN
Illustrative. From contract fee down through delivery cost, unbilled time, scope creep and write-offs, leaving a thin realised margin a utilisation rate never reveals.
Two engagements are sold at the same fee and the same planned margin. On the dashboard they are equal wins, and both teams show high utilisation.
Engagement A is scoped tightly and billed in full. Engagement B drifts: extra meetings, rework, a senior pulled in to recover it, and hours quietly written off at month-end.
Count delivery cost, unbilled time, scope creep and write-offs and Engagement A realises a healthy margin while Engagement B finishes below cost.
Tighter scoping, change orders that actually get raised, the right seniority on the work, and fixed fees priced on real delivered cost. The work stays; the leak closes.
| Engagement A | Engagement B | |
|---|---|---|
| Contract fee | €180,000 | €180,000 |
| Planned margin | 32% | 32% |
| Unbilled hours | 6% | 28% |
| Scope creep | 4% | 22% |
| Write-offs | 3% | 14% |
| Realised margin | +24% | −9% |
Both engagements show full utilisation, so both look like good business. By realised margin, one is paying for the other, and only the engagement-level view tells you which to repeat and which to reprice or rescope.
EVERY ENGAGEMENT, BY FEE AND REALISED MARGIN
Illustrative. Plot engagements by fee and realised margin and the loss-makers a utilisation report kept hidden separate clearly from the ones carrying the firm.
A fully-loaded cost per hour for each role and seniority, including the bench and unbilled time the chargeable rate has to cover.
TDABC attributes delivered hours to the engagement that consumed them, billed or not, so the real cost of delivery is visible.
Unbilled time, discounts, scope creep and write-offs come off the fee, turning planned margin into realised margin.
Engagements and clients sort by realised margin. The losers become candidates to reprice, rescope or change how they are staffed.
Firms that manage on realised margin price fixed-fee work on real delivered cost, scope it tighter, and put the right seniority on the right task. Loss-making engagement patterns stop being subsidised by the profitable ones, and partners can see which clients and which work types actually build the firm.
The model is built on your data and handed over, so the costing stays current as the practice changes.
The Profit Check takes five minutes and no data upload. It points to where realisation is most likely leaking against your fees, and what it is worth to see engagement by engagement.
In professional services, 25 to 35 percent of paid-for time is never billed once you load the bench, pre-sales and write-offs, and a blended rate hides all of it. Costing only billable hours overstates engagement margin and conceals that 20 to 30 percent of clients run below cost when utilization, scope creep and rework are charged to the work that caused them. TDABC assigns those hidden hours engagement by engagement, so every client and project shows its real margin.
AI is pressing harder on professional services than on almost any sector, because the unit of value is the hour and AI compresses the hour. Document drafting, research and first-pass analysis are being automated, so the link between hours worked and value delivered is breaking. The firms that stay profitable are the ones that already price on outcome and cost to serve, not on time.