The Fixed Fee billing method involves setting a pre-established price for a project, regardless of the time and resources required. This approach provides cost predictability for clients, who pay a set amount for the entire project. For businesses, it enables them to manage their budget and gain a clear understanding of the project's financial scope.
Take a course on Financial Management here.
In this article
Key concepts for navigating the financials dashboard
Fixed fee budget is the cost your customer pays you for the project.
Budgeted hours: When you create a project, you typically estimate or set the total number of hours that you expect it will take to complete the project as budgeted hours.
Allocated hours - The total number of hours allocated for the project via resource management.
Tracked hours refers to the total number of hours that your team has tracked for the project. It represents the actual time spent working on the project and is reported using timesheets.
-> Forecasted values are calculated based on the resource allocation plan for the project.
-> Actual values are calculated based on the time tracked during the delivery of the project
Current Recognized revenue
Recognized revenue is the portion of the fixed fee budget that can be recognised based on the percentage of progress made on the project.
More on revenue recognition formulas here.
Cost is calculated based on the teammember's tracked hourly cost rates.
Hours tracked * Cost rates of respective team members/roles
Profit is the difference between recognised revenue and cost incurred
Recognised revenue - Cost
Profit Margin is the ratio of profit to recognised revenue
(Profit/Recognised revenue)*100
Forecasted Recognized revenue
Recognized revenue is the portion of the fixed fee budget that can be recognised as per the hourly resource allocation plan for the project.
More on revenue recognition formulas here.
Forecasted cost is calculated based on the team member's allocated hourly cost rates.
Allocated hours * Cost rates
Forecasted profit is the difference between forecasted recognised revenue and forecasted cost.
Forecasted recognised revenue - forecasted cost
Forecasted profit margin is the ratio of forecasted profit to
(Forecasted profit / Forecasted recognized revenue)*100
Accessing the Financials for Fixed fee projects
Get real-time insights into your project's revenue recognition and time usage with the financial dashboard. Track and compare actual revenue recognition with forecasted revenue recognition for completed portions of your project, and make necessary decisions for smooth project management.
To access Financials,
Navigate to Projects
Select a Fixed fee project you wish to view
Click on the Financials tab to track your project budget usage alongside the project hours.
Revenue Tracker
The Fixed Fee budget tracker enables you to track recognized revenue relative to the fixed fee budget and determine the remaining amount.
Hours Tracker
The Budgeted hours tracker helps monitor tracked hours in comparison to the budgeted hours and identifies the remaining budgeted hours.
Progress Charts
With the progress chart, you can understand data regarding how recognised revenue and hours usage has progressed for the project over time. This helps you compare the current progress with the planned trajectory of recognised revenue and hours.
Note:
-> Forecasted values are calculated based on the resource plan.
->Actual values are calculated based on time tracked during the project
More on how revenue recognition is calculated here.
Revenue progress
The progress charts provide you with information on the recognised revenue for the project over time.
X-axis is days.
Y-axis is recognised revenue
Hours progress
The progress charts provide you with information on the hours tracked for the project over time.
X-axis is days.
Y-axis is tracked hours
Breakdown Charts
A Breakdown chart shows you the monthly breakdown of recognised revenue and hours usage
Revenue breakdown
Revenue breakdown
Shows the monthly breakdown of forecasted and actual revenue recognised and the corresponding profit margin
Hours breakdown
Shows the monthly breakdown of billable and non-billable hours and the corresponding allocated hours
Summary table
You can view the detailed summary of hours usage and cost for the overall duration of the projector on a granular monthly basis.
Hours details table shows the detailed breakdown tracked hours for the project.
Cost details table shows the detailed breakdown cost incurred for the project.
Group byRoles and People Visualize the cost and hours utilized by each role and team member on the project
Group by Phases and tasks Visualize the cost and hours utilized by different phases and tasks in the project.
You also can choose the option to view
Cost, profit and margins which are metrics that keep changing based on the time your resources spend on the project.
Estimated revenue and allocated time which are metrics that are planned at the start of the project.
