Capability template for finance and accounting
Engagement margin review
Midway or at close, the partner and finance lead get one worksheet for an engagement: recorded time, agreed fee, billed to date and supplied costs by workstream, the gaps that limit it, and the questions the team must answer. No cost rate is invented.
Listed under
Add it to a workflow in the Fully Powered Planner, beside the teams and roles that will run it. Book a fit call
The outcome
The engagement partner and the finance lead sit down with the same page. For each workstream it shows the fee that was agreed, what has been billed, the hours that were budgeted and the hours recorded, and the costs of delivery the firm has supplied: its own cost rates for the time, expenses and subcontractors. Where hours or costs are running past the plan, or where effort is well ahead of billing, the page says so and asks the engagement manager the question that explains it.
The page is just as clear about what it cannot see. Hours still awaiting approval, roles with no cost rate, subcontractor costs not yet invoiced and work recorded outside the fee schedule are each listed with their effect, so nobody mistakes a partial figure for a finished margin. The partner and the finance lead check every figure, and they alone decide whether to change staffing or take any action on the fee.
Who starts the work, and when
The finance analyst or the engagement manager runs it when the timesheets and costs for an engagement are ready for a review: at the midpoint of a longer engagement, or at close before the final invoice and the retrospective. The partner and the finance lead review the same week. It is run on request, for one engagement at a time.
What they supply
- The time export for the engagement: workstream, role, hours and approval status.
- The fee schedule: each workstream with its budgeted hours and agreed fee, and the total agreed fee.
- The firm's cost rates by role. The capability never supplies one.
- The billing list: each invoice by workstream, fee or recharge, with its amount.
- The delivery costs: expenses and subcontractor costs by workstream, invoiced or not yet invoiced.
- At the midpoint, the engagement manager's remaining hours by workstream.
What comes out
One worksheet in a fixed order: the picture for the whole engagement, a tie-out, an entry for each workstream with three tests marked fired or not fired, the gaps that limit the view, numbered questions each addressed to a role, and the decisions that belong to the partner and the finance lead, each with its facts. If the fee schedule does not add up to the agreed fee, or a file does not have the expected columns, nothing is drafted until that is put right.
The worksheet recommends no staffing change and no fee action, sets no fee, writes nothing off and changes no record.
An invented example
Illustrative example with invented data. The firm, the client, the suppliers, the roles' cost rates and every figure below are invented. Firm A is an invented 30-person advisory firm. It is mid-way through an operating-model review for Client B, a fixed-fee engagement billed on milestones. The finance analyst prepares the review for the engagement partner and the finance lead. People are referred to by role.
The inputs come first, in full, so the template can be run on them. The worksheet follows.
The inputs
1. Settings
Engagement: Operating-model review for Client B
Stage: mid-way, as of Friday 30 October 2026
Fee basis: fixed fee of $100,000, billed on milestones agreed with Client B
Agreed engagement fee: 100,000
For: engagement partner and finance lead, review on Thursday 5 November 2026
Prepared by: finance analyst, on Monday 2 November 2026
Cost limit: 45% of a workstream's agreed fee
2. Fee schedule
Workstream | Budget hours | Agreed fee
Assessment | 120 | 30,000
Design | 200 | 50,000
Rollout support | 80 | 20,000
3. Time export, as of 30 October 2026
Workstream | Role | Hours | Status
Assessment | Partner | 10 | Approved
Assessment | Manager | 40 | Approved
Assessment | Consultant | 80 | Approved
Assessment | Analyst | 12 | Approved
Design | Partner | 14 | Approved
Design | Manager | 46 | Approved
Design | Consultant | 70 | Approved
Design | Analyst | 20 | Approved
Design | Consultant | 16 | Submitted
Rollout support | Manager | 8 | Approved
Rollout support | Consultant | 10 | Approved
Workshops | Consultant | 8 | Approved
4. Cost rates, supplied by the finance lead
Role | Cost rate
Partner | 150
Manager | 95
Consultant | 60
5. Billing list, as of 30 October 2026
Invoice | Workstream | Type | Amount
INV-1 | Assessment | Fee | 30,000
INV-2 | Design | Fee | 15,000
INV-3 | Design | Recharge | 960
6. Delivery costs, as of 30 October 2026
Item | Workstream | Kind | Amount | Status
Survey platform licence | Assessment | Expense | 1,400 | Invoiced
Data extract, Supplier A | Assessment | Subcontractor | 3,000 | Invoiced
Facilitation, Supplier B, first invoice | Design | Subcontractor | 6,000 | Invoiced
Travel | Design | Expense | 960 | Invoiced
Facilitation, Supplier B, second invoice | Design | Subcontractor | 4,500 | Not yet invoiced
Rollout delivery, Supplier C | Rollout support | Subcontractor | | Not yet invoiced
7. Remaining hours, from the engagement manager's note of Thursday 29 October 2026
Workstream | Remaining hours
Assessment | 10
Design | 80
Rollout support | 60
The worksheet
ENGAGEMENT MARGIN REVIEW: Operating-model review for Client B, mid-way at 30 October 2026
For: the engagement partner and the finance lead, review on Thursday 5 November 2026. Prepared by the finance analyst on Monday 2 November 2026.
Sources: time export, as of 30 October 2026, 12 rows; fee schedule, 3 workstreams; billing list, as of 30 October 2026, 3 invoices; delivery costs, as of 30 October 2026, 6 items; cost rates for 3 roles, from the finance lead; remaining hours from the engagement manager, note of 29 October 2026.
Settings used: fixed fee, billed on milestones; cost limit 45% of a workstream's agreed fee. Defaults used: hours test 10%; effort-ahead-of-billing gap 25 points.
THE PICTURE
Agreed fee: $100,000. Fees billed: $45,000 (45.0%). Unbilled fee: $55,000.
Hours: budget 400; approved 318 (310 on scheduled workstreams, 77.5% of budget); not approved 16; expected still to come 150 (not supplied for: Workshops); projected 460 on scheduled workstreams (15.0% over budget). 8 approved hours on a workstream not in the fee schedule are in neither percentage.
Cost: time at the firm's rates $22,610 for 286 of 318 hours (32 hours have no rate); direct costs invoiced $11,360; direct costs not yet invoiced $4,500 stated (1 with no amount); recharged to the client $960.
Fee less supplied costs so far: $62,490. This is not a margin: the gaps below are not in it, so on the costs side the full figure is this or lower.
Workstreams: 4 (3 scheduled, 1 not in the fee schedule). Flagged: 2 workstreams with at least one fired test. Gaps: 5 numbered items.
TIE-OUT
Fee lines add to the agreed fee: $30,000 + $50,000 + $20,000 = $100,000.
Hours: approved hours by workstream add to the export's approved rows: 142 + 150 + 18 + 8 = 318. Not approved: 16. Export total 334, computed from the rows, not checked against a report.
Billing: fees billed by workstream add to the fee invoices: $30,000 + $15,000 + $0 + $0 = $45,000. Recharges: $960.
Costs: invoiced by workstream add to the list: $4,400 + $6,960 + $0 + $0 = $11,360. Not yet invoiced: $0 + $4,500 + amount not supplied + $0 = $4,500.
Results: workstream results add to the engagement: $15,500 + $28,830 + $18,640 - $480 = $62,490.
WORKSTREAMS
Assessment. Fee $30,000; billed $30,000 (100.0%); unbilled $0.
Hours: budget 120; approved 142 (118.3%); not approved 0; expected still to come 10; projected 152 (26.7% over).
Cost: time $10,100 (12 hours without a rate); direct costs invoiced $4,400; not yet invoiced $0; recharged $0. Supplied cost $14,500, at least (48.3% of the agreed fee).
Fee less supplied costs so far: $15,500, incomplete (12 Analyst hours have no rate).
Tests: Hours over budget: fired (26.7% over; test 10%). Effort ahead of billing: not fired (18.3 points; test 25). Cost limit: fired (48.3%; limit 45%; the cost is at least this).
Design. Fee $50,000; billed $15,000 (30.0%); unbilled $35,000.
Hours: budget 200; approved 150 (75.0%); not approved 16; expected still to come 80; projected 230 (15.0% over).
Cost: time $10,670 (20 hours without a rate); direct costs invoiced $6,960; not yet invoiced $4,500; recharged $960. Supplied cost $21,170, at least (42.3% of the agreed fee).
Fee less supplied costs so far: $28,830, incomplete (20 Analyst hours have no rate).
Tests: Hours over budget: fired (15.0% over; test 10%). Effort ahead of billing: fired (45.0 points; test 25). Cost limit: not fired (42.3%; limit 45%), on the costs supplied only.
Rollout support. Fee $20,000; billed $0 (0.0%); unbilled $20,000.
Hours: budget 80; approved 18 (22.5%); not approved 0; expected still to come 60; projected 78 (2.5% under).
Cost: time $1,360 (all hours rated); direct costs invoiced $0; not yet invoiced: amount not supplied (Supplier C); recharged $0. Supplied cost $1,360, at least (6.8% of the agreed fee).
Fee less supplied costs so far: $18,640, incomplete (Supplier C amount not supplied).
Tests: Hours over budget: not fired (2.5% under; test 10%). Effort ahead of billing: not fired (22.5 points; test 25). Cost limit: not fired (6.8%; limit 45%), on the costs supplied only.
Workshops (not in the fee schedule). Fee none; billed $0 (no fee); unbilled none.
Hours: no budget; approved 8; not approved 0; expected still to come not supplied; projected not stated.
Cost: time $480 (all hours rated); direct costs invoiced $0; not yet invoiced $0; recharged $0. Supplied cost $480 (no fee).
Fee less supplied costs so far: -$480, incomplete (not in the fee schedule; remaining hours not supplied).
Tests: not run (no budget and no fee).
GAPS THAT LIMIT THE VIEW
1. Hours not approved: Design, 16 hours, status Submitted. If approved, recorded 166 and projected 246 (23.0% over). Not in any figure above.
2. No cost rate: Analyst, 32 hours (Assessment 12, Design 20). Not in any cost above.
3. Costs not yet invoiced: Design, Supplier B second invoice, $4,500 stated and included. Rollout support, Supplier C, amount not supplied and not included.
4. Not in the fee schedule: Workshops, 8 hours, $480 of time, no fee.
5. Remaining hours not supplied: Workshops.
QUESTIONS FOR THE TEAM
1. Engagement manager. Assessment: 142 approved hours against a budget of 120, with 10 more expected (152, 26.7% over), and the fee is fully billed. Did any of the extra hours come from work outside the agreed scope, and if so what was agreed with Client B about it?
2. Engagement manager. Assessment: supplied cost is at least $14,500, 48.3% of the $30,000 fee, above the 45% limit. Were the survey platform licence ($1,400) and the data extract from Supplier A ($3,000) in the plan the fee was set on?
3. Engagement manager. Design: 75.0% of the budget hours are used and 30.0% of the fee is billed, 45.0 points apart. Which agreed milestone has Design reached, and when will the next invoice be raised?
4. Engagement manager. Design: 80 hours are expected against 50 left in the budget (projected 230, 15.0% over). What drives the extra 30 hours?
5. Engagement manager. Design: 16 hours are Submitted and not approved. When will they be approved or returned?
6. Engagement manager. Design: Supplier B's second invoice is stated at $4,500 and not yet invoiced. Is that amount still current, and when is the invoice due?
7. Engagement manager. Rollout support: no amount was supplied for Supplier C. What has been quoted or agreed, and when will it be invoiced?
8. Engagement manager. Workshops: 8 hours are recorded to a workstream that is not in the fee schedule. Do they belong to a scheduled workstream under another name, or to additional work agreed with Client B?
9. Engagement manager. Workshops: remaining hours were not supplied for this workstream, which has 8 approved hours. How many hours remain, and when will the note be updated?
10. Finance lead. Analyst: no cost rate was supplied for 32 hours (Assessment 12, Design 20). What is the rate, or should those hours stay out of the cost view?
DECISIONS FOR THE ENGAGEMENT PARTNER AND THE FINANCE LEAD
1. Staffing. Projected hours are 152 against 120 for Assessment, 230 against 200 for Design and 78 against 80 for Rollout support; 150 hours are expected still to come. Whether to change who does the remaining work, once questions 1 and 4 are answered.
2. Fee action. Assessment is fully billed at $30,000 with projected hours 26.7% over; Design is 15.0% over with $35,000 unbilled. Whether to take any action on Client B's fee or scope, once questions 1, 4 and 8 are answered.
3. Billing. Design has 30.0% of its fee billed with 75.0% of its budget hours used. Whether the next Design invoice is due, once question 3 is answered.
Draft for the engagement partner's and the finance lead's review. Every figure comes from the files listed above and is for the two of them to validate. No fee has been set, nothing has been written off, no cost rate has been invented, no record has been changed and nothing has been sent.
Where it fits
- Professional services, where the partner owns the engagement's economics and the finance lead sees them only after close.
- Engineering firms, where design and study phases run over their hours before the invoice schedule notices.
- Marketing & advertising, where agency retainers and project fees depend on how many hours a client's work actually takes.
- Finance and accounting, which keeps the cost rates, the billing and the books this review draws on.
- Project and delivery, where the engagement manager answers for the plan the hours were budgeted against.
- Growth & scaling, when more engagements run at once than one partner can hold in their head.
- Established businesses, where an engagement's true cost is known to one person and should be on a page.
It is a different piece of work from the budget-versus-actual variance commentary, which explains a period's ledger lines for management, and from the client billing summary, which prepares an invoice for the client to read. This one looks inside a single engagement at what the work has taken against what was agreed.
What has to change for your company
Decide which fee bases you will review (fixed fee, capped fee or budgeted time and materials) and how the fee is split across workstreams. Agree who supplies the cost rates, how often they are refreshed and which roles they cover. Set the three tests: how far projected hours may pass the budget, how far effort may run ahead of billing, and what share of a workstream's fee its costs may reach. Decide when an engagement is reviewed, which decisions the partner takes alone and which go to the finance lead as well, and what counts as approved time in your timesheet system.
What has been checked
Fully Powered AI wrote this capability template from its own map of the work. It was editorially reviewed on 10 November 2026. It was tried on its invented example in Claude on 10 November 2026; the record is published with it. No edit has been made since that run. It has not yet been tested in a client environment. It has not yet been tested as a packaged version in ChatGPT, Claude, Copilot or Gemini.
Testing in your firm means running it on two or three finished engagements whose outcome the partner already knows, plus hard cases written in advance: a fee schedule that does not add up, hours in a workstream that is not scheduled, a role with no cost rate, a subcontractor invoice that has not arrived. The finance lead checks every figure against the timesheet system and the billing records before anyone relies on it. Pilot acceptance-test preparation builds that test set, and what we test before we call an AI workflow ready describes the record we keep.
The full capability template
Everything above is the outline. The complete capability template is the working version: the roles, the inputs, the procedure, the exceptions and stop conditions, the output format, the reviewer checklist, the acceptance tests, the instructions for an AI assistant and what to customize for your company. It comes with a download and the link to its folder in Fully Powered’s public repository.
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Next step
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