When Project Rates are present, total Project Revenue equals Project Budget.
For a given period, Project Revenue = Billable Hours + Other Expenses.
The Effective Hourly Rate is calculated using ONLY Revenue based on Billable Hours/ T&M Benchmark. Other Expenses (Other Charges) will be accounted for separately on the date they occur.
In the screenshot below, the $5,000 Other Charges added to a future date is fully recognized as revenue in the future. The Effective Hourly Rate does not use the Other Expenses . Instead these are treated separately:
So the revenue that is recognized is based on 2 things and added up:
Billable hours/T & M Benchmark
Other Expenses Charges if they occur within the date period.
In addition, the total Project Revenue does not equal the Project Budget under the following conditions:
When all Project Rates are $0 and Other Charges are present, the Project Revenue equals the sum of Other Charges instead of the Project Budget.
When the sum of Other Charges exceeds the Project Budget, the Effective Hourly Rate will be set to $0 even when project rates are present, and the total Project Revenue equals the sum of Other Charges instead of the Project Budget.
How is this useful?
This more accurately reflects revenue earned due to billable hours in a period by calculating the rate based on workload and not other expenses.
This allows Milestone Revenue Recognition for Fixed Price in all date range or period reports
This will allow mixed budget types- like billable hours + retainer.