Report: Q0058

Path: Live Data > Accounting > Project Revenue/Cost Forecast

Purpose:

The Project Revenue/Cost Forecast report, identified by the report number Q0058, serves as a critical tool within Q360, designed to provide insight into the current state of existing projects in terms of both the revenue they have already earned and the revenue that is yet to be earned. Furthermore, it forecasts the remaining cost and revenue month over month into the future, based on user-defined filter settings. This report is invaluable for project managers and financial analysts looking to make informed decisions about project performance and profitability.

Benefits:

• Enhanced Project Visibility: The report provides a comprehensive view of each project’s current status, projecting both earned and projected revenue, enabling stakeholders to gain a clear understanding of the financial health of individual projects
• Accurate Forecasting: The inclusion of forecasting methods (STRAIGHTLINE and MATLABOR (recommended)) allows for precise predictions of future cost and revenue, crucial for making informed financial decisions
• Material Cost and Revenue Projection: By considering the Request Date and Purchase Order ETA date for material items, the report conservatively forecasts the recognition of material costs and revenue, ensuring financial accuracy
• Optimized Resource Allocation: The inclusion of Sold Hours, Remaining Hours, and Forecast Hours allows for a better understanding of labor resource allocation and utilization, aiding in efficient project management
• Detailed Profit Analysis: The report goes beyond revenue to calculate Gross Profit (GP) and Gross Margin (GM), providing a comprehensive financial picture and supporting profitability analysis
• Periodic Forecasting: The ability to forecast data month over month into the future helps in long-term planning, resource allocation, and revenue recognition, supporting strategic decision-making
• Early Warning System: The Backlog and GP Backlog columns serve as early warning indicators, alerting stakeholders to projects where revenue recognition may fall short of projections, allowing for timely corrective actions
• Sales Opportunity Integration: Inclusion of sales opportunity data allows for the forecasting of potential cost, revenue, and hours of active sales opportunities. Users may customize the inclusion based on probability percentages

Forecasting Methods
Material Forecasting
Sales Opportunity Data
Sales Opportunity Filters
Report Columns

Forecasting Methods

The Project Revenue/Cost Forecast report offers two distinct methods for forecasting cost and revenue: STRAIGHTLINE and MATLABOR (recommended). The choice of forecasting method can be set as the default configuration—contact your Solutions360 Professional Services or Customer Care team. Value for all projects (unless explicitly denoted otherwise on the Project > Profit tab) uses the “PROJECTFORECASTMETHOD” configuration. Options for this configuration are:

• STRAIGHTLINE: This method takes the project start and end dates into consideration and evenly distributes the cost and revenue over the duration of the project
• MATLABOR (recommended): This method is the more accurate option, particularly for labor, and it varies depending on the version of Q360 being used:
  • Pre-Version 23.01:
    • The MATLABOR method calculates forecasted labor cost and revenue based on the start and end dates of parent tasks
    • It takes the estimated effort placed on these tasks into account to forecast cost and revenue
    • The report assumes that the effort is expended, and the cost and revenue are recognized over that period

• • Version 23.01 or later:
    • In versions 23.01 or later, the MATLABOR method leverages the scheduled effort from the lowest nested project tasks
    • It combines the scheduled effort with the start and end dates of those tasks in a similar fashion to calculate forecasted labor cost and revenue
    • Again, the report assumes that the effort is expended, and the cost and revenue are recognized over that period

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Material Forecasting

For the material component of cost and revenue, the report uses either the Request Date set on the Project > Material grid or the Purchase Order ETA date for the material item. Whichever of these dates is later will be used to ensure a conservative forecast. This approach assumes that the material is intended to be utilized by that point and will likely recognize the cost and revenue on the specified date.
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Sales Opportunity Data

In addition to project-specific data, the Project Revenue/Cost Forecast report offers the flexibility to include data from sales opportunities. Sales opportunities can be included in the report, allowing users to straight-line forecast the potential cost, revenue, and hours associated with active sales opportunities. The report leverages the “Close Date” and “Install Finish Date” on a sales opportunity to make these forecasts. Any data that is pulled from the quotes linked to said opportunities requires that those quotes are not flagged as an “Option” on the Quote > Header tab (also visible on the Opportunity > Quotes tab > Quote grid).
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Sales Opportunity Filters

The report’s filters enable users to specify whether they want to include sales opportunities in the forecast and set a minimum probability percentage (set on the sales opportunity header). This feature allows for a more detailed and customized analysis of potential revenue, cost, and hours related to sales opportunities, further enhancing the report’s capabilities.
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Report Columns

The Project Revenue/Cost Forecast report includes standard project-specific information such as Entity No., Branch, Department, Project Number, Type, Title, Project Status, Start and End Date, % Total Complete, % Labor Complete, and Project Manager, however, it also provides more specific columns tailored to the report’s purpose:

• Projected Revenue: displays the overall projected revenue for the project, including labor, material, miscellaneous, etc. This aligns with the Project > Profit tab
• Earned Revenue: displays the overall earned revenue for the project, encompassing labor, material, miscellaneous, etc. This aligns with the Project > Profit tab
• Backlog: represents the difference between Projected Revenue and Earned Revenue, indicating the revenue remaining to be recognized
• GP Backlog: Similar to Backlog, this column represents the difference between Projected Gross Profit (GP) and Earned GP, indicating the gross profit remaining to be recognized
• Forecast Method: indicates whether STRAIGHTLINE or MATLABOR is used for forecasting. The default method can be set globally, but distinct forecasting methods can be set on the Project > Profit tab
• Backlog Material Cost: displays material that has not yet been shipped and posted for both cost and revenue recognition on the project
• Forecast Material Cost: represents material that is eligible for forecasting due to having either the Request Date or the Purchase Order ETA date set
• Unforecast Material Cost: covers material that does not yet have either the Request Date or the Purchase Order ETA date set or has already been shipped and costed to the project
• Sold Hours: ums the quantity of all L-type items (not canceled) on orders linked to the project. Should be equal to the “Projected Hours” on the Project > Profit tab
• Remaining Hours: represents all hours that have not yet been time billed for, equal to Sold Hours minus time-billed (actual) hours
• Forecast Hours: covers all hours with estimated effort (pre v23.01) or scheduled effort (23.01 or later) denoted, and have a start/end date in the future

Note: The report takes into account the forecasted effort on tasks and forecasted material based on Request Date or Purchase Order ETA date. It calculates the values of Rev (Revenue), Mat (Material) Cost, Lab (Labor) Cost, GP (Gross Profit), GM (Gross Margin), and Hours for all periods based on the user-defined number of periods in the filters

In summary, the Project Revenue/Cost Forecast report empowers organizations to optimize their project management processes, make data-driven decisions, and achieve better financial performance. It is an indispensable tool for project managers and financial analysts seeking to enhance project profitability and performance.