To compute the proper amount of revenue for a project, you must complete a number of steps. Because the timing and sequencing of these steps have a direct affect on the validity of the revenue calculation, please be sure that you complete the steps in the right order.
The calculation of revenue depends upon a variety of factors including:
Revenue Formula
Ceilings/Overrides
Prior Fiscal Year Cost/Revenue History
Labor Categories and Billing Rates
Fixed Amounts or Revenue Adjustments
Costpoint contains "locking" procedures to ensure that postings can be made to the General Ledger without causing a loss of data during collisions with other processes. However, you must "freeze" the Ledger for the duration of the burden and revenue computation processes. This means that you must make no postings to the General Ledger from any subsystem (Labor, A/P, and so forth) when those processes are running.
Freezing the ledger gives you a better result because reports printed after the burden cost process is complete all tie together. Some of the detail reports (labor detail, ODC detail) are printed directly from the G/L, but all of the summary reports (Project Status Report, Revenue Summary, and Cost Summary) are printed from a table that is updated only through the burdening process, so it is possible for them to become out of sync. This happens when you post to the G/L AFTER the starting the burdening process. Those additional costs are not picked up for burdening and for revenue calculations and do not appear on the summary reports. However, they appear on the detail reports because those reports are printed directly from the ledger. To ensure that no additional costs can be entered after the final transactions are posted and the closing process has begun, set the Status of individual transaction screens to Not Available in the Status group box on the Manage Subperiods screen. If you do this, no further transactional entry can take place for that subperiod.
This step is required, even if you are planning to print all of your project reports using target rates. Enter target rates on the Pool Rates subtask of the Manage Cost Pools screen. The Compute/Print Pool Rates screen does not update these target rates — only actual rates are updated. However, this program also allocates service center costs, which can become direct cost and therefore need to be burdened by target rates.
You can skip this step if:
You do not have any service centers.
You are sure that your service centers are not directly allocated to any projects.
You plan to print all of your project reports using target rates.
You plan to post revenue at target.
You do not expect to post any variances.
However, it is probably safer and more practical to compute the pool rates anyway.
After you have computed the pool rates and allocated service center cost, you must post the Journal that is updated through that process to the G/L. You must post the pool journal before burden cost for each project can be calculated, because the burden cost program uses only the costs posted to the G/L and, since costs allocated to Service Centers are direct costs, these must be posted. Before posting, you can print the Allocation Journal Edit Report and/or the Service Center Cost Allocation Report and retain them for auditing purposes.
Run the Compute/Print Commitments screen before running the burden cost program (Step 6), because the burden cost program burdens commitments and incurred costs. You do not have to compute commitments before running the burden cost program, but it saves time if you compute commitments now, instead of computing and burdening them just before updating the Project Status Report (PSR) tables (Step 7).
You must complete this step before you can print any Project Summary Reports and before you can compute revenue. The Compute Burden Costs screen updates the project tables with costs posted to the G/L and applies the actual and target rates from the Pool Rates subtask of the Manage Cost Pools screen to current subperiod, period-to-date, and year-to-date direct costs. It also applies cost of money rates.
The direct costs and hours from the G/L and the burden cost (actual and target) are stored in the PROJ_SUM and PROJ_BURD_SUM tables for use in the revenue computation, and for reporting on the Project Summary Report and Project Cost Summary Report. Note that the revenue computation does NOT look at the costs in the G/L — it only uses the costs that were found and burdened by the Compute Burden Costs program. To obtain accurate revenue and cost information, run this process after posting all costs for the period to the General Ledger. If any entries are made to the general ledger after the Compute Burden Costs process has been completed, rerun the Compute Burden Costs process.
If you are planning to print Project Status Reports that do not include revenue or fee (profit) information, you can go to the Update Project Status Report Table screen as soon as you complete Step 6 and update the Project Status Report with the burdened costs for each project. However, if you plan to reprint the Project Status Reports with revenue information, you must perform this update a second time to get the revenue information on the report.
For any projects that include Loaded Labor (T&M) revenue formulas, you need to run the Load Labor Rates screen. This program updates the Labor History table with the appropriate T&M billing rates, according to the order of precedence that you set up on the Manage Rate Sequence Orders screen. You can run this program whenever you freeze the labor that is burdened and used for reporting on T&M projects. In other words, you can perform this step right after Step 2, but you must complete it before you attempt to compute revenue for projects with Loaded Labor revenue formulas.
For any projects that include the Revenue = Billings revenue formula, you must compute and post billings before attempting to compute revenue.
Use the Compute Revenue screen to compute revenue using the formula that was specified on the Manage Revenue Information screen. The program takes into account any ceilings that have been specified, and any fee rates, fee overrides, or fee ceilings. The PROJ_SUM and PROJ_BURD_SUM tables that were updated with direct and burden cost by the Compute Burden Costs screen are updated with fee and revenue information. Additionally, Costpoint creates a Revenue Journal.
At this point, you can either post the Revenue Journal to the G/L, or you can wait until the revenue redistribution process is completed before posting the Revenue Journal.
Use the Redistribute Revenue screen to redistribute a project's revenue based on cost incurred. This program is particularly useful if you have manually entered revenue at a summary level of the project, or if the formula used to compute revenue was not based on incurred cost (Fixed Amounts, Revenue=G/L, Revenue=Backlog, ETC and EAC formulas, and possibly Revenue=Billings). This redistribution allows you to post revenue based on the performing organization, because incurred cost reflects the organizations that performed on the project.
The redistribution process updates both the PROJ_SUM and PROJ_BURD_SUM tables. This process is not required.
Use this screen to update the tables from which the Project Status Report, the Project Cost Summary, and Project Revenue Summary are printed. If you previously updated the PSR Table with cost (Step 7), you need to update it again for fee and revenue information. If you have not previously updated the table, all information (cost, fee and revenue) is updated.
Use this screen to create report tables necessary for specific project reports. Creating multiple report tables enables Costpoint to reduce the processing time necessary when reports are actually run. You must run this utility in order to print accurate Project Revenue Summary, T&M Analysis, and Project Labor Summary reports.
Before "un-freezing" the ledger, print all of your Project Status Reports and the detail Labor and ODC reports from Costpoint Inquiry and Reporting.
If you have not previously posted revenue (Step 11), or if you have posted and then redistributed revenue (Step 12), you must post the Revenue Journal to the G/L.