Margin (profit/loss)
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      2. Margin (profit/loss)

      People margin reporting

      People margin reporting allows people leaders to easily see the contribution a person (or group of people) make to revenue.

      People margin reporting provides information to evaluate people’s productivity and financial value, and informs decision making to help increase efficiency and profitability.

      Projectworks keeps track of the costs and value of billable work for a person, as well as the invoiced value of their billable time when invoices are approved.

      Understanding People Margin

      The margin on a person = person’s Revenue MINUS Employee Cost

      Margin (%) = person’s Margin DIVIDED BY Revenue

      Revenue

      Projectworks enables you to view a person’s margin dependent on the Revenue Calculation you want to calculate the margin against:

      • Accrued revenue;

      • Invoiced work; or

      • Value of billable work.

      Accrued revenue

      The accrued revenue for a person is the:

      1. Amount invoiced on time up to and including today, that has been included in manager or finance approved invoices dated up to and including the last day of the current month;

      2. PLUS any uninvoiced billable hours up to and including today MULTIPLIED BY the person’s billable rate

      Example 1: Annie logged 80 billable hours last month, and 80 billable hours this month for Project A

      Annie’s billable rate on Project A is $150 p.h., so the value of the billable work = $24,000 (160 hrs MULTIPLIED BY $150)

      An approved invoice for her time has been raised for last month’s time for the time entry amount of $12,000

      Accrued revenue = $24,000 ($12,000 invoiced amount PLUS $12,000 uninvoiced amount (80hrs MULTIPLIED BY $150))

      Example 2: Annie logged 80 billable hours last month, and 80 billable hours this month for Project A

      Annie’s billable rate on Project A is $150 p.h., so the value of the billable work = $24,000 (160 hrs MULTIPLIED BY $150)

      An approved invoice for her time has been raised for last month’s time for the forecast amount of $15,000

      Accrued revenue = $27,000 ($15,000 invoiced amount PLUS $12,000 uninvoiced amount (80hrs MULTIPLIED BY $150))

      In this instance, Annie’s 80 hours invoiced for last month has been marked up.

      Please note: If a person has different billable rates for different timecodes or projects, the uninvoiced billable hours for each timecode will be multiplied by associated billable rate (i.e. not the person’s target hourly billable rate).

      Uninvoiced billable hours include any hours included in draft invoices.

      Invoiced work

      The invoiced work for a person is the:

      1. Amount invoiced on time up to and including today, that has been included in manager and finance approved invoices dated up to and including the last day of the current month.

      Invoiced work excludes any billable work that is in a draft invoice (or has not yet been invoiced). 

      e.g. Annie logged 80 billable hours last month, and 80 billable hours this month for Project A

      Annie’s billable rate on Project A is $150 p.h., so the value of the billable work = $24,000 (160 hrs MULTIPLIED BY $150)

      An approved invoice for her time has been raised for last month’s time for the forecast amount of $15,000

      Invoiced work = $15,000 ($15,000 invoiced amount only)

       

      Value of billable work

      The value of billable work for a person is the:

      1. Billable hours up to and including today MULTIPLIED BY the person’s billable rate

      The value of billable work does not take in to account any invoiced amounts and excludes mark-ups, mark-downs and written-off time.

      e.g. Annie logged 80 billable hours last month for Project A

      Annie’s billable rate on Project A is $150 p.h., so the value of the billable work = $12,000 (80 hrs MULTIPLIED BY $150)

      An approved invoice for her time has been raised for last month’s time for the manual amount of $9,000, as Annie spent 20 hours on discovery and design work which wasn’t included in the quote for the work, and therefore has to be written-off.

      Value of billable work = $12,000 (80hrs MULTIPLIED BY $150)

      Please note: If a person has different billable rates for different timecodes or projects, the billable hours for each timecode will be multiplied by associated billable rate (i.e. not the person’s standard hourly billable rate). 

      Employee Cost

      If a person is a salaried or fixed employee their employee cost remains static on a month by month basis (unless their salary changes).

      Hourly contractors costs will fluctuate dependent on how many hours they log in Projectworks, so their monthly costs will change dependent on how many hours they have worked in a month.

      e.g. If a salaried or fixed employee is on leave for two weeks of the month, they are paid their regular salary.

      Whereas if an hourly contractor is on leave for two weeks, their employee cost will be reduced by around half for that month in comparison to the previous months where they worked the full month.

      Margin by Person report and the Person Margin screen

      The Margin by Person report allows senior management to view a group of people’s margin’s in one report, whereas the Person Margin screen displays the margin for a specific individual only. It is not uncommon that access to the Margin by Person report will be more restricted, due to the sensitive nature of cost information.

      Read more about access to the Margin by Person report and Person Margin screen →

      There are a number of filters available to slice and dice the Margin by Person report and gain visibility across manager, team, role etc.

      Billable Work (hrs), Average Billable Rate and Value of Billable Work

       

      Billable Work (hrs)

      Billable Work (hrs) include all hours logged to billable projects. This includes billable and non-billable timecodes. Time logged against non-billable timecodes cannot be invoiced, however the average billable rate is based on the total number of hours worked on the billable project.

       

      Average Billable Rate

      A person’s average billable rate gives you an indication on if their hourly billable rate is above or below their standard hourly billable rate. People and projects may have revenue targets that you base people’s hourly rates on, however if a person’s billable rate is consistently marked down, revenue targets are unlikely to be met.

      Avg. Billable Rate = Revenue DIVIDED BY Billable Work (hrs)

      e.g. Annie logged 80 billable hours last month, and 80 billable hours this month for Project A

      Annie’s billable rate on Project A is $150 p.h.

      An approved invoice for her time has been raised for last month’s time for the forecast amount of $15,000

      An approved invoice for 40 hours of her time has been raised for this month’s time for the forecast amount of $10,000 (40 hours have yet to be invoiced)

      Annie’s Avg. Billable Rate for the past two months based on:

      1. Accrued revenue = $193.75 p.h. ((($15,000 PLUS $10,000) PLUS (40 MULTIPLIED BY $150)) DIVIDED BY 160 hours)

      2. Invoiced work = $156.25 p.h. (($15,000 PLUS $10,000) DIVIDED BY 160 hours)

      3. Value of billable work = $150 p.h. (160 MULTIPLIED BY $150)

      Value of Billable Work

      A persons value of billable work = Billable hours up to and including today MULTIPLIED BY the person’s billable rate. This is the same as the uninvoiced earned value and based on the person’s billable rate for each timecode that they have entered their time against.

      e.g. Annie logged 80 billable hours last month, and 80 billable hours this month for Project A

      • 20 hours for “Architecture design” timecode at billable rate of $170 p.h.

      • 140 hours for “Development” at billable rate of $150 p.h.

      Annie’s value of billable work = $24,400 (($170 MULTPLIED BY 20 hrs) PLUS ($150 MULTIPLIED BY 160 hrs)