CP-235 Revenue Formulas:Complex Revenue Calculationsand How to Use Them EffectivelyPresented by:Traci Rowland, Baker Tilly...
Agenda• Review Available Revenue Formulas• Explain Calculations & Opportunities for Use     – Loaded Labor Formulas (T&M) ...
Review Available Revenue Formulas• There are 26 revenue formulas in Costpoint 6.1—based on contract  type, these formulas ...
Loaded Labor Formulas• Used when computing revenue using loaded labor rates• The labor portion of the formula is computed ...
Loaded Labor Formulas• Loaded Labor Rate Plus Cost Incurred on Non-Labor (T&M) =                                  Loaded  ...
Loaded Labor Formulas• Loaded Labor Plus Non-Labor Plus Burden on Non-Labor =                 Loaded                      ...
Loaded Labor Formulas• Loaded Labor Plus Non-Labor w/ Burden w/ Fee =    Loaded                                      Burde...
Loaded Labor Formulas• Loaded Labor Rate w/Fee Plus Non-Labor w/ Burden w/Fee = Loaded                                    ...
Loaded Labor Formulas• Loaded Labor Rate w/Burden w/Fee Plus Non-Labor w/Burden  w/Fee =Loaded Labor               +      ...
Multiplier Formulas• Revenue calculated by applying a multiplier to labor and non-labor costs  that are posted in the gene...
Multiplier Formulas• Rate Schedule times Multiplier Plus Non-Labor Times Multiplier =         Labor                       ...
Cost Incurred Using Estimate to                Complete• Project costs to complete and inception-to-date (ITD) losses must...
Estimate to Complete  Prior Year Allow. Costs               1,500    Example: $20,000 Contract Value  YTD Allow. Costs    ...
Cost Incurred Using Estimate at                Completion• Project costs at completion and inception-to-date (ITD) losses ...
Estimate at Completion Prior Year Allow. Costs                 2,000                                                 Examp...
Functions that Refine Revenue                                Calculations• The following slides demonstrate a sampling of ...
FFRE Client Examples          FFRE Client Example• Contract Type—Firm Fixed Priced with  Reimbursable Expense• Special Con...
FFRE Client Examples• Contract Type—FFRE     – Labor Revenue—Estimate to Complete     – Expenses Revenue—Loaded Labor Rate...
T&M Client Examples          T&M Client Example• Contract Type—Time & Materials• Special Considerations:  • Burden on Non ...
T&M Client Examples• Contract Type—T&M     – Revenue and Billing—Loaded Labor Plus Non-Labor Plus Burden on Non-Labor     ...
USAID Client Examples           USAID Contract           Client Example• Contract Type—Time & Materials—USAID• Special Con...
USAID Client Examples• Contract Type—CPFF                                                      Contract Level     – Revenu...
QuestionsCopyright © 2010 Deltek, Inc.               23
Speaker Contact Information• Traci Rowland, Director, Baker Tilly     – Direct Dial: 703-923-8218     – Email: traci.rowla...
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Deltek Insight 2010: Revenue formulas complex revenue calculations & how to use them effectively

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  • Deltek Insight 2010: Revenue formulas complex revenue calculations & how to use them effectively

    1. 1. CP-235 Revenue Formulas:Complex Revenue Calculationsand How to Use Them EffectivelyPresented by:Traci Rowland, Baker Tilly / Beers + CutlerJennifer Goode, Baker Tilly / Beers + Cutler 1
    2. 2. Agenda• Review Available Revenue Formulas• Explain Calculations & Opportunities for Use – Loaded Labor Formulas (T&M) – Multiplier Formulas – Estimate to Complete – Estimate at Completion• Functions that Refine Revenue Calculations – Direct Cost Ceilings – Burden Cost Ceilings – Cost Fee Overrides – Multiplier Overrides• Provide examples of how our clients have used these formulas to generate revenue systematically for more challenging contract typesCopyright © 2010 Deltek, Inc. 2
    3. 3. Review Available Revenue Formulas• There are 26 revenue formulas in Costpoint 6.1—based on contract type, these formulas include: Transaction-Based Non-Transaction Based (Cost Plus/Time & Materials) (Firm Fixed Price/Award) – Loaded Labor Rate – Do Not Compute – Loaded Labor Rate Plus Cost Incurred On Non-Labor (T&M) – Cost Incurred Using Estimate To Complete – Loaded Labor Plus Non-Labor Plus Burden on Non-Labor – Cost Incurred Using Estimate At Completion – Loaded Labor Plus Non-Labor W/Burden W/Fee – Contract Value Times Percent Complete – Loaded Labor Rate W/Fee Plus Non-Labor W/Burden – Contract Value Times Percent Complete Vs. W/Fee Rate Schedule – Loaded Labor Rate W/Burden W/Fee Plus Non-Labor – Fixed Amount Month To Date W/Burden W/Fee – Fixed Amount Year To Date – Rate Schedule Times Multiplier Plus Non-Labor Times – Fixed Amount Contract To Date Multiplier – Equal To Billings Before Retainage – Labor Cost Times Multiplier Plus Non-Labor Times Multiplier – Equal To Billings After Retainage (Costs) – Contract Value Less Backlog – Labor Cost Times Multiplier Plus Non-Labor Times Multiplier – Equal To Deliveries (Hours) – Equal To Project Ledger Sales – Fee on Hours Plus Cost Incurred – Unit Revenue Only – Cost Plus Fee On Cost – Cost Plus Fee On Cost Current MonthCopyright © 2010 Deltek, Inc. 3
    4. 4. Loaded Labor Formulas• Used when computing revenue using loaded labor rates• The labor portion of the formula is computed by multiplying the assigned labor rate by the hours incurred by PLC• Non-labor amounts posted in the general ledger are included in Loaded Labor Plus Non-labor formulas• Other variations of Loaded Labor Formulas include: – Loaded Labor Plus Cost Incurred on Non-Labor – Loaded Labor Plus Non-Labor Plus Burden on Non-Labor – Loaded Labor Plus Non-Labor W/ Burden W/ Fee – Loaded Labor Rate W/Fee Plus Non-Labor W/ Burden W/ Fee – Loaded Labor Rate W/ Burden W/ Fee Plus Non-Labor W/ Burden W/ Fee 4
    5. 5. Loaded Labor Formulas• Loaded Labor Rate Plus Cost Incurred on Non-Labor (T&M) = Loaded Labor + Non-Labor Labor Hours x Labor RateCopyright © 2010 Deltek, Inc. 5
    6. 6. Loaded Labor Formulas• Loaded Labor Plus Non-Labor Plus Burden on Non-Labor = Loaded Burden on Labor + Non-Labor + Non-Labor G&A* x Non-Labor*Example only—burden is applied based on company’s indirect cost pool structureCopyright © 2010 Deltek, Inc. 6
    7. 7. Loaded Labor Formulas• Loaded Labor Plus Non-Labor w/ Burden w/ Fee = Loaded Burden on Labor + Non-Labor + Non-Labor + Fee Non-Labor x (1 + Fee Rate)Copyright © 2010 Deltek, Inc. 7
    8. 8. Loaded Labor Formulas• Loaded Labor Rate w/Fee Plus Non-Labor w/ Burden w/Fee = Loaded Burden on Labor + Fee + Non-Labor + Non-Labor + Fee Labor x (1 + Fee Rate)Copyright © 2010 Deltek, Inc. 8
    9. 9. Loaded Labor Formulas• Loaded Labor Rate w/Burden w/Fee Plus Non-Labor w/Burden w/Fee =Loaded Labor + Burden on Labor + Fee + Non- Labor + Burden on Non-Labor + Fee(Labor x Fringe) + (Labor x OH) + (Labor x G&A)**Example only—burden is applied based on company’s indirect cost pool structureCopyright © 2010 Deltek, Inc. 9
    10. 10. Multiplier Formulas• Revenue calculated by applying a multiplier to labor and non-labor costs that are posted in the general ledgerNote: labor costs should have a Project Labor Category (PLC) assigned to them• Variations of Multiplier Formulas include: – Rate Schedule times Multiplier Plus Non-labor times Multiplier • Revenue calculated using labor rates and rate types – Labor Cost times Multiplier plus Non-Labor times Multiplier (Cost) – Labor Cost times Multiplier plus Non-Labor times Multiplier (Hours) • Revenue is computed using actual rates for hoursCopyright © 2010 Deltek, Inc. 10
    11. 11. Multiplier Formulas• Rate Schedule times Multiplier Plus Non-Labor Times Multiplier = Labor Non-Labor Cost x Multiplier* + Cost x Multiplier**Multiplier amount is based on contractual agreementCopyright © 2010 Deltek, Inc. 11
    12. 12. Cost Incurred Using Estimate to Complete• Project costs to complete and inception-to-date (ITD) losses must be estimated first• ITD allowable costs divided by the estimated costs to complete (entered in the Basic Revenue Info screen at the revenue level of the project)• This percentage is then multiplied by the contract value less any ITD losses to yield ITD revenue for the project• The sum of the revenue in the Prior Year Cost and Revenue screen is subtracted from the ITD revenue, and the difference is the current period revenue 12
    13. 13. Estimate to Complete Prior Year Allow. Costs 1,500 Example: $20,000 Contract Value YTD Allow. Costs + 2,500 ITD Allow. Costs = 4,000 Contract Value 20,000 ITD Cost % Complete x 30% ITD Allow. Costs 4,000 Estimate to Complete ITD Revenue = 6,000 + 10,000 Total = 14,000 ITD Allow. Costs 4,000 ITD Revenue 6,000 ITD Allow. Costs + - 1,000 ÷ 14,000 Previous Period Rev. ETC ITD Revenue = 30% Current Period Rev. = 5,000Copyright © 2010 Deltek, Inc. 13
    14. 14. Cost Incurred Using Estimate at Completion• Project costs at completion and inception-to-date (ITD) losses must be estimated first• ITD allowable costs are divided by the estimate at completion entered less any ITD losses• This percentage is then multiplied by the contract value less any ITD losses—the resulting figure is compared to ITD revenue already recognized• The difference between the already recognized revenue and the revenue calculated is the current period revenue 14
    15. 15. Estimate at Completion Prior Year Allow. Costs 2,000 Example: $10,000 Contract Value YTD Allow. Costs + 3,500 ITD Allow. Costs = 5,500 ITD Allow. Costs 5,500 Estimate at Completion ÷ 10,000 ITD Cost % Complete = 55% Contract Value 10,000 ITD Revenue 5,500 ITD Cost % Complete x 55% Prior Period Rev. - 1,000 ITD Revenue = 5,500 Current Period Rev. = 4,500Copyright © 2010 Deltek, Inc. 15
    16. 16. Functions that Refine Revenue Calculations• The following slides demonstrate a sampling of actual contract revenue scenarios as well as functions to refine revenue calculations • Direct Cost Ceilings – Used to restrict the calculation of billing and/or revenue on specific direct cost accounts – The ceiling becomes the not-to-exceed value for direct costs in these calculations • Burden Cost Ceilings – Used to impose ceilings for project/account/pool combinations – The ceiling becomes the not-to-exceed rate for the project • Cost Fee Overrides – Used to establish an override fee percent for direct costs on the project – The override fee percent is used in place of the percent entered in the Basic Revenue Info screen—if using the Cost Incurred Plus Fee on Hours revenue/billing formula, an override fee on hours can be established as well • Multiplier Overrides – The multiplier override percent will be used in place of the percentage entered in the Basic Revenue Info screen or Project Billing Info screen when revenue and billings are calculatedCopyright © 2010 Deltek, Inc. 16
    17. 17. FFRE Client Examples FFRE Client Example• Contract Type—Firm Fixed Priced with Reimbursable Expense• Special Considerations: • Estimate to Complete • Direct Cost Ceilings 17
    18. 18. FFRE Client Examples• Contract Type—FFRE – Labor Revenue—Estimate to Complete – Expenses Revenue—Loaded Labor Rate Plus Cost Incurred on Non-Labor – Billing—Loaded Labor Rate Plus Cost Incurred on Non-Labor Contract Level Level 1 Billing Level Billing Level • Billing Formula – LLRNL Level 2 • Scheduled Bill Labor/Revenue Expenses/Revenue Level 3 Level 3 Revenue – ETC Revenue – LLRNL Direct Cost Ceiling (A)Copyright © 2010 Deltek, Inc. 18
    19. 19. T&M Client Examples T&M Client Example• Contract Type—Time & Materials• Special Considerations: • Burden on Non Labor • Master Rate Schedule 19
    20. 20. T&M Client Examples• Contract Type—T&M – Revenue and Billing—Loaded Labor Plus Non-Labor Plus Burden on Non-Labor Contract Level TM01 Revenue/Billing/ Revenue & Billing Revenue/Billing/ Revenue & Billing Total Ceilings - LLRNLBNL Total Ceilings - LLRNLBNL TM01.01 TM01.02 Charging Charging Charging Charging Labor Non-Labor Labor Non-LaborCopyright © 2010 Deltek, Inc. 20
    21. 21. USAID Client Examples USAID Contract Client Example• Contract Type—Time & Materials—USAID• Special Considerations: • TCN/CCN Labor • Labor Multipliers • Multiplier Override 21
    22. 22. USAID Client Examples• Contract Type—CPFF Contract Level – Revenue and Billing— Level 1 Rate Schedule times Multiplier Plus Non-Labor Cost times Multiplier Option Year Level 2 Labor Multiplier – 2.0700 Revenue & Billing Non-Labor Multiplier – 1.0000 Billing/Revenue – RSMNLM Multiplier Override Level 3 REG Labor TCN Labor CCN Labor Expenses Level 4 Level 4 Level 4 Level 4Copyright © 2010 Deltek, Inc. 22
    23. 23. QuestionsCopyright © 2010 Deltek, Inc. 23
    24. 24. Speaker Contact Information• Traci Rowland, Director, Baker Tilly – Direct Dial: 703-923-8218 – Email: traci.rowland@bakertilly.com• Jennifer Goode, Manager, Baker Tilly – Direct Dial: 703-923-8695 – Email: jennifer.goode@bakertilly.comCopyright © 2010 Deltek, Inc. 24

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