Burn Rate

Week 3 of an 8-week project. You've already used 55% of the budget. At this pace, you'll be tapped out by week 5 — with three weeks of work still ahead. That's your burn rate telling you something is wrong.

Burn rate measures how fast you're consuming resources — usually money or hours — over time. It's the speedometer for your project budget. And just like driving, if you're going 120 in a 60 zone, you need to know *now*, not when you hit the wall.

Project Burn Rate vs. Company Burn Rate

The term gets used at two levels:

Project burn rate — How fast a specific project consumes its allocated hours or budget. If a 200-hour project burns 30 hours per week, it'll last about 6.7 weeks. Start burning 40 hours/week (because more people got allocated, or scope crept in) and you're done in 5 weeks — regardless of whether the work is finished.

Company burn rate — How fast the organization spends money overall. Monthly overhead costs plus salaries plus everything else. If you spend €80,000/month and bill €95,000/month, your net burn is negative (meaning you're profitable). If you spend €80,000 and bill €65,000, you're burning €15,000/month in cash.

Reading the Signals

Burn rate is most useful as a leading indicator. Three patterns to watch:

• Accelerating burn. Hours consumed per week are increasing. Common cause: overallocation or untracked scope creep. The fix is immediate — check whether the added work was sanctioned and adjust resource allocation if not.
• Steady burn above plan. The weekly rate is consistent but higher than estimated. This usually means the original estimate was wrong. Better to re-baseline the budget early than to pretend you'll "make up the hours" later.
• Decelerating burn late in the project. People are getting pulled to other work, and the remaining deliverables are dragging. Check if key people still have enough bandwidth to close it out.

Burn Rate and Profitability

Burn rate connects directly to margins. A project billing a flat €30,000 with team costs of €120/hour (blended cost rate) can afford 250 hours of burn. Exceed that and your profit margin goes negative. Tracking burn rate weekly lets you project whether you'll land above or below that line — which is essentially a mini revenue forecast for each project.

The project manager who checks burn rate every Friday avoids the Monday surprise. The one who checks it at project close writes a post-mortem about why the margin disappeared.