Modules 2 & 3 · Project Finance

Project Finance on One Page

The whole PM money job, start to finish: earn it, protect it, bill it, price it, and collect it. The firm stays healthy. Everything in Modules 2 and 3 hangs on these five moves.

Quick reference · the finance package at a glance · pairs with Modules 2 & 3

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Two modules, one job. Module 2 covers making money and protecting it. Module 3 covers where the cash is and how it arrives. Here they are as a single picture: the money moving from a signed fee to cash in the bank, and the five moves that carry it whole.

1

Start here

The money job, in one line

A project can be on budget and still lose money, and it can be profitable and still run out of cash. The project manager moves a signed fee all the way to collected cash without leaking margin.

Everything below expands that one sentence. The fee comes in. Five moves carry it across the project. Profit is what survives.

2

The spine of the whole package

Earn it, protect it, bill it, price it, collect it

$1.4M
Fee in
→
Earn
Backlog → earned value

Value is the work truly finished × the fee, not the hours spent.

Leak: hours burned on rework earn nothing.
→
Protect
Effort behind earned value

When spend runs ahead of earned value, that gap is margin leaving now.

Leak: a green budget hiding the margin gap.
→
Bill
Earned value → invoice

Invoice work as it is earned. Unbilled earned work is cash sitting still.

Leak: earned work waiting for “next cycle.”
→
Price
Name every change first

A change is added scope. Price it and offer the choice before building it.

Leak: absorbed scope is profit given away free.
→
Collect
Invoice → cash

An unpaid invoice is a loan to the client. Work the aging.

Leak: a receivable no one is chasing.
→
15 to 20%
Profit kept

First two moves are Module 2 (earn, protect). Last three are Module 3 (bill, price, collect). Same fee, all the way across.

3

Do not blur them

The two numbers to keep separate

The fee · what Grace earns
$1.4M
Grace’s net service revenue on Oakhaven. Manage it to a 15 to 20% margin.
The OPCC · what the building costs
~$40M
The Owner’s construction cost. Carry it as a range, disclaim it, reconcile it every phase review.
Why it matters
The fee is what Grace earns. The OPCC is what the Owner spends. Never quote one in place of the other in a client conversation. Full treatment lives in Module 3’s Field Guide.
4

The machine underneath

The ratios that price every hour

The burdened hour
$110
A $40 wage × 2.75. There are no forty-dollar hours.
Utilization
62.5%
Direct labor ÷ total labor. A group metric, not a report card.
Net multiplier
3.2 to 3.4×
Revenue per $1 of direct labor. What the billing rate has to deliver.
Revenue factor
~2.0
Utilization × multiplier. Net revenue per $1 of total payroll.
Target margin
15 to 20%
The reward for the risk, and the first thing rework burns.

Illustrative Grace figures, locked across the course. The full build lives in Module 2’s Overview and its Field Guide.

5

One artifact, two reads

How to read the BST scorecard

The same phase scorecard answers both modules’ questions. Read it two ways every week.

What to readWhereWhat it means
Margin · is it being earned?Variance ④ = Revenue − EffortEarned minus spent. Negative is the Margin Gap, margin leaving now. (Module 2)
Cash · is it being paid?Unbilled days + Receivable daysHow long earned work waits for an invoice, then cash. Add them for days to cash. (Module 3)
Where it lands · the forecastProfit ⑥ at completionFee minus estimate-at-completion, at today’s pace. Found early, it is a recovery plan. (both)
6

The package, mapped

Which module teaches what

Module 2 · the machine

On budget, still losing money

  • What a dollar and the $110 hour really are
  • The three KPIs: utilization, multiplier, revenue factor
  • Building and defending the fee, the three doors
  • Earned value and the Margin Gap
Open Module 2 →

Module 3 · the flow

Backlog to cash

  • Profit is earned, cash is received
  • The fee-to-cash pipeline and the float
  • Bill it, price it, collect it
  • The collections craft, and the Owner’s cost number
Open Module 3 →
On Monday, ask one question
What have I earned, what have I billed, and what have I collected. Where is the gap? That single question is both finance modules, applied to one project.