Where Professional Services Practices Lose Margin

Practices sell time and then fail to capture it. Scope creep is absorbed rather than billed, work in progress sits unbilled for weeks, and partners carry client knowledge that never becomes practice knowledge. Recruitment is treated as the fix for capacity problems that are actually workflow problems.
What disciplined infrastructure looks like
Engagement scoping that defines what is included before work begins, so out-of-scope requests become paid variations rather than favours. Automated WIP and lockup reporting so billing happens on a cycle, not when someone remembers. Standardised client onboarding and file structures, so any competent staff member can pick up any client. Capacity reporting that shows who is actually loaded before the next hire is approved.
The test
If lockup exceeds sixty days and nobody owns the number, the practice is lending its clients money interest free.

