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It means to analyse movement of all P&L to be in line with projected costs. This helps to find out deviations to projection & correcting measures to beat targeted results.
The relevant facts with respect to Project Profit Analysis can be summerised as follows:
1. Duration (Period) of Project or coverage of work ;
2. Escalation clause in Project / Contract;
3. Cost Benefit Analysis (CBA);
4. Projected Revenue on the basis of Project Progress;
5. Projected Profit on the basis of Periodicity (matching concept)
We can analyse our Project Profit on the basis of above parameters.
To understand the concept of a particular project or various project yielding profit basis by:
1. covers the forecasting risk and sources of value
2. covers the sensitivity analysis
3. cover the break even analysis
4. covers the operating leverage
5. covers the capital rationing
Agreed with all of the above . In addition this determine the company's potential growth in the future.
Are you undertaking a project where the main objective is to reduce cost (Cost savings)?
Normally a project is undertaken in order to meet its objectives. I believe you are referring to Cost Benefit Analysis.
For CBA, Total cost/ total revenue= payback period, if your payback period is shorter, the more you get profit upon completion of the project.
During a project duration, the cash flow will form a bell curve across the duration of the project. We have earned value(EV) techniques to justify if the project is delayed, over budget or cost overrun. You may save during the project execution such as currency exchange savings, completion prior to the scheduled dates, discounts, etc. This will not be considered as a profit for project.
Profitability Analysis enables to evaluate market segments, which can be classified according to products, customers, orders or any combination of these, or strategic business units, such as sales organizations or business areas, with respect to your company's profit or contribution margin.
project profitability analysis is studying the impact of fixed costs and variable costs to profitability. and measure effectiveness the operations performance.
In simple means it is the Analysis of Profit of any Project.How the profit deviates with changing in costs.In depyh it includes fixed costs and variable costs and its impact on profit.
Project profit analysis is particularly done either prior to the startup of a project or in the initial years. It is to study the trends and impact of overall operating conditions on revenues and profit of that project.
Project Analysis is measuring the financial status of the project in terms of its profitability, cost efficiency, in line with targets, other quantitative and qualitative requirements to ensure operational success.
Profitability analysis is a branch of financial analysis that consists in putting measures of profit into perspective. As for example: a company that has made a profit of $1m in year 2011 doesn’t tell us much about how good its performance was, which effort was deployed to achieve this performance or what level of capital the company operates with to attain such a profit level. Profitability analysis shed some lights on those aspects.Also due to the need for a relative measure of profit rather than absolute profitability analysis is essential. At a fundamental level investors need a sound measure of how good an investment is compared to another one. The concept of internal rate of return or IRR is such a measure.
