VPVI-17...VPVI-17: The Project Manager’s Guide to the Importance of Project Accounting: and how to speak the same language Amanda De Jong, Deltek Irene Dragoo, Deltek Amanda de Jong,

VPVI-17:The Project Manager’s Guide to the Importance of Project Accounting: and how to speak the same language

Amanda De Jong, DeltekIrene Dragoo, Deltek

Amanda de Jong, Solution Architect

2

» Results oriented professional with over 12 years experience

in the A/E industry. (8+ years at Deltek)

» Specializes in business consulting, financial reconciliation,

solution/custom workflow development, and software

implementation.

» Offers a variety of skills in financial analysis, project

management, budget preparation and management,

productivity and utilization metrics analysis, process

improvement, change management, and cash flow

management.

» Bachelors of Administration, Finance & Accounting,

University of Toledo, Toledo, OH.

At Deltek - 20+ years

» Principal Consultant - completed 500+ successful Ajera implementations

» General Consulting – assist with implementation of new features, changes in staff, and better use of Ajera and it features

» Financial Workshops – development and training to improve financial and reporting management

CONFIDENTIAL © Deltek, Inc. All Rights Reserved. 3

Irene Dragoo, Principal Consultant

Let’s speak the same language


» Accrual Accounting

» Accrual accounting provides more accurate picture for making business decisions

» You recognize income when you have a right to that income (you bill a client)

» You recognize expense when you incur a debt (you receive a vendor invoice)

» You do not wait until funds are actually exchanged before you recognize the transaction

» Matching Principle

» Matching principle closely matches

income with the expenses that helped to

generate it in the same period

» Period Example: month (November)

» Time entry is important to link the

expense of the Labor to the Revenue

Recognition directly generated in that

period.

» More on these topics: Insight course AJ-11 on Tuesday,

11/19. If you missed us checkout the Insight Attendee Portal

or the Insight app to download the presentation.

Speaking the Same Language


Why is Accounting Obsessed with Time?Time is our most valuable commodity in the

professional service industry.

Time is scarce. Every minute you are in this

presentation is a minute you could be

catching up on email, project planning, billing

a client, or spending time with your friends &

family.


Project Management Terminology:

» Spent

The amount viewed as the value of effort

expended on a project if you are able to

achieve your assigned billing rates

Economic Theory:

» Opportunity Cost

The loss of potential gain from other

alternatives when one alternative is chosen.

» If you spend time and money going to a

movie, you cannot spend that time at

home reading a book, and you can’t

spend the money on something else.

Speaking The Same Language


Speaking The Same Language


CostThe raw amount paid to employees for work performed, or

the out-of-pocket costs to the company for expenses and

consultants

BurdenThe allocation rate of indirect costs that are applied to direct

project costs of Labor, e.g. Employer paid payroll taxes,

health insurance, overhead cost

Work-In-ProgressProject billable time and expenses at their respective billing

rate that have not yet been included on a final invoice

Time Value of Money

The concept that money available at the present time is worth more than the identical sum in the future due to its potential earning capacity. The core principle of finance holds that provided money can earn interest, any amount of money is worth more the sooner it is received.

The time value of money explains why interest is paid or earned; interest, whether it is on a bank deposit or debt, compensates the depositor or lender for the time value of money.


Speaking the Same Language:Time Value of Money

Mark-up Accounts

ReceivableFinance Charge

Many firms mark up expenses

and consultants on projects,

because the cost is incurred and

sometimes paid prior to billing

then payment from the client.

This is to recoup the ‘Time

Value of Money’ for the items

paid on the clients behalf.

When clients are invoiced it is

almost always in arears of the

services provided. The time it

takes to collect the outstanding

accounts receivable further

exacerbates the ‘Time Value of

Money’ principle.

Interest rate charged to clients

for carrying an outstanding Client

Invoice longer than a specified

period of time (e.g. 60 days).

This is to recoup the further ‘Time

Value of Money’ lost in between

incurring the expense, transition

to AR and awaiting payment.


Project Management and it’s relationship to Accounting


Project Management & Accounting Management

Scheduling Tools Communication

Include Accounting and other

internal resources in the

scheduling of the project to

avoid negative impact on

Revenue and Cost

Available tools include:

Schedule Manager; Estimated

Start & Completion Dates for

Resources and Tasks

Keep Accounting in the

communication loop as the

project progress to ensure they

are aware of changes or issues


Project Management is the Lynchpin to Firm Success» Accounting Managers are responsible for aligning the timing of

information required for Project Management.

» Project Managers are responsible for their project staffing, costs, and client management. This supplies accounting with key information:

» Forecasting Revenue: Estimated (and Actual) Start / Completion Dates allow for revenue forecasting

» *Schedule Manager is another tool for revenue forecasting.

» Estimate to Completion (ETC): Does this project have an expected profit or loss? Utilizing Reported Percent Complete to look ahead

» Managing Exposure: The potential relationship between ‘scope creep’ and the collection of Accounts Receivable and Work-In-Progress can negatively impact firm performance and collections.



Forecasting RevenueEstimated Start / Completion Dates in Project Command Center

Updating the Estimated (and Actual) Start / Completion Dates at the phase level in the Project Command Center. Ajera can then take this information and forecast revenue based on the average number of days in the period for each phase.

Schedule Manager is another tool in Ajera that will use the actual scheduled hours to forecast revenue.

Forecasting RevenueEstimated Start / Completion Dates in Project Command Center» Project Workload Report (standard report)

» Leverages the Estimated Start / Completion Dates if the Actual Start / Completion dates are not available in the Project Command Center to forecast revenue. The example below is 1 project, but this can layer all of the projects in Ajera into this report and run weekly or monthly as shown below.

» Firms are also able to layer ‘Preliminary’ projects into this view as well and/or into the widget reporting to show what is forecasted under contract as well as future contracts pending.



Estimate to Complete (ETC)Using Reported Percent Complete in Project Command Center

Update the Report Percent Complete (RPC) and date bi-weekly at the phase level in

the Project Command Center with the estimate of where you think you are in your

contract. This will allow you to compare what has actually been spent, to your

reported percent of completion to identify if you are running on budget and/or

schedule.


Estimate to Complete (ETC)Using Reported Percent Complete in Project Command Center

Utilizing the RPC PMs can see if they are currently over or under budget to date, giving Project Managers time to course-correct the project if running over budget (EG. Contact the client regarding change orders for out of scope services).

*Insight Bonus Dashboard


Estimate to Complete (ETC)Using Reported Percent Complete in Project Command CenterThis information also allows firm managers and accounting to anticipate potential losses on a project which will impact overall firm profitability and cash flow.

*Insight Bonus Dashboard


Earned Value Analysis (EVA)Using Reported Percent Complete in Project Command CenterEVA is the relationship between a project’s contract amount, spent (earned or burn rate) amount, and the project’s Reported Percent Complete (RPC) – Project Command Center > Progress report

» This is an example of a fringe benefit to Project Managers when entering the Estimated Start / Completion Dates and Reported Percent Complete (RPC) regularly.

» Accounting Managers are monitoring the Accounts Receivable Aging which is ‘hard’ exposure layered with ‘soft’ exposure Work-In-Progress. Accounting Managers work directly on collections from clients.

» Project Managers have a direct impact on managing exposure. Identifying ‘scope creep’ early on helps

» Mitigate delayed invoicing of WIP to clients

» Timely payment of outstanding client invoices

» Improve long-term client satisfaction with open communication

» *Insight Bonus Dashboard


Managing Exposure = Accounts Receivable + WIP

» Discuss options for connecting with experts across all

Deltek software

» One provider of all things Deltek

» Certified team of consultants

» Deeper level of project governance

» Get information on how to get more out of your Deltek

investment

Connect with Ajera at the Xpo Booth


Thank you!


Amanda De Jong - [email protected]

Irene Dragoo – [email protected]

Appendix – Import Dashboard in Ajera » Ajera Menu > Setup -> Utility -> Dashboard Import/Export

» When prompted, select to Import a “Single Tab

» Browse to the location where you have saved the dashboard file and select

» Click Import button

» None of the Dashboards included in this course have security Roles assigned to them.

This can be updated once you have tweaked the settings on the widget.

Appendix – Earned Value Analysis Ajera Learning Center


» https://help.deltek.com/product/ajera/8/#Courseware/z_PROJ_EarnedValueAnalysis.htm?Hi

ghlight=eva

https://help.deltek.com/product/ajera/8/#Courseware/z_PROJ_EarnedValueAnalysis.htm?Highlight=eva

Documents

VPVI-17...VPVI-17: The Project Manager’s Guide to the Importance of Project Accounting: and how to speak the same language Amanda De Jong, Deltek Irene Dragoo, Deltek Amanda de Jong,