Financial Categories: Revenue Calculations

⏱️ 8 minute read

This article provides an in-depth explanation of how the new revenue fields are calculated, based on budget type and whether manual revenue recognition or month locking has been applied.

This article covers:

• Time & Materials budgets (Without Manual Revenue Recognition or Locked Months)
• Fixed Price (without Manual Revenue Recognition or Locked Months)
• With Manual Revenue Recognition (All Billable Budget Types)
• With Locked Months (All Billable Budget Types)

Time & Materials budgets (without Manual Revenue Recognition or Locked Months)

The following calculations apply to projects with budget types Time & Materials, Time & Materials Retainers and Fixed Hours Retainers, with no manually entered revenue recognition and no revenue-locked months.

Estimated Revenue

Estimated Hours x Rate + Price of Planned Billable Expenses

Note: Estimated Hours by default is the time estimated on tasks, but there is an option in project financial settings to use allocated hours instead.

Actual Revenue

Actual Hours x Rate + Price of Past Billable Expenses

Note: Actual Hours by default is the time registered on tasks, but there is an option in project financial settings to use past allocated hours (up to but not including today’s date) instead.

Remaining Work Revenue

Remaining Work Hours x Rate + Price of Future Billable Expenses

Note: Remaining Work Hours by default is the time remaining on unfinished tasks, but there is an option in project financial settings to use future allocated hours (from today’s date and into the future) instead.

Projected Total Revenue

Actual Revenue + Remaining Work Revenue

Note: Projected Total Revenue will equal Estimated Revenue if all tasks are completed in the amount of time estimated and if all expenses are marked as ‘Planned’. The figures will differ if tasks are completed under or over the estimated time or there are expenses not marked as ‘Planned’.

Fixed Price (without Manual Revenue Recognition or Locked Months)

The following calculations apply to projects with budget types Fixed Price and Fixed Price Retainers, with no manually entered revenue recognition and no revenue-locked months. For Fixed Price Retainers, the Fixed Price given here in formulas is interchangeable with the sum of all period prices.

Time vs Expenses Revenue

On Fixed Price projects, revenue from expenses is taken as-is, i.e., the revenue from expenses is equal to the sum of the price on all billable expenses. The revenue designated for time is the remainder of the Fixed Price after expenses are accounted for.

Time Revenue = Total Revenue - Expenses Revenue

Total Revenue = Fixed Price + Price of Expenses Billable on Top of Fixed Price

Estimated Revenue

The total Estimated Revenue on Fixed Price projects is equal to the Fixed Price plus the price of any Planned expenses marked as Billable on top of Fixed Price.

Estimated Revenue = Fixed Price + Price of Planned Billable Expenses on top of Fixed Price

This is the formula for the Estimated Revenue for a given date range:

(Estimated Hours in Date Range x Rate) / (Total Estimated Hours x Rate) x Total Time Revenue + Price of Planned Expenses in Date Range

Note: Estimated Hours by default is the time estimated on tasks, but there is an option in project financial settings to use all allocated hours instead.

You could also express Estimated Revenue as:

Estimated Billable Value of Service of Time in Date Range / Total Estimated Billable Value of Service x Total Revenue of Time + Price of Planned Expenses in Date Range

Actual vs Remaining Work Revenue

Actual and Remaining Revenue reflects the split of total revenue between the time that has been registered and the expenses that have been incurred on the one hand (Actual Revenue) and the time remaining on unfinished tasks and future expenses (Remaining Work). This split changes as time is registered, estimates are updated or tasks are marked as completed.

Actual Revenue

(Actual Hours x Rate) x (Projected Total Hours x Rate / Projected Total Time Revenue) + Price of Past Expenses

Note: Actual Hours by default is time registered, but there is an option in project financial settings to use allocated hours in the past (before today’s date) instead.

Actual Revenue could also be expressed as:

(Actual Time Billable Value of Service x (Projected Total Time Value of Service / Projected Total Time Revenue) + Price of Past Expenses

Remaining Work Revenue

(Remaining Work Hours x Rate) x (Projected Total Hours x Rate / Projected Total Time Revenue) + Price of Future Expenses

Note: Remaining Work Hours by default is the time left on unfinished tasks, but there is an option in project financial settings to use allocated hours in the future (today’s date and beyond) instead.

Remaining Work Revenue could also be expressed as:

(Remaining Work Time Billable Value of Service x (Projected Total Time Value of Service / Projected Total Time Revenue) + Price of Past Expenses

Projected Total Revenue

Actual Revenue + Remaining Work Revenue

Note: Projected Total Revenue will equal Estimated Revenue if all tasks are completed in the amount of time estimated and if all expenses are marked as ‘Planned’. The figures will differ if tasks are completed under or over the estimated time or expenses are not marked as ‘Planned’.

With Manual Revenue Recognition (All Billable Budget Types)

Manual revenue recognition is by definition revenue that is associated with time. (Since expenses revenue is taken as-is, expense revenue can already be “manually” input.) 

With manual revenue recognition, the total amount of revenue for time is fixed. The revenue is divided into Actual Revenue vs Remaining Work Revenue and the split between these two will change based on the values of Actual Hours or Remaining Work Hours in the month.

The split between Actual and Remaining Work Revenue will vary depending on the these scenarios:

• The month has both Actual Hours and Remaining Work Hours
• The month has Actual Hours but no Remaining Work
• The month has Remaining Work Hours but no Actuals
• The month has no Actual Hours or Remaining Work Hours

In Scenario 1 with both Actual Hours and Remaining Work Hours in a month with manual revenue recognition, the formulas for the revenue splits are as follows:

Actual Time Revenue = Actual Time Billable Value of Service / Projected Total Time Billable Value of Service x Time Manual Revenue Recognition

Remaining Work Time Revenue = Remaining Work Time Billable Value of Service / Projected Total Time Billable Value of Service x Time Manual Revenue Recognition

With Locked Months (All Billable Budget Types)

Time Revenue

Remaining Work Hours do not remain in the past even if task dates are entirely in the past. Remaining Work Hours are placed on today’s date if task dates are entirely in the past.

If there are no Remaining Work Hours in a month with locked revenue, the full amount of the manually entered revenue will be considered Actual Revenue. 

We do not recommend locking current or future months but it is still possible to do so. If a current or future month’s revenue is locked, the total revenue for the month is fixed, but the split between Actual and Remaining Work Revenue will continue to shift if time is registered or the remaining work is altered. 

If there are Remaining Work Hours and no Actual Hours in a month with locked revenue, the full amount of the manually entered revenue will be considered Remaining Work Revenue.

If there are both Actual Hours and Remaining Work Hours in a month with locked revenue, the revenue for time will be split according to the relative value of the Actual Hours and Remaining Work Hours:

Actual Time Revenue = Actual Time Billable Value of Service / Projected Total Time Billable Value of Service x Time Revenue

Remaining Work Time Revenue = Remaining Work Time Billable Value of Service / Projected Total Time Billable Value of Service x Time Revenue

Expense Revenue

Total Revenue = Time Revenue + Expenses Revenue

Expenses Revenue is taken as-is, so when Total Revenue is fixed and expense values are adjusted, the Time Revenue must also adjust to keep the total the same.

If a month is locked with a Total Revenue of $100 and an expense is added with a price of $200, the Time Revenue goes negative to -$100. A negative value for Time Revenue is distributed between Actual and Remaining Work Revenue according to relative values: the same split as it would be with positive values. If Remaining Work Hours accounts for 75% of the total time value in the month whereas Actual Hours accounts for 25%, the time revenue would be -$75 in Remaining Work Revenue and -$25 for Actual Revenue.

Note that if manual time revenue is entered, then the month is locked, then an expense is added, the time revenue will still adjust so that the total revenue remains the same in the month while the expense is added.

Related articles

• Updates to Financial Categories and Reporting in Forecast
• Understanding Project Reporting (Time, Money and Value) in Forecast