Customer invoice is based on a billing schedule.
Cost incurred via hours, expenses, item are loaded on project financials (mostly Profit & Loss)
Revenue needs to be calculated and posted using completed percentage or upon project completion using completed contract method. There are various calculation options available.
Cost can be posted to WIP (work in progress) in Balance Sheet and upon revenue recognition to Profit & Loss
Use case scenarios involve companies billing fixed amount to a customer and managing their cost and profitability separately.