VPVI-64Project Planning + Revenue Methods =The Ultimate Revenue Forecast

Larry George

Chief Financial Officer- Partner, Architect with other responsibilities

Director of Accounting- Full time Accounting (CPA), the Real Deal

Director of Project Performance- Architecture and IT background

- Vision Administrator since implementation

- Coordinate 10 Group Operations Leaders

with 50+ Project Directors across 5 Studios

Project Accountants- Two full time and one part time

- Billing, AP, Plan Management, Project Director

Support

Accounting + Finance at RATIO

Why I Attend Insight

• First Deltek Conference - Spring 2007 in Orlando

• 7th Insight

• Tips – How to’s

• Learn how others work and use the tools

• Gain Insight into what’s next…

• Workflows, UDIC’s

• What can I take back to benefit my company?

• New ideas, Best Practices, Inspiration

Getting to Know You

• Who does NOT use project planning?

• Anyone use Activities?

• Anyone mastered Managing Vision Dashboards?

• Custom revenue methods?

• Using Vantagepoint?

• Any SQL masters in the house?

• Custom Reporting gurus?

• Anyone have a great forecasting system?

Planning

Vision Environment• 7.6 Basics + Resource Planning, CRM,

Visualization

• Newforma – first work with CCG

• Payables Approval and Tracking from CCG

• Synthesis from Knowledge Architecture – “Upshift”

• OpenAsset

• Mobile CRM and Time & Expense

• Do not have Performance Management – yet. ?

• Limited use of iAccess

• Analysis Cubes

Setting the Stage.

• Advantage to Vision 5 in 2007

• Primary drivers for implementation

- Labor Planning

- Forecasting

- CRM

- Organization Reporting

- Dashboards = Real time data

access

• Now five studios in three times zones

Setting the Stage..

• Using Project Planning since the

beginning.

• WBS = Project, Phase, Task

- (Task = Discipline)

• 90% of revenue from fixed fee contracts.

• 40 - 45% of gross to consultants

• Every billable project has a plan

- Currently 370+ active.

- Fees range from under $1,000 to

over $20,000,000.

•Fees flow from plan toproject

•Fees, staff, and consultants aremaintained

at every phase /task

•Calendar format is usuallySemi-Monthly

Setting the Stage...

•Project Number

- Add number to namefield

for display on all tabs

•Additional Editors

- Enable specific others

to edit plans

•Project Stage

- Plans with issues

- Allows us to discountthe

forecast bystage

Planning Tweaks

Forecasting the Old WayCopy orCut

Paste

Reproportion

• Manually allocating fee for every plan, level, and

period is labor intensive and error prone.

• Schedules change and we don’t work to the plan.

• Does not support org reporting at lower levels.

• You can’t forecast negative revenue.

• Who can we trust to maintain the forecast?

• I always thought there had to be a better way.

• The forecast should simulate the revenue

method.

So What’s the Problem

So What’s the

Solution?

• Current Revenue = JTD Revenue - Prior Revenue

• Rev Gen calculates Gross Revenue. Consultants and

expenses are subtracted to report Net Revenue.

• Custom Revenue Methods allow us to calculate Gross

Revenue and report Net Revenue independent of client

invoices or consultant vouchers.

• The Key Components of Rev Gen include:

- Actual posted labor cost

- Actual Consultant and Other expenses

- Planned labor

- Planned fees

- The Revenue Generation method

Revenue Generation

Show Me The Money!

• Bill_F Net = % Billed * Net Fee + Markup

- Different from normal Billed in that it applies the

billed % to just the net fee

- This is used when labor is minimal or sporadic.

• Hourly Net = Labor @ Bill Rate + Markup

- Typical hourly billing

• Fee_R Net = Labor % Complete x Net Fee + Markup

- This accounts for at least 90% or our revenue.

- Labor must be recorded to calculate % complete.

Revenue Methods

95.37%

3.43%

1.21%

FEE_R HOURLY BILL_F

The Revenue Master workflow setsthe

Revenue Method at all lowerlevels

Managing the Methods

Labor Tab Configuration

One Night At

• Fee_R : Net Revenue = labor % complete x net fee*

• JTD Labor, ETC Labor, and Net Fee drive the forecast

• Current month Calculation:

- Recalculate Net Rev based on EAC EM.

- Subtract prior net revenue.

- Add Net Rev forecast for this period based on new EAC

EM.

• Future months forecast at the new EAC EM.

* For mockup purposes, reimbursable markup and consultant fees are not addressed

Mocking up Fee_R Logic

Build the Logic in Excel

Play Time

• Involved CCG initially to help create custom reports.

• Used the excel spreadsheet to describe the objective.

• Started working with Darrell Aaron with CCG

• Worked through conversion of the Excel idea into SQL.

• Darrell did initial work on his own but much of the later work

was us sharing a screen and talking through issues and

possibilities.

• Through this process I set aside the idea of developing a

custom report in favor is Excel Pivot tables.

• I’ve been using Analysis Cubes for years, so this was a

natural.

Phone a

Friend

SQL Happened

Pivot to Excel

Pivot Table Fields

Plan Variance Tracking

Excel Does Charts

Full Project Reporting Capabilities

Org Reporting at Lower Levels

Customizing Custom Reports

Timing Considerations• Reporting is only correct when the current period

follows a closed period.

• Excel solution; the current period is manually editable

by me.

• Vision custom report: the current period is taken from

the users Vision instance.

- The problem is the time period between when a new

accounting period is opened and the financials for

the prior period are completed. This is 7-10 days

when the report is likely not accurate.

- Need to educate users when to set Vision to the

prior period when that period is not yet closed.

Negative adjustment from prior

earned revenue is caused by

either added future labor,

reduction of net fee, or both.

Forecasting Negative Revenue

How Accurate is it?

• If you record exactly the hours planned, it’s perfect.

• Be careful to not over plan staff.

• Most PD’s are overly optimistic about

- How soon work will start

- How soon it will be complete

- How much time will be spent

• Direct Expenses do not earn revenue so will

have a negative impact on Net Revenue.

• We Discount Forecasts for Firm Summaries

- Active plans to 90%

- Imminent plans to 75%

- Uncertain plans to 15%.

•Make required input

fields more obvious.

•Add drop down fields

for survey responses.

More Tweaks