A planned-versus-actual project margin review compares the approved resource, hours, cost, and margin baseline with delivery data recorded for the same period and on the same cost basis. Review hours by resource before the overall percentage: a small total-hours variance can still hide an expensive role-mix change. Treat the current result as an observation, not a final-margin forecast.
In plain words
A planned-versus-actual review is a regular meeting where you compare what the project was supposed to cost and earn with what it really has. You look at hours by role first, then cost, then margin, and you decide what to do about any difference.
Who this helps: Project managers, delivery leads and finance partners who run or attend project reviews.
Questions this guide answers:
- How do you run a planned versus actual margin review?
- What questions should a project margin review ask?
- How often should a project be reviewed?
Margin words: gross, contribution, managed margin, budget, forecast and the roles named here are defined once in the margin vocabulary.
Start with a week-three example
At the end of week 3 the baseline expected 420 hours and USD 19,800 of labor. The project recorded 432 hours and USD 21,420. Only 12 hours over, but USD 1,620 of extra cost, because more of the hours came from senior roles than planned. A weekly review exists to catch exactly this: the hours looked almost on plan; the money did not.
What belongs in the approved baseline?
The baseline is the reference point accepted before delivery. It should preserve enough information to explain the planned margin rather than storing only a percentage.
- approved project or purchase-order budget;
- roles, named resources when available, and planned hours by period;
- the rate and cost-component policy used for the plan;
- included non-labor and shared-cost assumptions;
- scope, duration, and any approved exclusions;
- the date and reason for later approved baseline changes.
The resource-loading pricing example shows how a fixed-price baseline can begin with explicit role and cost assumptions.
Compare like with like
If actual hours cover the first six weeks, compare them with the hours planned for those six weeks—not the entire project. If a rate changed during delivery, cost the period using the policy that applies to that period. If the revenue or cost definition changes, label the new basis rather than silently comparing it with the old one.
PMI cost variance is earned value minus actual cost. A project-margin variance compares margin calculations. These answer related management questions, but they are not the same formula and should not share a label.
Worked example: why role mix matters
Continue the illustrative three-role project from the pricing example. At the end of week 3, the approved plan expected 420 hours and USD 19,800 of labor for the period. The project records 432 actual hours—only 12 hours above plan—but the cost difference is larger because more senior-consultant time was used.
| Role | Planned hours | Actual hours | Hours variance | Planned labor | Actual labor |
|---|---|---|---|---|---|
| Consultant at USD 60/hour | 120 | 132 | +12 | USD 7,200 | USD 7,920 |
| Senior consultant at USD 90/hour | 60 | 75 | +15 | USD 5,400 | USD 6,750 |
| Analyst at USD 30/hour | 240 | 225 | −15 | USD 7,200 | USD 6,750 |
| Total | 420 | 432 | +12 | USD 19,800 | USD 21,420 |
Hours variance = 432 − 420 = +12 hours
Labor-cost variance = USD 21,420 − USD 19,800 = +USD 1,620
The total effort is 2.86% above the plan for the period, while labor cost is 8.18% above plan. The higher-cost senior mix explains most of the difference. That does not tell the team whether the decision was wrong: senior intervention may have resolved a real delivery risk. It tells the team what to investigate and document.
Which questions should the review ask?
| Signal | Question | Possible follow-up |
|---|---|---|
| Hours above plan | Which resource and week created the difference? | Check estimation, rework, client dependency, and unapproved scope. |
| Cost rising faster than hours | Did the role mix or applicable rate change? | Confirm whether more senior or higher-cost work was intentional. |
| Budget consumption ahead of progress | Is the project spending faster than it is completing the agreed work? | Review remaining scope and dependencies; do not infer completion from spend. |
| Margin percentage changed | Are the revenue, cost categories, scope and cut-off appropriate to the comparison? Separate period actuals from the full-project forecast. | Reconcile the basis before discussing performance. |
| Large update without explanation | What operational event caused it? | Record a reason and an accountable next action. |
A useful review ends with a decision: accept the variance, correct an input, adjust the delivery plan, pursue a scope decision through the firm's normal process, or assign further investigation. A dashboard can surface the signal; it cannot choose the response.
How should margin be read alongside progress?
A cost-to-budget view and a completion view answer different questions. Budget consumption asks how much of the supported budget has been used. Percent complete asks how much work is judged complete. Neither number is a substitute for the other.
A project may be 40% complete after consuming 55% of its cost budget because early work was intentionally senior-heavy, a dependency created rework, the original estimate was weak, or scope was added. The gap is a prompt for investigation—not automatic proof of failure.
Actual-to-date margin uses recognized revenue and included costs through the same cut-off. It does not include unrecorded remaining work. Forecast-at-completion margin adds the remaining plan and expected costs against forecast total revenue; review both with scope completion and budget consumption.
How often should actuals and margin be reviewed?
There is no universal cadence. Choose a period short enough to support a decision before the next meaningful commitment. Weekly review is practical for many active delivery teams; a fortnightly or milestone cadence may fit slower work. The important point is that the data owner, cut-off time, and decision process are explicit.
A repeatable review checklist
- Confirm that actual hours and supported costs are complete through the cut-off date.
- Compare planned and actual hours by resource for the same period.
- Reconcile rate, role-mix, and non-labor cost changes.
- Read budget consumption beside completion and remaining scope.
- Compare margin calculations only after confirming a consistent basis.
- Record material reasons, decisions, owners, and the next review date.
At the office: Paul’s Friday review
An illustrative story with invented figures, to show how the idea works in a real office.
Every Friday Paul, a delivery lead, reviews three projects in 20 minutes. For one project the plan says 160 hours of senior time and 240 of junior time. The actuals say 200 senior and 190 junior. Total hours are almost the same, 400 against 390, but the senior hours cost more.
At USD 90 for senior time and USD 50 for junior time, the plan is 160 x 90 + 240 x 50 = USD 26,400. The actual is 200 x 90 + 190 x 50 = USD 27,500. The total hours looked fine; the cost is USD 1,100 over.
Paul asks why seniors are doing junior work, and moves two tasks to the juniors the next week.
Who runs the weekly margin review, and what is the checkpoint?
| Step | Owner | Checkpoint |
|---|---|---|
| Close the hours | Team members and project manager | Timesheets are in by the cut-off; missing ones are listed |
| Compare the same period | Project manager | Planned and actual hours by role and week |
| Find the cause | Project manager with the delivery lead | Estimate gap, rework, client dependency, scope or role mix |
| Decide the response | Delivery head | Operational fix or a priced change request |
| Record | Project manager | Decision, owner and date are written down |
Frequently asked questions
How often should actuals and margin be reviewed?
Weekly for volatile or fixed-price work, monthly for stable work, and at every stage gate. See how often to review project margin.
What belongs in the approved baseline?
Roles, hours, rates, non-labor costs, the fee and the cost rules applied, frozen at handover.
How should margin be read alongside progress?
Compare it with percent complete and budget consumption. A margin that looks fine early can hide work that has not been done yet. See budget consumption vs percent complete.
How often should you review project margin?
There is no universal rhythm. Weekly suits volatile or fixed-price work; fortnightly suits steady delivery; monthly suits stable, low-risk projects. Pick a period short enough to act before the next meaningful commitment, and review more often when scope, staffing or rates change.
- Project Margin Variance: Formula, Example and Causes
- Budget Consumption vs Percent Complete: Reading Both
- Project Baseline Handoff: From Sales to Delivery
A post-project margin review template
At closeout, replace the remaining-work forecast with reconciled final figures. Finance confirms recognized revenue and included costs; the project manager confirms completed scope, outstanding expenses and approved changes. Keep this final review distinct from the weekly meeting that decides what to do next.
- Baseline: original fee, included cost, hours, margin and approval version.
- Approved changes: added or removed scope, fee, effort and authorization.
- Final result: matching final revenue and cost, with the margin amount and percentage.
- Cause of the difference: separate missing work, scope changes, extra effort, staffing/rate changes and pricing concessions.
- Evidence and lesson: identify what the next estimator should include or investigate, with an owner and a review date.
For example, 500 planned hours and 680 recorded hours are not automatically a 36% estimating error. If 80 hours belong to approved additional scope, original-scope effort was 600 hours: 20% above the original plan. Preserve that distinction before applying an uplift to the next proposal.
Continue the sequence: guides to read next
- Project Margin Review Cadence: how often to hold the review
- Planned vs Actual Project Margin: building the comparison
Sources and methodology
- Project Management Institute, Managing fixed-price projects using earned value management. Used for baseline, planned value, actual cost, progress, and review principles. The article distinguishes those EVM measures from a project-margin comparison.
- The actual-hours workflow, period rate treatment, calculation boundaries, and product limitations were reviewed against the current Managed Margin application on 26 September 2026.
- All project figures are illustrative and are not a customer result or a recommended benchmark.