Advisory finance: explain a fixed-fee margin miss
A fictional advisory team sold a fixed-fee finance-transformation project. The engagement exceeded planned hours. Explain the margin bridge and assess a genuine change in scope without sacrificing delivery quality.
Original Finance Circle professional-services scenario. All fees, hours and rates are fictional. Deloitte’s public interview guide is a format reference, not the source of a confidential client engagement.
Independent Finance Circle learning material. The source organisation does not sponsor, author or endorse this exercise.
Clarify. Structure. Calculate. Defend.
Take 2 minutes to clarify the decision and definitions, 3 minutes to structure the analysis, then work the exhibits. Finish with a concise recommendation and answer a follow-up. The time is a suggested practice format, not an employer requirement.
Clarify before solving
What are the data basis and reporting boundary?
Original Finance Circle professional-services scenario. All fees, hours and rates are fictional. Deloitte’s public interview guide is a format reference, not the source of a confidential client engagement.
Which assumptions can I use without requesting more data?
CAD. Fixed client fee is 150,000. Budget is 1,000 hours at 80 cost per hour plus 10,000 other delivery cost. Actual base delivery is 1,200 hours at 80 cost per hour plus 12,000 other cost. Fee remains 150,000.
What decision am I expected to support?
Calculate total profit and margin with the change order. Separately calculate base profit after a 5% fee discount.
Build your structure
- Fixed fee and budget delivery economics
- Hours and other-cost overrun bridge
- Genuinely approved incremental scope
- Discount alternatives, quality and escalation
Use the branches that matter to this decision. A memorised framework is less useful than explaining why each analysis could change your recommendation.
Everything you need to work the case.
Assumptions & boundaries
- CAD. Fixed client fee is 150,000. Budget is 1,000 hours at 80 cost per hour plus 10,000 other delivery cost.
- Actual base delivery is 1,200 hours at 80 cost per hour plus 12,000 other cost. Fee remains 150,000.
- A separately approved change order adds 200 hours, 30,000 revenue and 2,000 other cost. The fee discount alternative reduces only the base fee by 5%, with actual base costs unchanged.
Illustrative engagement model
| Driver | Budget | Actual base |
|---|---|---|
| Fee | 150,000 | 150,000 |
| Hours | 1,000 | 1,200 |
| Delivery cost / hour | 80 | 80 |
| Other delivery cost | 10,000 | 12,000 |
Choose the responsibility. Solve the decision.
Each level uses the exhibits above and asks a different question. Your entries stay in this open page only; copy your work before leaving.
Calculate budget and actual margin.
Calculate budget profit, actual base profit and actual base profit margin.
Do extra hours automatically create extra billable revenue?
Numerical checks compare your arithmetic with the case model. Written recommendations are self-practice and are not automatically graded.
03 · Reveal worked solution & decision guide
Expected numerical answers
- Budget profit
- 60,000 CAD
- Actual base profit
- 42,000 CAD
- Actual base margin
- 28 %
Work through the calculation
- Budget = 150,000 − 1,000 × 80 − 10,000 = 60,000. Actual = 150,000 − 1,200 × 80 − 12,000 = 42,000.
- Actual margin = 42,000 / 150,000 = 28%, versus 40% budget.
A strong concise response
My calculation shows that budget profit is 60,000 CAD; actual base profit is 42,000 CAD; actual base margin is 28 %. Distinguish scope changes, inefficiency and estimate error before assigning a cause to excess hours.
Answer the interviewer follow-up
Do extra hours automatically create extra billable revenue?
No. The base fee is fixed. Separate approved scope changes from estimate error or delivery inefficiency before changing the commercial model.
Assessment rubric · 20 points
For self-review or mentor discussion. This rubric is not an automated written-answer grade or an employer scoring system.
Correctly derives all 3 numerical results for this level, keeps signs and units consistent, and explains the method.
Explains the objective: Calculate budget and actual margin. States the supplied scope, timing and metric definitions before calculating.
Distinguish scope changes, inefficiency and estimate error before assigning a cause to excess hours. Addresses the interviewer follow-up without contradicting the facts.
Leads with a clear conclusion, distinguishes facts from assumptions, and identifies the next evidence needed. Does not claim the source company asked or endorsed this question.
Use full precision until the final rounding. Alternative written recommendations may be reasonable if they respect the facts and explain assumptions. This is Finance Circle’s guide, not an official source-company answer.
Source & attribution
The references below identify the public reporting, hiring guidance, research or mock-interview material used for context. Finance Circle wrote the exercise and its answers. Illustrative figures are explicitly identified; they are not company results or findings.
Employer-published case-interview format; fictional engagement data and independent model answers.
Source reviewed 30 October 2026. No external page is needed to answer this exercise. Company names and logos identify sources only. All trademarks belong to their respective owners.