Case Study: Recovering Lost Revenue for an Architecture Firm
The Issue
An architecture firm engaged us to review project financials after concerns arose regarding project profitability and billing accuracy. While contract amendments had been approved and significant project milestones had been completed, portions of this additional work were not being fully reflected in client billings.
As a result, earned revenue remained unbilled, project margins appeared lower than expected, and management lacked complete visibility into the true financial performance of several engagements.
Our Approach
We conducted a detailed review of the firm’s project accounting and revenue recognition processes, focusing on:
- Original contract terms and approved amendments
- Work-in-progress (WIP) reporting
- Percentage-of-completion calculations
- Milestone billing practices
- Alignment between project progress and recognized revenue
By reconciling contract modifications with project status and billing records, we identified revenue that had been earned but not fully captured through the firm’s invoicing process.
The Outcome
The review uncovered approximately 5% in additional recoverable revenue that had not been billed despite being contractually supported and substantially completed.
Results Achieved
√ Recovered approximately 5% additional project revenue.
√ Corrected understated project margins and improved profitability reporting.
√ Strengthened billing and project control procedures to reduce future revenue leakage.
Key Takeaway
For professional service firms, even small gaps between project progress, contract amendments, and billing practices can result in meaningful revenue loss. Regular reviews of WIP, contract changes, and revenue recognition processes help ensure that earned revenue is accurately captured and profitability is properly reflected.