A project margin rollup combines work by summing each included project's approved revenue basis and margin dollars, then dividing total margin by total revenue. Do not take a simple average of project percentages unless every project has the same revenue weight. Define status, currency, cost basis, and reporting period before aggregating, and keep pipeline work separate from committed delivery.
In plain words
A rollup combines the margins of several projects into one figure, for a client, a team or the whole firm. Do not average the percentages. Add up the margin dollars and the revenue first, then divide: a big project should count for more than a small one.
Who this helps: Finance analysts, portfolio and PMO staff and managers who report on groups of projects.
Questions this guide answers:
- How do you calculate portfolio margin across projects?
- Why is averaging margin percentages wrong?
- How do you report project margin for a department?
Margin words: gross, contribution, managed margin, budget, forecast and the roles named here are defined once in the margin vocabulary.
Delivery Margin rolls margin up by business unit, and Client Portfolio by client, weighting each service order by its revenue. Start free or see project margin tracking software.
Start with a small example
Two projects: Project A has a fee of USD 100,000 and a margin of USD 40,000 (40%). Project B has a fee of USD 20,000 and a margin of USD 2,000 (10%).
- The average of the percentages is (40% + 10%) ÷ 2 = 25%. That is wrong, because it treats the small project as important as the large one.
- The rollup adds the margin amounts and the revenues: (40,000 + 2,000) ÷ (100,000 + 20,000) = 35%.
A rollup combines several projects into one view, such as a business unit. Always add the amounts first and divide once.
What is the margin-rollup formula?
Rollup margin = sum of included project margin dollars
Rollup revenue = sum of included project revenue bases
Rollup margin % = rollup margin / rollup revenue x 100
This ratio of sums is equivalent to weighting each project's percentage by its revenue basis. It prevents a small engagement from influencing the combined result as much as a project worth ten times more. The dollar totals also make the result easier to reconcile back to individual projects.
Worked example: why a simple average is wrong
For this full-project planned example, assume two included purchase orders use the same currency and cost policy. Purchase Order A has a planned fee of USD 100,000 and a planned margin of USD 40,000. Purchase Order B has a planned fee of USD 25,000 and a planned margin of USD 2,500.
| Item | Approved budget | Gross margin | Individual margin % |
|---|---|---|---|
| Purchase Order A | USD 100,000 | USD 40,000 | 40.00% |
| Purchase Order B | USD 25,000 | USD 2,500 | 10.00% |
| Rollup totals | USD 125,000 | USD 42,500 | 34.00% |
Correct: USD 42,500 / USD 125,000 x 100 = 34.00%
Incorrect simple average: (40.00% + 10.00%) / 2 = 25.00%
In this example, the simple average understates the combined result because it gives the USD 25,000 purchase order the same weight as the USD 100,000 order. The correct 34.00% is USD 42,500 divided by USD 125,000. Other project combinations can make the simple average overstate the result.
A boundary case: a loss-making component in the same rollup
For a separate final-outcome illustration, assume A and B finish with the same fees and margin amounts as the planned figures above, and C finishes with USD 20,000 revenue and a USD 4,000 loss, or −20%. All three values now describe completed work. The weighted formula also applies when a component is negative.
| Item | Approved budget | Gross margin | Individual margin % |
|---|---|---|---|
| Purchase Order A | USD 100,000 | USD 40,000 | 40.00% |
| Purchase Order B | USD 25,000 | USD 2,500 | 10.00% |
| Purchase Order C | USD 20,000 | -USD 4,000 | -20.00% |
| Rollup totals | USD 145,000 | USD 38,500 | 26.55% |
The correct rollup is USD 38,500 / USD 145,000 = 26.55%. A simple average of the three percentages, (40.00% + 10.00% - 20.00%) / 3 = 10.00%, would understate the true weighted result by more than sixteen points here, and it would move in the opposite direction if the loss-making item carried the largest budget instead of the smallest. A rollup must include a loss on the same basis as a gain; excluding it or treating it as zero hides exactly the result a portfolio review exists to surface.
Which items belong in a project margin rollup?
Aggregation is only meaningful when the components share a compatible basis. The U.S. Government Accountability Office's cost guide emphasises a technical baseline, work breakdown, ground rules, assumptions, documentation, and updates with actual costs. A professional-services rollup needs the same clarity even when its calculation is simpler.
| Boundary | Decision | Reason |
|---|---|---|
| Status | Separate draft pipeline from active or committed work. | A scenario is not the same as an approved delivery obligation. |
| Currency | Use one reporting currency and a documented conversion policy. | Raw amounts in different currencies cannot be added meaningfully. |
| Margin layer | Aggregate gross with gross, or another consistently defined layer. | Mixing gross and after-shared-cost figures changes the numerator. |
| Time basis | Use planned figures together or actuals through one cut-off. | Different periods create false comparisons. |
| Archive rule | State whether archived projects are included. | The population affects both dollars and percentage. |
| Calculability | Identify records missing a valid revenue or cost basis. | Silently treating missing data as zero distorts the total. |
How do rollups work in Managed Margin?
Managed Margin calculates margin per service order and builds higher views from those results. The project view consolidates its service orders, and the Delivery Margin report totals service orders by business unit and across the workspace, recalculating each percentage from summed revenue and cost rather than averaging percentages.
Each service order shows its baseline, forecast, change and biggest drag. Service orders without a finalized baseline or resource plan are named separately instead of being shown with a misleading figure. Financial detail follows role permissions. See the full Managed Margin workflow for how these views sit alongside pricing and delivery.
Rollups use one currency per workspace. They cover project margin layers, not operating or net margin, and months can be locked once a financial period ends.
Margin-rollup validation checklist
- List the exact projects or purchase orders included.
- Confirm status, archive, currency, period, and cost-basis rules.
- Exclude Draft scenarios from committed-work totals.
- Sum matching revenue amounts and margin amounts separately. Use full-project planned fees for a planned rollup and recognized revenue for an actual-to-date rollup.
- Divide summed margin amounts by the matching revenue total. Use approved fees for a full-project planned view; use recognized revenue for an actual-to-date view. Do not mix those two denominators.
- Reconcile totals to the underlying records.
- Flag missing or non-calculable items rather than treating them as zero.
- Keep the row-level breakdown available beside the aggregate.
- Label planned, actual, gross, and after-shared-cost views explicitly.
Start with the professional-services project margin guide for the full workflow. To understand the base numerator, read how to calculate project margin; for the margin layers the product reports, see what Managed Margin is.
- Contribution Margin vs Net Margin vs Gross Margin
- Project Margin Variance: Formula, Example and Causes
At the office: Aisha combines three projects
An illustrative story with invented figures, to show how the idea works in a real office.
Aisha, a portfolio analyst, has three projects. Project 1 earns USD 40,000 on USD 100,000 revenue (40%). Project 2 earns USD 6,000 on USD 50,000 (12%). Project 3 earns USD 2,000 on USD 10,000 (20%).
The simple average of 40%, 12% and 20% is 24%. But total margin is 48,000 on total revenue of 160,000, which is 30%. The 24% figure treats the USD 10,000 project as important as the USD 100,000 one.
She reports 30% and shows the three projects underneath it, so the leaders can see that Project 2 is the one to look at.
Who builds a margin rollup, and what do they check?
| Step | Owner | Checkpoint |
|---|---|---|
| List what is included | Portfolio analyst | Projects or purchase orders are named; drafts are excluded from committed totals |
| Check compatibility | Finance | Same currency, period and cost policy |
| Add and divide | Portfolio analyst | Sum of margins divided by sum of revenues |
| Present | PMO lead | The basis is stated next to the number |
Frequently asked questions
Why is a simple average wrong?
It gives a small project the same weight as a large one. Weighting by revenue reflects how much each project contributes.
Which items belong in a rollup?
Projects in the stated statuses and period, on a common cost basis and currency.
How does this relate to overhead?
Include allocated overhead under a compatible policy, period and cost boundary. Different projects can have different allocation amounts. Reconcile the total pool and state exclusions before comparing the resulting margins.
How do you roll up project margins?
Add up the margin amounts of the included projects, add up their revenues, then divide the first total by the second. Do not average the percentages: a USD 100,000 project at 40% and a USD 20,000 project at 10% roll up to (40,000 + 2,000) ÷ 120,000 = 35%, not 25%.
What if a rollup has zero or negative total revenue?
Show the margin amount and label the percentage as not calculable; do not report 0%. Also disclose any revenue that was excluded from the rollup (for example projects without a recognized fee), so readers can see how much exposure sits outside the percentage.
Continue the sequence: guides to read next
- Project Margin Review Cadence: when to review the portfolio
- What Is Managed Margin? Meaning, Formula and Software: the margin basis to roll up
- How to Calculate Project Margin (Formula + Example): the project figure each rollup uses
Sources and methodology
- U.S. Government Accountability Office, Cost Estimating and Assessment Guide. Used for baseline, ground-rule, documentation, work-breakdown, and actual-cost update principles.
- UK Infrastructure and Projects Authority, Cost Estimating Guidance. Used for consistent cost breakdowns, transparent assumptions, exclusions, and traceability.
- The weighted formula, Draft exclusion, rollup levels, permission boundary, and planned-gross-margin limitation were reviewed against the current Managed Margin application on 26 September 2026. Figures are illustrative.