Project Financial

Are you unknowingly loosing money on your Projects – find out with iBE Project Financials?

October 15, 2015 10:08 am Published by Leave your thoughts

We are pleased to announce a major upgrade to our project financials. We now show alot more information and allow you to expand and collapse rows, show and hide columns and even rename columns to suit your own terminology. If you open a project and click on the FINANCIALS tab you will see the following information in columns for actuals to date, remaining, forecast (actual + remaining), base plan and any number of baselines and variances such as forecast vs. planned, actual vs. planned and each baseline vs. planned. You can create any number of baselines or copies of your project using our new Baseline feature from the more button on the project toolbar.

In case you were wondering what all the rows mean in our project financials, here is a quick explanations. The columns should be self-explanatory, actuals representing time and expenses recorded to the project, planned values being the initial or base planned values typically frozen once you starting project delivery. Remaining values really only apply to labor hours and related financial metrics such as labor cost or T&M revenues and differs from the planned values if you maintain remaining hours for task resources different to plan. Forecast is actual + remaining. The rows, from top to bottom are:

  • T&M Revenue at company or project rates (a project type setting) gives you an indication of what this project might be worth if the same volume or work had been sold at company rates or on a pure T&M basis. This is the basis of calculating your customer’s discount %
  • Project or Contract Services Revenue is the actual, projected or forecast labor and services revenue or the sum of hours * resource billing rates for T&M deliverables plus quality service rate for fixed price or milestone-based deliverables
  • Expenses Revenue is either zero (if your project type is configured not to include billable expenses as revenue) or the value of billable expenses plus any applicable mark-up(s) defined in your project’s expenses tab
  • Project Labor Cost is the sum of actual, planned, remaining or forecast hours times each resources’ individual cost rate for every task, irrespective of whether that task is internal, T&M or fixed price. The cost of a fixed price task is based on the labor input in other words
  • Project Gross Service Margin is the Project or Contract Services Revenue minus the Project Labor Cost (as $) or this margin divided by the Project or Contract Services Revenue (as %). It never includes expenses
  • Billable vs. non-billable Expense Costs are the sums of billable vs. non-billable expenses booked to this project. You can now plan or budget for billable and non-billable expenses in the project EXPENSES tab
  • Total Project Direct Cost is simply the sum of Labor + Expense Costs
  • Project Gross Margin depends on whether your project type is set up to include expenses as revenue or not.
    • If expenses are included then the total project gross margin is the Project Services Revenue + Expenses Revenue minus Total Project Direct Cost (which includes all expenses). Project Gross Margin as a % is gross margin $ divided by Services + Expenses Revenue
    • If expenses are not included then the total project gross margin is the Project Services Revenue minus Project Labor Cost and also minus the Non-billable Expenses Cost (since billable expenses are not part of the margin calculation). Project Gross Margin as a % is the margin in $ divided by Project Services Revenue
  • Department Overhead Allocation is a new concept where you will soon be able to maintain overhead % separately for labor vs. expenses by department. All projects allocated to each department will adopt that department’s overhead rates and calculate Net Margins accordingly. More information on this will be forthcoming as we roll it out
  • We also keep track of a large number of other financial and operational project metrics such as
    • Funded and unfunded revenues, based on matching revenues to customer purchase order values remaining
    • Invoiced, paid and approved timesheet or expense amounts ready to bill
    • Average days to pay this project
    • Recognized revenue, based on a range of industry-standard revenue recognition techniques for you to choose from
    • Project dates, durations and efforts
    • Internal cost budgets. You can directly edit project cost budgets or maintain cost budgets at task level and roll them up
    • Average cost and revenue per labor hour, across both T&M and fixed price tasks

You can set alerts to email the project leader or others whenever one of these project metrics crossing a certain threshold

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