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Projector includes a number of ways of looking at revenue. From Standard Revenue to Total Revenue, each type gives you insight into an aspect of your business. This article helps you quickly differentiate each type of revenue by providing you with a description and a practical example. How revenue is calculated often depends on whether an engagement's contract is Time and Materials (T&M), Fixed Price (FP), or Not to Exceed (NTE). First, let's enumerate the types of revenue that Projector can track and calculate. There is a short definition next to each to help you quickly find an answer, but please read the details section below to find out when these definitions may change depending on the contract type. You'll notice that most of our tracked revenue types center around Time. This is because PSA firms are mostly concerned with time (labor) revenue as opposed to cost (non-labor) revenue.
One last thing before we get started, the following document makes some assumptions about how your installation was initially configured. If you have configured Projector in a non-standard way, then some of these definitions may not match your particular installation. |
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This webinar
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The Basics
So we have a lot of different types of revenue to cover. I'm going to start with the four basic types, Standard, Contract, Billing Adjusted, and Other Direct Cost. These are the easiest to understand. Once you have a full understanding of them, we can move on to the more complicated types of revenue.
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So hopefully you understand how Projector determines your percent complete. Next you need to understand how that revenue gets assigned to time cards. For me, the trick to understanding this is to picture each time card. Then determine how much each time card contributed to the percent complete number. Again we will work with hours because it is simpler. If 25 hours were worked, and the project is 25% complete, then each hour of work earned 1% of the revenue. So a timecard for 8 hours earns 8%. Looking at the same problem from a resource perspective, if Sally worked twice as much as Jim, she earns 2/3 of the revenue and Jim earns 1/3.
Revenue Recognition
Revenue recognition is the process of locking down revenue on time cards. For T&M/NTE this happens automatically as time is approved. For fixed price engagements you must run the revenue recognition wizard. The wizard uses the dynamic revenue allocation method just discussed to assign a specific amount of revenue to time cards across a specific time period. This locks in the revenue on those time cards and it cannot be changed except by running the revenue recognition wizard again on the same time period. This is useful because as an engagement changes over time, perhaps taking longer to deliver than expected, your earned revenue in the past stays static, and Projector automatically spreads the remaining revenue across the rest of the engagement.
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Or, if you are using our Advanced Analytics Module /wiki/spaces/docs/pages/12916221 (AAM) you can visualize your rate realization. The green bar represents what you actually earned. The stacked blue, red, and yellow bars represent revenue loss due to discounting, sales, and write downs.
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