Every IT services firm has felt it: the deal was sold at a healthy margin, the project was delivered competently, and yet the margin that landed was several points below what was quoted. The money did not disappear in one place. It leaked, quietly, across the handoffs between selling the work and collecting for it.
Margin is lost at the joins, not in the middle
Delivery teams rarely destroy margin through incompetence. It erodes in the gaps: the rate sales assumed that delivery never agreed to, the change absorbed to keep a client comfortable, the invoice raised late, the dispute settled by discount. By the time the project P&L is accurate, the project is closed and the lesson is expensive.
The nine handoffs where money leaks
Trace a deal from first call to final payment and there are roughly nine transitions, each with its own leak. The opportunity carries a rate and skill mix nobody checked against the bench. Pre-PO work burns effort against a deal with no cost centre. The won-awaiting-PO gap holds people for a date that moves. The sales-to-delivery handoff loses the commercial assumptions entirely. Staffing delivers a profile at a different grade than sold. Execution absorbs unpriced scope. Change requests get delivered but only partly invoiced. Billing waits for a monthly cycle while approved work sits unbilled. Collection settles disputes that trace back to execution but cannot be evidenced.
No single leak is large. Together they are the gap between sold and delivered margin.
One record from opportunity to collection
The structural fix is to put the whole chain on one record, so that an assumption made at the sales stage is still visible and checkable at the billing stage. When sold rate, staffed cost, effort burn and recognised revenue live on the same project, margin erosion appears in week three rather than at closure — while there is still time to price a change, correct a staffing mismatch, or accelerate an invoice.
The handoff that costs the most
Of the nine, the sales-to-delivery handoff is usually the most expensive. When it is a phone call and a folder, delivery inherits a number and reverse-engineers a plan to fit it, and the assumptions behind the price are lost. When the opportunity carries its assumptions — rates, skills, timeline, risks — into the project record, and delivery signs off before the PO is celebrated, the first sprint stops paying for a miscommunication.
Seeing erosion in time to act
The goal is not a more accurate post-mortem. It is a live project P&L that shows budget against actual, effort burn, change requests and recognised revenue as the project runs — with variance flagged early enough to intervene. Closing the gap between sold and delivered margin is worth several points of gross margin, and those points are pure profit because the work was already being done.