Work Item Financial Data

Work item financial data can be divided into three groups:

• Cost related data
• Revenue related data
• Expenses

See also below in thos article description of Useful Financial Indicators and Currency settings.

Cost Related Data

Cost related data is presented by the following fields:

• Budgeted Cost – estimated budget planned for a specific work item
• Fixed Cost – cost that does not change as a result of the work item’s execution. For example, you may use fixed costs for items that will be fulfilled by certain subcontractors and their price is agreed upon between the parties in advance.
• Actual Cost – takes into account the work already completed and expenses already invested in the work item’s execution.
• Cost Variance – represents the difference between planned budget and actual cost. Cost variance will help you track initial cost estimates verses actual investments.

 REVENUE RELATED DATA

Revenue related data is used with projects billed to a given customer and is presented by the following fields:

• Expected Revenue – income planned for specific work item
• Fixed Price – the price that does not change and is not dependant on the work actually completed and is agreed upon with the customer in advance.
• Actual Revenue – actual revenue gained as a result of the work item’s execution

Note:

Fixed Cost and Fixed Price are calculated in the Actual Cost and Actual Revenue only upon 100% completion of the related work item.

Expenses Related Data

Expenses are the expenditures incurred within the project activities other than human resources and fixed cost investments. Expenses related data is presented in two groups of fields:

• Overall Expenses
• Billed Expenses

 Overall Expenses  

• Direct Planned Expenses – expenses planned for a specific work item.
• Planned Expenses – sum of the work item’s Direct Planned Expenses and Planned Expenses aggregated from its sub-items.
• Actual Expenses – represent the sum of the accumulated actual expenses corresponding to the work item and its sub-items that are already approved.
• Projected Expenses – represent the sum of the accumulated actual expenses corresponding to the work item and its sub-items that were not approved yet.

Billed Expenses  

• Direct Planned Billed Expenses – expenses directly planned for a work item that will be billed to a customer.
• Planned Billed Expenses – sum of the work item’s Direct Planned Billed Expenses and Planned Billed Expenses aggregated from its sub-items.
• Actual Billed Expenses - represent the sum of all accumulated actual billed expenses corresponding to the work item and its sub-items that are already approved.
• Projected Billed Expenses - represent the sum of all accumulated actual billed expenses corresponding to the work item and its sub-items that were not approved yet.

Actual Expenses are factored in the Actual Cost of the work item, while Actual Billed Expenses are factored in the Actual Revenue of the work item.

Useful Financial Indicators 

• Profitability – represents the viability of the project / work item. Profitability is calculated as a difference between Actual Revenue and Actual Cost
• % Profitability – represents a ratio between Actual Revenue and Actual Cost
• % Invested – represents the actual investment in a work item’s execution and is calculated as a percent of the Actual Cost divided by the Planned Budget
• EV - Earned Value (EV) is the value of completed work expressed in terms of the Planned Budget assigned to that work for a schedule activity
• CPI - Cost Performance Index (CPI) value greater than 1.0 indicates a cost underrun of the estimates. CPI equals the ratio of the EV to the Actual Cost. The CPI is the most commonly used cost-efficiency indicator
• SPI - The Schedule performance index (SPI) is used to predict the completion date and is sometimes used in conjunction with the CPI to forecast the project completion estimates. SPI equals the ratio of the EV to the Planned Budget

 Currency settings

Cost Currency Type and Revenue Currency Type are relevant for the organizations that work with multiple currencies (Learn more about multiple currencies in the  Managing Currencies section and specifically in the  Work Item Default Currency section of the application help).