Project Administration for Engineering Firms
An engineering or architecture firm rarely loses money on a project that goes spectacularly wrong. It loses money on projects that run for twenty months, where the construction supervision phase takes 30% more hours than budgeted, and where nobody notices because the project budget is only settled at the end. This article describes how to set up the administration of such a project so that overruns become visible while you can still do something about them.
The problem with one budget for the whole project
Take a €180,000 project running eighteen months, split into concept design, preliminary design, detailed design, tendering and construction supervision. Book that as one project with one budget and there is exactly one moment when you know whether it went well: the end.
Halfway through, the counter reads 55% of budget and that looks fine. You cannot see that the preliminary design phase ran 40% over and that detailed design has not started. By then the overrun is already fourteen weeks old.
The fix is structural and simple: every phase is its own administrative unit with its own budget, in hours and in money. In Horixa that is a service within the project. Employees pick the phase they are working on when they log time, and each phase has its own budget bar filling up.
That costs ten extra minutes when setting up the project and produces a signal eighteen months earlier for the rest of its life.
Setting up phases: where to draw the line
Too few phases gives you no visibility; too many turns time tracking into a puzzle. Two rules of thumb that hold up in practice:
- Follow the phasing in your contract or fee structure. Those boundaries are agreed with the client anyway, and they are the only ones you can defend in a dispute.
- Only split further if you actually steer at that level. A separate service for "structural calculations" only makes sense if someone genuinely checks whether that part stays within budget.
For an average project that comes down to four to eight services. If the firm works with fixed disciplines (structures, services, building physics) that each carry their own rate, that is a second axis: one service per phase, and one hour type per discipline with its own rate.
The installment schedule: invoicing without thinking about it
The classic mistake on long-running projects is that invoicing becomes dependent on somebody's memory. Installment three was scheduled for 1 March, never went out, and surfaces in June.
Record an installment schedule per service: amount, scheduled date, description. When an installment falls due, it should appear as a draft invoice automatically, together with the loose hours and recharged costs for that same client. You check and send; you do not have to remember that something needed doing. How to build such a schedule, and what it does to your VAT and your books, is covered in milestone and installment invoicing.
Two things that go wrong here and are worth arranging up front:
An installment is not revenue. A €30,000 advance installment with only €8,000 of work behind it is not profit but a liability. Conversely, work you have done but may not yet invoice is work in progress. Over eighteen months that builds to amounts you do not want to be estimating.
E-invoicing is not a side issue in this sector. If you work for municipalities, provinces, water authorities or national infrastructure bodies, a structured e-invoice is often already a requirement. Over the Peppol network the invoice lands directly in the client's administration, carrying the project reference and purchase order number. See e-invoicing and UBL for what that means in practice.
Variations: keep them separate or they disappear
On technical projects, additional work is not the exception but the rule: a changed brief, an extra variant, a permit process that drags on. The problem is that variations almost always sink into the existing project administratively.
So book additional work as its own service with its own budget and rate, never as extra hours on an existing phase. Two reasons. First, at final settlement you see what it really was: a €180,000 project with €24,000 of variations, rather than a project that "became €204,000". Second, the conversation with your client stays factual, because the hours on the variation demonstrably sit outside the base contract. The practical approach is in invoicing out-of-scope work.
Post-calculation: the phase that pays best
When a project finishes, most firms do nothing more with the numbers. That is a waste, because this is the only reliable source for your next proposal.
What you want to know after delivery, per phase:
- Budgeted hours against tracked hours. Which phase structurally overran?
- The realised hourly rate: invoiced amount divided by tracked hours. On a fixed fee that is the number that counts, not your list rate.
- The costs you recharged and the costs you absorbed. Surveys, permit fees, hired specialists.
- The ratio between phases. If construction supervision cost 25% more than budgeted on four projects in a row, that is not an incident but your estimating model.
Do this within two weeks of delivery, with the project lead present. After a month the memory of why something overran is gone, and then you are left with a number without an explanation.
If you want to underpin your hourly rate structurally rather than looking back per project, the model is in calculating your hourly rate.
Capacity over long lead times
With eighteen-month projects, the workload of your structural engineers next quarter is a more realistic concern than next week's. Capacity planning over a horizon of eight weeks or more, with leave and calendar appointments already deducted from available hours, prevents you from taking on a project for which nobody is available in month three.
Frequently asked questions
How do I split a long-running project into phases? Follow the phasing in your contract or fee structure, and only split further where you actually steer. In practice that means four to eight administrative units per project, each with its own budget in hours and in money.
What is the difference between an installment and revenue? An installment is an invoicing moment, not a performance. Invoice ahead of the work and you carry an obligation; work ahead of invoicing and you carry work in progress. Over long lead times both grow to amounts you want to know rather than estimate.
How do I stop variations from disappearing into the fixed fee? By recording additional work as a separate service with its own budget and rate instead of as extra hours on an existing phase. It then stays visible at final settlement and you can substantiate the hours factually.
Is e-invoicing mandatory for public sector work? Dutch public sector clients generally require a structured e-invoice (UBL), usually over the Peppol network. Between businesses, e-invoicing is becoming the European norm in stages; setting it up now means not having to do it under time pressure later.
What is the minimum I should record for a useful post-calculation? Budgeted and tracked hours per phase, the realised hourly rate, recharged and absorbed costs, and a short note on the reason for any deviation. That last item is the one people skip and the one that makes the numbers usable for the next quote.
Want to see phases, installments and post-calculation come together on one project card? Try Horixa free for 14 days or get in touch.