Service Performance Insight's 2024 Professional Services Maturity Benchmark put average project margin at 35.5% and average project overrun at 9.9%, with surveyed firms hitting 89.7% of their annual margin target.
Those averages are the sum of small, individually defensible estimating decisions. Here are the seven that show up most often.
1. Estimating the build and not the engagement
The technical work is the part everyone estimates carefully. The engagement around it — status reporting, steering attendance, stakeholder management, internal QA, environment access, onboarding your own people — is absorbed as overhead.
It is not overhead; it is project cost. Put it in as visible lines. Clients rarely object to project management they can see, and always object to it when it appears as an unexplained percentage.
2. Assuming utilisation you have never achieved
Plans are built as though a person assigned to a project works on it all week. SPI's 2024 benchmark reported average billable utilisation of 71.2% across surveyed firms — and that is total billable time, not time on one project.
Estimating in ideal days and staffing in calendar days is the single most common source of schedule overrun, and schedule overrun on a fixed fee is margin.
3. Leaving review cycles unbounded
'Revisions until the client is happy' is a commitment with no ceiling, and it is usually made verbally by someone who is not going to do the revising.
State the number of rounds, require consolidated feedback, and say what happens to feedback that arrives after acceptance. Two rounds with a defined window is generous; unlimited rounds with no window is a subsidy.
4. Padding instead of resolving
Padding is what teams do with an open question they did not want to ask. The number goes up, the question stays hidden, and nobody can say later what the padding was for.
It also fails in both directions: it makes you uncompetitive on the work you understand, and under-covered on the work you do not. Resolve the question, convert it into a stated assumption, or exclude the work.
5. Discounting price without changing scope
A discount granted at the end of a negotiation removes margin from a plan that was already tight. The work does not shrink; only the payment does.
If price has to move, move scope, terms, or timing with it: defer a phase, reduce a driver, shorten the review window, or take a faster payment schedule in exchange.
6. Ignoring the cost of the bids you lose
SPI's 2024 benchmark reported a win rate of 48.2% of bids and an average of 109 non-billable hours per consultant per year on business development and sales support, with sales cycles averaging 81 days from qualified lead to signature.
Roughly half of your scoping effort earns nothing. That cost belongs in how you price won work, and it is the strongest argument for making scoping repeatable rather than artisanal.
7. Never comparing the estimate to what happened
Most firms estimate frequently and calibrate rarely. Without the comparison, estimating does not improve with experience — it just becomes more confident.
Compare actual effort by phase and role to the estimate, attribute each variance to a cause, and let recurring causes change your rules and your discovery questions. It is the least glamorous habit in professional services and the one that separates firms that estimate well from firms that estimate loudly.
Sources
- 2024 Professional Services Maturity Benchmark — Service Performance Insight
Figures are quoted as published by their source. Some benchmark reports require registration or purchase for full access.
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