The Problem
Margin Vanishes in the Last Mile
You scoped the engagement well—deadline met, client happy—but somehow margin is 8 points below target. The cause? A dozen small variances that individually look harmless: one more revision cycle, a senior doing junior work, late inputs that compressed the timeline, scope clarifications that "weren't really changes." Each one nibbles at margin; together, they gut it.
Common symptoms:
- Hours running 10–15% above budget without a single logged change request
- Role mix drift ≥10pp vs. plan (expensive resources on low-complexity tasks)
- Rework ratio >10% (QA loops, client amends, internal corrections)
- Turnaround time creeping up ≥15% vs. baseline (late starts, compressed finishes)
- New asks absorbed without a change request on file
Business Impact: When these patterns persist, margins erode silently—often discovered only at engagement close or quarter-end review, when recovery options are limited.
The Framework
The Margin Protection Framework
Act before margin loss becomes visible in the P&L. Use risk conditions as early warnings and issue conditions as triggers for immediate intervention.
Make Margin Visible Weekly
Run a weekly mini-P&L per engagement. Show hours, margin %, and deviation from plan. Use traffic-light indicators and auto-alerts when thresholds are breached.
Rebalance & Standardize
Match right work to right level. Use templates for repeatable deliverables. Set client input SLAs with clear consequences.
Commercial Corrections
Raise change requests for scope drift. Tier fees by engagement complexity. Rebase milestones when scope resets.
Step-by-Step Guide
Make Margin Visible
Create transparency before problems become crises.
Actions:
- Run a weekly mini-P&L per engagement showing hours, margin %, and deviation
- Use traffic-light indicators (green/yellow/red) for quick status
- Set up auto-alerts when margin drops below thresholds
- Review all engagements weekly with delivery leads
Rebalance & Standardize
Fix the operational drivers of margin erosion.
Actions:
- Match right work to right level—stop senior resources doing junior tasks
- Deploy templates and checklists for repeatable deliverables
- Establish client input SLAs with documented consequences
- Reduce rework through quality checkpoints early in delivery
Commercial Corrections
Address scope and pricing when operational fixes aren't enough.
Actions:
- Raise change requests for any scope drift—no exceptions
- Tier fees based on engagement complexity and urgency
- Rebase milestones and budgets when scope materially changes
- Document all commercial decisions for future reference
Prevent Recurrence
Build systematic protections into your engagement model.
Actions:
- Upgrade SOW language to capture common scope drift scenarios
- Implement rate card hygiene—review and update quarterly
- Add onboarding gates that verify client readiness before kickoff
- Build margin protection into engagement manager scorecards
KPIs to Track
| Metric | Target | Frequency |
|---|---|---|
| Engagement Margin | ≥40% | Weekly |
| Write-offs | ≤2% of revenue | Monthly |
| Partner/Senior Time | At or below plan | Weekly |
| Turnaround Time | Flat or improving vs. baseline | Weekly |
| CR Velocity | ≤7 days from request to approval | Weekly |
Warning Signals
Hours 10-15% above budget
Hours running above budget without corresponding change requests logged indicates silent scope creep.
Role mix drift ≥10pp
Senior resources consistently assigned to junior-level tasks erodes margin through labor cost.
Rework ratio >10%
High rework indicates quality issues, scope ambiguity, or poor client input management.
New asks without change requests
When the team absorbs new work without documenting it, margin erosion is certain.
Real Scenarios
The "Quick Revision" Spiral
Situation
Client requests "minor" changes to delivered work. Team accommodates without logging time properly.
Response
Implement change request protocol. Log all revision time. Set revision limits in SOW.
Outcome
Visibility into true revision cost enables pricing adjustments on future engagements.
Senior Doing Junior Work
Situation
Senior staff handling routine tasks because "it's faster than explaining."
Response
Audit task allocation weekly. Create runbooks for common work. Enforce role-appropriate assignment.
Outcome
Labor cost aligns with task complexity, protecting margin.
Quick Wins
Start with these immediate actions:
- Set up weekly margin dashboard for all active engagements
- Create a simple change request form and train all delivery leads
- Audit top 3 engagements for role mix—reassign work this week
- Document the top 5 "absorbed" scope items from recent engagements
Related Playbooks
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