FFI Standard for Project Revenue Companies
Financial infrastructure requirements for companies whose revenue is delivered through defined, time‑bounded engagements.
A Project Revenue company delivers its revenue through defined, time‑bounded engagements with a start and end date. The defining financial characteristics are revenue concentration by client and project, dependence on a billable backlog, and timing variance between project commencement, delivery, and revenue recognition.
The unit is the engagement. Lifetime value is project‑specific and depends on the recurrence of engagements from the same client. The payback period for client acquisition must account for the cost of acquiring the client relationship, not just the first project (Book 2, Section 2.2).
Gross margins of thirty to sixty percent are typical, reflecting the direct labour cost of delivering professional services. Gross margins above sixty percent indicate that delivery is increasingly systematised. Gross margins below thirty percent indicate that delivery costs are high relative to the fees charged (Book 2, Section 2.5).
Project Revenue companies face high revenue concentration risk. The annual operating plan must model the backlog of signed engagements and the pipeline of anticipated engagements separately. Revenue projections based on unsigned pipeline without disclosed conversion rates overstate expected revenue (Book 6, Section 6.1).
Project Revenue companies are typically valued on revenue multiples lower than those of Recurring Revenue companies, reflecting the lower predictability of project‑based revenue. The applicable multiple range varies by sector and client concentration (Book 4, Section 4.3).