Table Of Contents
- Introduction to Profitability Report
- Indicators Provided By The Profitability Report
- Where Does The Data Come From?
- Introduction to Formulas
- Formulas - In Detail
- Profitability Report - Setting Up All The Necessary Data
- FAQ
Introduction to Profitability Report
Overview
The Profitability Report calculates employees' profit margins based on costs, incomes, average hour cost, rate, profit, and profit margin. It allows for sorting of various data like name, team, and department, with the option to include company overheads. The report provides insights into a worker's profitability index, job availability, capacity utilization, project benefits, cost-effectiveness, and contract renewal considerations.
The report answers questions such as:
- Is employee’s work profitable for the organization?
- What is the current or scheduled profitability for a given seniority, department, etc.?
- Do the projects this employee works on bring us benefits?
- Should we extend their contract?
Required User Rights
| Required Permissions | Organization Manager |
| Manager Finance Permissions |
For this report to show us reliable data on the profitability of our company, we must have correctly configured data in several places in the system. Therefore, this article is divided into two parts:
- In the first one, you will find a short explanation of where the data based on which the indicators are calculated to come from
- In the second one, you will find information on calculating the indicators.
Accessing Profitability Report
Follow the path below to access the report:
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Log in to Manager Role Account ▶ Go to the Reports Tab ▶ Go to the Profitability
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As easy as that!
Indicators Provided By The Profitability Report
The four overarching indicators provided by the profitability report are:
- Profitability of individual people
- A sum of people's profitability
- Cost
- Income
- Profit/Margin
Where Does The Data Come From?
For the profitability report to be correctly configured, all the data must be entered based on the indicators calculated. The graphic below will show you what specific data constitutes the Profitability Report:
Notice the Use Only Settled Data option in the upper right corner of the report settings. As you already know from the explanations above, the checkbox changes the system's calculations to calculate profitability. For you, however, it is even more important. When deciding whether to select it or not when generating a report, you determine whether you want to see hard data on historical and current profitability in the report or whether you want to look at the best possible scenario that will result from unsettled data. Therefore, with the checkbox checked, you control. Without it checked - you predict.
Settings Impacting Profitability Report Calculations Placed In The Profitability Report Tab
- Checkbox: Use only settled data
- Checkbox: Include Organization Overheads
- Checkbox: Include Project Overheads
- Chosen filters:
a. People (Full Name, Person Skills, Team, Department, Seniority, Position, Nationality, Employment Type In Time Frame, Hashtag)
b. (with assignments in) Project Title
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Note: The Project Title filter (with assignments in it) does not change the calculations on the report. It only screens and filters the list of people with an assignment on a given project. |
Settings Impacting Profitability Report Calculations Placed In The Other Tabs/Sections
Organization Overhead Distribution By Department
Follow the path below to access the report:
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Log in to Administrator Role Account ▶ Go to the Settings Tab ▶ Go to the General
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Introduction To Formulas
If you want to skip the explanations in the article and just check the formulas, go to the video at the link or watch the slider below:
How Is It Reflected In The System?
The simple graphic below shows a generalized legend explaining what the Profitability report calculates and where it can be found in the system.
Summary Formulas
The graphic below explains the formulas the system uses to calculate the data in the summary at the top of the report:
Calculation Variables
Calculations and formulas vary depending on the type and status of the project.
Hence, different calculation models depend on the type of project, its status, and its settings. This way, the formulas are variable depending on the configuration of the following settings:
- Use only settled data (checked or unchecked)
- Include Organization Overheads (checked or unchecked)
- Include Project Overheads (checked or unchecked)
- Status (Closed or Active)
- Organization Overhead Distribution By Department (checked or unchecked)
Formulas - In Detail
Below, we explain how we calculate a person's profitability depending on various variables. Please note that the costs, revenues, and margins displayed for a given person are the SUM of the formulas if the staffer has worked on several projects.
| Example: Suppose a person has Fixed Price Active and Time And Materials Closed project assignments. In that case, their profitability will be the sum of the calculations for Fixed Price Active and Time and Materials Closed. |
Please note that we use the general-to-detail method when presenting the calculations to make them easier to understand. At the beginning, we show the general formulas, the so-called General Formula, based on concepts you know. Then, we branch it into more detailed indicators reflected in the appropriate system objects.
Profitability Of A Person
Below is the most general formula that calculates the person’s profitability in the projects.
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Note: In the case of Fixed-Price projects, the Total Project Income value (red) doesn’t include the revenue added through one-time and recurring overheads. If you're using the Profitability report and want accurate financial metrics for Fixed-Price projects, make sure to add revenue in the Income section (Manager Account ➡ Projects Tab ➡ Project Profile ➡ Budget Section ➡ Scheduled Subsection). |
Fixed Price Projects Active
Use Only Settled Data Unchecked
Below, you will find the formula used to calculate a person's profitability in Fixed-Price projects with active status and Use Only Settled Data unchecked.
Use Only Settled Data Checked
Below, you will find the formula used to calculate a person's profitability in Fixed-Price projects with active status and Use Only Settled Data checked.
Fixed Price Projects Closed
Use Only Settled Data Checked
Below, you will find the formula used to calculate a person's profitability in Fixed-Price projects with closed status and Use Only Settled Data checked.
Please note - although we include specific calculations for this settings configuration, the settled data checkbox does not matter for Fixed Price Status Closed projects.
| Note: Please note - although we include specific calculations for this settings configuration, the settled data checkbox does not matter for Fixed Price Status Closed projects. |
The calculations for a checked and unchecked checkbox in this kind of project will be the same.
Time & Materials Active
Use Only Settled Data Unchecked
Below, you will find the formula used to calculate a person's profitability in Time & Materials projects with active status and use-only settled data unchecked.
Time & Materials Closed
Use Only Settled Data Checked
Below, you will find the formula used to calculate a person's profitability in Time & Materials projects with closed status and Use Only Settled Data checked.
Overhead Rates Per Person
Cost Project Overheads
Use Only Settled Data Checked
Use Only Settled Data Unchecked
Income Project Overheads
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Note: In the case of Fixed-Price projects, the Sum of Income Project Overheads will not be calculated accurately if revenue is added through revenue overheads instead of the Income section. If you're using the Profitability report and want accurate financial metrics for Fixed Price projects, make sure to add revenue in the Income section (Manager Account ➡ Projects Tab ➡ Project Profile ➡ Budget Section ➡ Scheduled Subsection). |
Use Only Settled Data Checked
Use Only Settled Data Unchecked
Organization Overheads
Use Only Settled Data Unchecked
Use Only Settled Data Checked
Department Overheads: Organization Overhead Distribution By Department Checked
Use Only Settled Data Unchecked
Use Only Settled Data Checked
Profitability Report - Setting Up All The Necessary Data
Below, you will find short instructions and links to related resources that will explain in more detail how to configure your data so that the profitability report shows you reliable numbers that will then allow you to make management decisions:
Managing Organization Overheads
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Log in to Manager Role Account ▶ Click the Organization Tab on the main
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Learn more about Organization Overheads in Primetric in the following article: Lesson 19 - Organization overheads
Adding Hour Rates
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Log in to Manager Role Account ▶ Go to the People Tab ▶ Click Employee whose contract you need to edit ▶ Go to the Contracts Section ▶ Manage employee’s cost
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Learn more about employees’ hour costs in Primetric in the following article: Lesson 6 - Configuring team members' information
Managing Project Overheads
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Log in to Manager Role Account ▶ Go to the Projects Tab ▶ Pick the project
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Learn more about Project Overheads in Primetric in the following article: Lesson 19 - Organization overheads
Setting Up Organization Overheads Distribution Per Department Option
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Log in to Administrator Role Account ▶ Go to the Settings Tab ▶ Go to the General
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Learn more about the following option in the article: Lesson 19 - Organization overheads
Settling Budget Quick Overview
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Log in to Manager Role Account ▶ Go to the Projects Tab ▶ Pick the project
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Learn more about settling budget in Primetric in the following article: Lesson 16 - Project budget settlement
Planning Project Budget Estimations Overview
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Log in to Manager Role Account ▶ Go to the Projects Tab ▶ Pick the project
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Learn more about budget planning in Primetric in the following article: Lesson 14 - Project budget overview & budget planning
FAQ
Why do billable hours in the Profitability report differ from the "tracked billable" values in the Utilization report?
In the case of Time and Materials projects, when entering different values in the "work for income" and "work for costs" sections on the "Budget - Dashboard" panel while settling, the values in both reports may vary. It's important to note that the Profitability report analyzes explicitly the number of hours derived from "work for income." Additionally, the Profitability report itself utilizes predefined algorithms, which can impact the final results.
This is a beta version of our report. If you have any feedback regarding our algorithm for calculating these values, please contact us and share it!