Table of contents
- Project budget dashboard overview
- How to properly settle the project budget?
- Different ways of settling project budget
- Settling chosen employees' work without confirming that work settlement has been settled
- Settling chosen employees' work with confirming that work settlement has been settled
- Settling the whole work settlement date with a different income settlement date (available only in the T&M project)
- Adding cost or income directly to the settled tab (skipping scheduled tab)
- Project Financial Report
In this lesson, you will learn:
- about project budget dashboard,
- how to settle budget,
- what is the difference between work for income and work for cost,
- when we cannot edit the work logged by our co-workers,
- where are the margin and profit and project costs coming from,
- how to undo a settlement, settle overheads, and how all these data affect the financial report of the project.
As you can see there is a lot to cover, so prepare a good coffee and let's make you a finance guru ;)
Project budget dashboard overview
In the project budget dashboard, you will find the work summary, tracked costs, and incomes that can be settled.
This is how project budget dashboard looks like:
A - work summary of people working in the selected work settlement date
B - total summary of costs and incomes generated in the selected work settlement date. The income settlement date is the information on when exactly you have received payment from your client.
C - selecting this checkbox will be recognized as settling the whole work settlement (if you would like to settle only a few people, but you still want to see in the dashboard the same work settlement you should uncheck it)
D - this button allows you to settle finances in the selected work settlement
What is the "work settlement date"?
Work settlement - it is the last not settled period (between the settled cost settlement date and not settled cost settlement date)
Here is the example of the last not settled settlement date:
As you can see this example has monthly cost settlement dates, and the last settled cost settlement date was February 2021. This is why in the dashboard you will see the work settlement date between 01.03.2021 - 31.03.2021.
In the Fixed Price projects, you will see income settlement dates as well, but the mechanism is the same.
Work for income and work for cost
Work for income and work cost is the total number of tracked hours by your team members in the selected work settlement date.
In Primetric you can easily change the number of hours that should be taken into account when calculating costs, and different numbers of hours when it comes to calculating income.
Why there is such differentiation? Let's find out.
It is not always possible to count our client for all hours worked on the project. Sometimes you set with your client that you won't charge him for fixing bugs or you gave him 100h free.
Then you can easily change the number of income hours and cost hours.
- your client doesn't pay you for fixing bugs, so you can decrease work for the income,
- you gave your client a discount, so you can decrease work for income,
- you want to add additional hours that haven't been tracked in Primetric, so you can change income and cost hours,
- and many others.
Here is an example of how work for income and work for cost look like in the project budget dashboard:
Editing of this data is no longer possible when the employee logs the first hours in the selected work settlement date to the project or work logs will be enlisted from a separate system as follows:
However, if you want to change the number of hours you can do that by editing project timesheets as below:
Enabling the "Managers can override finance of tracked work" option
Nevertheless, it is not possible at this stage to demonstrate the difference between work for income and work for cost. If you want to do that you need to enable "Managers can override finances of tracked work" in the Administrator role -> Settings.
The result will be the ability to edit work for income and work for the cost even if employees already tracked time in the project.
As you can see, all tracked hours are fully editable now.
How Primetric calculates the cost of work?
The cost in your project is the correlation of hours worked by your colleagues to their hourly cost. The hourly cost is determined in two ways, it is either the cost of an hour when we settle accounts with a person conventionally called a contractor at an hourly rate, or it is calculated as the quotient of the monthly salary to the employee's capacity (all available monthly hours).
The final cost in the project is the product of the employee's avg hour cost and the hours worked by him.
Taking into account the following data, the total cost of the project in the month of May with one employee assigned will be as follows:
Work cost = avg hour cost x work for the cost
How Primetric calculates the income, profit, and margin?
Time & Material Projects
In the T&M project, you can find additional information not available in the Fixed Price projects: profit, margin, and income. This is due to the nature of times and materials projects, where income is the product of the hours worked (work for income) for our client and the hourly rate that we have set for that client.
Work income = hour price x work for income
Below is an example in a T&M project:
With the above data, the system also calculates profit and margin. Project profit is the difference between Income and Cost
Work profit = Work income - Work cost
Margin is a percentage definition of the Profit to Income ratio
Margin = Work profit / Work income
Fixed Price Projects
The main difference between the T&M and Fixed Price projects at this stage is that you can't specify an employee's hourly income rate.
Income in Fixed Price project
In a Fixed Price project, work hours are not directly correlated with incomes. If you have planned any incomes in your Fixed Price project, they will display under the summary as below:
How to properly settle the project budget?
Settling work budget (direct costs and incomes generated in a project)
In the most common use case, the only thing you need to do is click the Settle button, and (optionally in Fixed Price projects) the commit button next to the scheduled incomes.
- In the Time & Material project, you can also change the income settlement date.
- In projects where you settle with your client in a different currency, you can update the currency exchange rate for the specific work settlement date.
You can spot that there is a new work settlement date - June 2021. What's more because people didn't start working in June you don't see any tracked costs and incomes.
How settling work affects the system?
After settling work, you will notice that Primetric will:
- move work costs and incomes from the not settled tab to the settled tab (if work wasn't tracked it will move from the scheduled tab),
- split assignments into settled and scheduled + mark as "settled" the settled one + lock the settled one (you cannot edit it, reschedule, etc. -> to do that you will need to unsettle it. More about unsettling things you will find in the next lesson)
There is one assignment per person with tracked time.
Assignments have been split after settlement (in May). These assignments are not editable.
- lock possibility of editing timesheets
You can add work logs in Timesheet in May 2021.
You can't add work logs when an assignment is already settled.
- lock possibility of logging work by your employees
Employees can add work logs to the Fixed Price (Client A) project.
Adding new work logs in May to the Fixed Price (Client A) project is locked.
- change project finance report
All costs and incomes generated in May 2021 are in the not settled stage.
Costs and incomes have been moved from not settled / scheduled stage to the settled one.
Settling one-time project overheads
You won't see project overheads in the project budget dashboard. This is why it is important to know how to find and settle them. Settling project overheads can be done in two ways:
So, how to settle one-time project overheads?
If you set your overheads to settle automatically:
Basically, you don't have to do anything. One-time project overheads will settle automatically after the date that you scheduled them.
If you set your overheads to move from scheduled to not settled stage automatically
- You need to go to the Not settled tab
- Find overheads that you want to settle
- Settle them
If you set your overheads for manual settlement
- You need to go to the Scheduled tab
- Find overheads that you want to settle
- Settle them
- (Optional) You can move them to the not settled stage first, and then settle them from the not settled tab. There is no difference between these two methods.
Settling recurring project overheads
Settling recurring project overheads works the same as one-time. The only difference is that you can't manually settle them from the scheduled tab. They always move to the not settled or settled stage depending on the configuration.
Different ways of settling project budget
The project budget can be settled in several ways:
- by settling the whole work settlement date (above examples),
- by settling chosen employees work without confirming that work settlement has been settled,
- by settling chosen employees work with confirming that work settlement has been settled
- by changing the income settlement date (only in T&M Projects)
- by adding additional costs and incomes directly in the settled tab (without scheduling them)
So, let's analyze each of them.
Settling chosen employees' work without confirming that work settlement has been settled
This function is useful if you want to settle the work of our employees without settling the whole work settlement period. To do that you need to remember to disable the "Settle milestone "Work settlement name" with the selected work" option.
If you do that the work settlement date won't change in the project budget dashboard.
Settling chosen employees' work with confirming that work settlement has been settled
This function is useful if you want to settle the work of chosen employees with settling the whole work settlement period. To do that you need to remember to enable the "Settle milestone "Work settlement name" with the selected work" option.
Settling the whole work settlement date with a different income settlement date (available only in the T&M project)
Let's say that you generated costs in a project, but you expect to receive payment from your client in the middle of the next month. Then, you will probably want to settle income with a different settlement date than the work settlement date.
Adding cost or income directly to the settled tab (skipping scheduled tab)
This use case is helpful when it comes to unplanned incomes and costs. Let's say that you needed to buy an additional software license that you didn't plan to buy. Then you can add such cost directly in the Settled tab.
Thanks to that you can see in the project financial report that additional / unplanned costs appeared.
To do that just add income / cost directly in the Settled tab.
Project Financial Report
Speaking of the financial report, it is worth mentioning here that it reflects our finances in 3 different states. Below, let's take a look at what data it has based on previously entered information about our employees:
The chart shows us our costs or income which is scheduled (orange / blue border). It also shows us the planned Profit (green border). Projects that are not settled are marked with a lighter shade of each color, those settled with a darker one. The whole indicated in the diagram is also listed in the table below, which takes into account each of the three states.
At this point, it is also worth mentioning the possibility of including organizational overheads in the project book. Then the project participates in a properly calculated percentage of these costs.
This means that the organizational overhead (not to be confused with the one discussed earlier) will spread evenly among all projects in our company.
More about organizational overheads you will find in the next lessons.
What if my employees didn't track all hours and I've already settled the budget?
If you track time in Primetric:
- unsettle a specific employee's work or the whole work settlement date,
- edit timesheets on your own or ask employee to fill missing data
- settle it once again with the proper settlement dates
More about unsettling costs / incomes you will find in the next lesson.
If you sync work logs from other systems:
Primetric will be still syncing work logs from other systems but will create additional unsettled assignments that you will need to settle manually from the not settled tab.
The most recommended way is to confirm with your employees that they tracked all hours in the work settlement period.
Will changing work hours in the project budget affect timesheets?
No, if you change work for cost hours / work for income hours it won't affect the number of tracked hours in timesheets.