Decoupling Other Expenses- Charges from Effective Hourly Rate calculations for Project Revenue
For Fixed Price Projects, Project Budget and Revenue are always equal and Project Revenue is always comprised of Billable Hours + Other Expense Charges. This is NOT changing. What is changing is how we calculate the Effective Hourly Rate and how we recognize Other Expenses - Charges.
Project revenue calculations factor in Other Expenses and the logic applied to recognize the amount earned in a certain period is the same as for hours worked (Hours worked x Effective Hourly Rate) instead of just recognizing it on the date it incurred like in T & M Projects.
What it Does Now:
Project Revenue (Billable Hours + Other Expenses) always equals Project Budget. When selecting a period to report revenue on, we use the effective hourly rate to determine what revenue to recognize for that period.
Effective Hourly Rate is calculated using the Project Revenue (Billable Hours + Other Expenses Charges)/T & M Benchmark.
Project Revenue disregards the date of the Other Expense - Charge and simply factors it into the Effective Hourly Rate.
What it will Now Do:
Project Revenue will continue to be Billable + Other Expenses - but the Effective Hourly Rate will now be calculated using ONLY Billable Hours/ T& M Benchmark and the Other Expenses- Charge will be accounted instead separately on the date it occurs
Why:
Many customers have requested we recognize Other Expenses - Charges on the date they incur - especially if using this to add ad-hoc expenses.
Will more accurately reflect revenue earned due to billable hours in a period by calculating the rate based on actual work and not other expenses.
Will align with how T & M Project recognize Other Expenses Charges
Will allow for Milestone Revenue Recognition for Fixed Price in all date range or period reports
Will allow mixed budget types- like billable hours + retainer
Who will be affected
Clients who have Fixed Price Projects with Other Expenses- Charges and Project Rates (if the T&M Benchmark & Project Revenue/Budget are different)
Dashboards
If your T& M Benchmark and Project Revenue are different- you'll likely see a slight difference in the Revenue Tab- Future & Past.
Tab: Revenue
Fields: Effective Hourly Rate, Other Charges, Totals
Reports
Project
Column: Project Revenue
Dates: Date Range & Period
Conditions: T & M Benchmark and Project Revenue are not the same
Rows: Summary, Individual People
People
Column: Project Revenue
Dates: Date Range & Period
Conditions: T & M Benchmark and Project Revenue are not the same
Rows: Summary, Individual Project
What historical data be affected?
Yes- this is a system wide change- a correction in our calculation logic. Only a small subset of customers will be affected and most reporting will look the same- with only slight changes in specific periods.
Not ALL reports or dashboards that are Fixed Price with Other Expenses will be affected- ONLY those where the T & M Benchmark and Project Revenue are not the same.
Renamed Effort Metrics in Reports
To make workload reporting clearer, we’re also renaming some existing workload metrics (column names).
Before | After |
Under Effort > Total |
|
Total | Total (Forecast) |
Scheduled Total | Scheduled (All) |
Actual Total | Actual |
Under Effort > Billable |
|
Billable | Total (Forecast) |
Scheduled Billable | Scheduled (All) |
Actual Billable | Actual |
Under Effort > Non-Billable |
|
Non-Billable | Total (Forecast) |
Scheduled Non-Billable | Scheduled (All) |
Actual Non-Billable | Actual |
These changes are naming updates only and do not change how the renamed metrics are calculated.
New Effort Metrics in Reports
We’re also adding two new workload metrics to Reports:
Pending Actuals — scheduled hours on the dates when scheduled hours are present but there are no corresponding actual hours logged (incomplete timesheets). Also known as missing actuals.
Scheduled (Future) — shows scheduled hours from today onwards.
These metrics make it easier to view the breakdown of the Total(Forecast) Hours:
Budget Remaining For Phase and Phase & Role Budget Type on Planner
You'll now be able to quickly see if you phase allocation is on track! We'll also flag if the allocation is above your budget by adding the pink line above it.
If you have any questions, please use the chat option in your account or contact us at help@runn.io.