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Project Profitability is the state or condition of a project to describe the yielding of a financial profit or gain from that project. It is a measure of project operational efficiency in terms of financial benefits. As a rule, it is calculated by the cost-income ratio.
Estimation is the major activity that ensures project profitability. Through estimating project parameters (such as cost, performance and time) it is possible to determine how the project is changed and to explore current status of project benefits. Calculating the cost-income ratio allows defining whether operating expenses do not exceed operating income produced by the project. The ratio confirms that project profitability tends to an increase if operating expenses are lowered.
Operational efficiency is closely linked to profitability. More efficient projects generate more profits and thereby operate with higher profitability. An efficient project runs with lower operational expenses and produces desired benefits with expected or lower consumption of resources. In the context of project efficiency, project profitability can be increased through improving staff productivity.
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