How to run a delivery practice on a P&L
Running a delivery practice on a P&L means the delivery leader is accountable for revenue, cost and gross margin — not only for shipping on time. Here is the operating model I use for a 33-person digital commerce and AI practice with 80+ concurrent engagements.
Step 1 — Get the cost base right
List every person, their fully loaded monthly cost (salary, benefits, tools, overhead allocation) and the share of their time that is billable. Add shared cost: architecture, DevOps, PMO, management. The total is what the practice must earn before it makes a rupee of margin. Most delivery leaders have never seen this number; ask finance for it in your first week.
Step 2 — Forecast revenue by engagement, monthly
For each engagement: contract type (fixed price, T&M, retainer), forecast revenue this month and next two, confidence (committed / likely / at risk). Sum by pod. Compare with cost. That is your forecast margin, eight weeks out.
Step 3 — Make utilisation honest
Report billable hours against available hours, with bench, leave and internal work shown separately. A practice that reports 90% utilisation while the bench is hidden in "internal projects" is lying to itself.
Step 4 — Price for margin, not for the win
Estimates come from delivery, not sales alone. Rate cards reflect the cost base plus target margin. Fixed-price work carries a 15–20% risk premium. Discounts are a delivery decision because delivery carries the consequence.
Step 5 — Run one weekly rhythm
Monday: portfolio page (revenue, margin, utilisation, RAG, commercial items). Wednesday: staffing forecast eight weeks out. Friday: client health and escalations. One hour each. Everything else is pull, not push.
Step 6 — Close the commercial leaks
Change requests in the same week. Invoices on the contract date. Hypercare with an end date. Disputes logged with an owner. The practice I run moved gross margin 10–15 points mostly by closing these leaks, not by cutting people.
What changes when you own the number
You start saying no to work that does not make margin. You hire ahead of demand instead of behind it. You know which clients are profitable and which are prestige. And the CFO stops treating delivery as a cost centre.
Frequently asked questions
- What is a P&L in a delivery practice?
- The profit-and-loss statement for the team: revenue recognised from client engagements minus the fully loaded cost of the people and tools that delivered it, giving gross margin.
- Who should own the delivery P&L?
- The most senior delivery leader who also controls staffing and pricing decisions. Ownership without those two levers is accountability without authority.
- How often should delivery margin be reviewed?
- Weekly at forecast level, monthly at actuals, with a rolling eight-week view.
If you are building or fixing a delivery organisation and want someone who has run one as a business, book 20 minutes.
Book a 20-minute intro call