A working example

Let's now get back to our real-world example of project profitability!

We know that our consulting service organizations project results data describes the results of all its project work over time. There are 100 projects (or observations) in our data and consists of two variables hours billed and profit. The first variable is self-explanatory: it's the total number of hours billed to the client for that project. The second is a US dollar amount that equates to the revenues collected from the client after subtracting all expenses (for the project).

We know that each project has both expenses and revenue, and some projects are profitable while others are not. In addition, even projects that are profitable vary greatly in their level of profitability. Again, the firm is interested in identifying which variables (if any) are candidates for predicting how profitable a project will be.

Let's get started with our statistical analysis!

Establishing the data profile

Before attempting...