How to use · Planning & decisions
Change an assumption. See what it means for your decision.
Case background
A professional services business is considering a $120k project requiring 100 person-days. Cost is $800 per person-day plus $12k of external services. Contribution excludes fixed overhead and taxes.
Is this $120k project worthwhile if it needs 100 person-days?
At the stated costs, the project contributes $28k. Extra effort reduces that margin, so also consider team capacity and payment timing.
One project, different assumptions
ContributionCost: $800 per person-day plus $12k external services. Fixed overhead and taxes excluded. Quote and effort are scenario assumptions; actual delivery needs follow-up.
Let me change the quote and person-days to compare outcomes.
Adjust the quote and effort to see the change in contribution. Daily cost and external services use the assumptions in this example.
Uses $800 per person-day and $12k external services; excludes fixed overhead and taxes. Quote and effort are the scenario assumptions you adjust.
At the original $120k quote, what if it takes 120 person-days?
Twenty extra person-days add $16k of cost, reducing contribution to $12k. A $136k quote would preserve the original $28k contribution.
One project, different assumptions
ContributionCost: $800 per person-day plus $12k external services. Fixed overhead and taxes excluded. Quote and effort are scenario assumptions; actual delivery needs follow-up.
At the original $120k quote and 100 person-days, would staged payments require funding a gap?
With 40% paid at kickoff, 40% at midpoint and 20% at acceptance, the cash schedule below stays positive. If the midpoint payment slips to acceptance, the project needs $4k of interim funding.
Project cash schedule
USD, thousandsKickoff
- Receipts
- 48
- Spending
- 12
- Cash balance
- 36
Midpoint
- Receipts
- 48
- Spending
- 40
- Cash balance
- 44
Acceptance
- Receipts
- 24
- Spending
- 40
- Cash balance
- 28
External services of $12k are paid at kickoff; personnel costs of $40k at midpoint and acceptance. This project-only view excludes other business cash flows and taxes.
Where would you like to take this?
Let me change the quote and person-days to compare outcomes.Start with the decision you are considering. Explore its assumptions in a model, then ask how they affect cash and delivery.
Start with my own question