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Audience
Project managers, invoice managers and executives
Description
Project teams with client-facing projects need additional financial data. Project Insight offers
not only planned versus the actual, but also allows you to track what was proposed to the client,
what is billable and, if you choose, what was invoiced. Project managers, project schedulers and
financial resources will learn how to utilize these powerful financial features for increased
project and organizational profitability.
Benefits
- Understand the purpose of the additional financial columns offered
- Learn how to become more profitable as an organization
Key Points
Transcript
Project management comes in various forms for various reasons in organizations and different types of projects require different management processes. For example, if you are managing internal facing projects, where your clients are the different departments in your organization, you will have a different set of requirements than organizations that are managing external client or professional services projects.
Professional services projects need to track high level target budgets, detailed planned versus actual budgets, client agreed to payment milestones, actual billable data and invoiced data.
Project Insight has functionality designed specifically for managing professional service type projects.
Setting Up Proposed Hours and Totals
Before you get started managing professional services projects, there is a configuration option that needs to be turned on. It is called the proposed hours and totals. This enables you to track proposed hours at different incremental steps along the way in the project.
You must be a system administrator to be able to turn this option on.
Expand the left navigation.
Click on the Administration section to expand it out.
Click on Projects.
In the Project Settings, there is an option called Proposed Hours & Total.
Check this to turn it on.
Click Save.
You will see how that is used more in a moment.
Click on the Administration section to collapse it.
Add a Professional Services Project
Now, you can add your professional services project.
Click on the Folders section in the left navigation to expand that out.
Click on the Projects Folder.
Add a project by hovering on the Add icon and click Project.
The Project Add/Edit form appears.
Collapse the left navigation to give you more room to work with.
Enter a project name Software Development Project for Customer ABC.
Click in drop down for the Copy from Template, you can see that there is a number of different templates set up.
Click the Software Development template.
Creating and using project templates is covered in more detail in the Create and Re-Use Project Templates training session, but templates are used frequently in professional services organizations. If you do projects that have similar tasks, you can rapidly create a new project based on a template. This saves you time and ensures that important tasks are not missed. It also gives you a basis of estimates to work with when creating your new project.
In the State, ensure you have Active checked so that you can track actual time and enter expenses against it.
If you need more information on adding a project, attend the Creating Your First Project webinar.
Target Budget
Before you save this project, you want to enter the Target Budget information.
Click on that tab.
Target Budget Information is covered in more detail in the training session called Managing the Project Plan v Actuals.
However, one field on the Target Budget is very important to professional services and that is the Target Budget Billable Total field.
This is where you record how much you plan to bill the customer for this project.
At this point, in your life cycle, during the project creation, this is usually a very high level or top down number.
Perhaps your sales and marketing team had some estimates that they spoke with about the customer and you want to record that. Maybe someone in your organization who has a lot of experience doing these types of projects thinks that the project should be worth a certain amount.
This might even be used to record the budget the customer has for this project or what they have told you they are willing to pay. Where and how you get this number will depend on your business process.
Enter in $65,000 because that is what your sales and marketing team estimated and communicated to the client.
You could enter a further breakdown of this $65,000 with hours, rates and expenses if you want,
but you do not have to and in many cases, it is not really necessary because the detail won’t come from here. The detail will come from your schedule or work breakdown structure.
This is the place to record a high target budget billable or top down billable budget which can be compared with the detailed project budget later on when that gets developed.
You also have the Target Budget Total.
These are the high level cost estimates for the project.
You may enter this, if you know it but in a lot of cases, for professional services organization, this data is just left blank.
Just leave it blank for now.
It is important to understand that the Target Budget Billable Total value is never going to change unless you, as the project manager changes it. It is a static data field that you can use to record expectations about the project and use it for comparison and reporting purposes as the project progresses.
Hover on the Save option and select Save & Display project.
Financial Summary
Your project gets created with all the tasks that were defined in the template. You can see there is already a work breakdown structure with the default tasks that are common for this type of project.
Click on the arrow next to your first summary task, to expand it out and you will see all the child or detailed tasks that are required to complete this stage of work.
You will also see that there is some pre-populated information for each Task such as Duration, number of Work Hours and Resources assigned to the task.
On this task list view, there is really no financial data displayed, except the Work Hours.
The Work Hours is the amount of time or effort that you think it will take the resource to complete the task.
Click on the Resource name assigned to this task.
Although only the Work Hours is being displayed currently on this current task list view, in the background, there are cost and billing rates assigned to this resource on this task.
Where those rates come from is covered in more detail in the Managing the Project Plan v. Actuals training session and is not covered in this session. However, Project Insight has an advanced rate flow that can be applied to most any business process.
Project Insight will use the cost and billing rates set here and multiply it by the Work Hours to get financial data.
Click the X to close the Resource layer.
Create a Quick Selection
How do you display that financial data? To change the columns of data that appear on your task list, click the Display Options icon.
Click on the Column Selection Options section to expand it out if it is not already.
This is where you set the columns of data that you want to appear.
When a new project is created, it uses a planning view that is one of the system default views to display your task list information. Or if your system administrator created a default view for your organization, it will apply that view.
You can create your own view of the financial columns that you care about and save it as a Quick Selection.
In the Selected Columns, you first want to remove the columns of data you do not need for financial management.
Double click on Duration, Start Date, End Date and Predecessors to remove those from the current view.
Click on Resources, because you want to insert your new financial columns just before that.
Click on a field in the Available Columns and type W to go directly to the W fields.
Scroll down until you see Work Billable Rate, double click on that.
Double click on Work Billable Time, Work Billable Expense and Work Billable Total.
Click the Update Display icon.
Click on the column headers to drag it and expand out the columns so you can see all the headers.
The Work Billable Rate is the billable rate assigned to this task and resource. Click on the Resource to display the Resource layer.
You can see that billable rate here as well, it is the same data that is showing on the task list.
Click X to close the resource layer.
If you have more than one resource on a task at different rates, then it is an average calculated rate that shows on the task list in the Work Billable Rate field.
Click on the Resources to display the Resource layer for a task that has two resources.
The rate is calculated by taking the work hours for the first resource and multiplying it by the rate, then taking the work hours for the second resource and multiplying it by the rate, then dividing that total value by the number of hours.
Then the value calculated from these data elements, is what is shown in the Work Billable Rate field on the task list.
Click X to close the resource layer.
Then the value of the labor or the Work Billable Time is calculated by taking the Work Hours and multiplying by the Work Billable Rate.
You also have the Work Billable Expenses. This is the non-labor cost amount that you are going to bill to the client.
Click the Edit icon for a task that does not have expenses entered.
Type $1,000 for the Work Billable Expense.
Hit enter to Save.
You have the Work Billable Expense entered and the Work Billable Total is the Work Billable Time plus the Work Billable Expense.
That is a common formula used for financial data in Project Insight, hours multiplied by rate gives the value of the time plus expenses gives you the total.
In this training session for professional services, the billable data is focused on, but these same data fields are available for costs as well, with a Work Rate, Work Time, Work Expense and Work Total and also for other financial metrics which you will see in a moment.
These Work Billable data elements build up the budget that you should use as the reference for billing your client.
It could be as simple as that. You take this value and agree with the client that is what you are going to bill them for that work.
Professional services organizations usually do milestone billing, so you may bill after each major phase and you bill for all the work done in that phase. For example, you may have an agreement with the client to bill for the Scope work after all the Scope tasks are completed.
You need to record that agreed to billable amount in separate fields than what you see here.
The reason for this, is that the project may change. Maybe your work hours estimates need to get revised as the task progresses or you need to add new activities. Some of these may be change orders and some may not, so you need to record those original Proposed Billable amounts separately so that you can track it and use it for comparison purposes.
To do that, click the Display Options icon.
Click on Resources in the Selected Columns, because you want to insert your new columns just before that.
Click on a field in the Available Columns and type P to go directly to the fields that start with the letter P.
Scroll down until you see the Proposed fields.
Remember at the beginning of this session, you turned on an option for Proposed Hours & Total. These are the fields. They will only appear if that option is turned on.
Double click on Prop. Hours, Prop.Rate, Prop.Time, Prop. Expense and Prop. Total.
Click the Update Display icon.
You do not want to record the proposed values against each individual task. You want to record the values on a milestone task for that billing phase.
For example, if you have a milestone payment due when the scope is complete, you can make the Scope complete task, your milestone task and record the proposed billing data against that milestone.
The billing data would be the total amount for all the scope tasks.
Right click on the Scope Complete task, hover on Edit Task (inline) and click Edit Advanced Options.
You will want to ensure the Milestone option on this task is checked.
Click Save.
That way, you can easily run milestone task reports and see the billing details.
The second best practice is that, on the task where you are recording the proposed billable amounts, you ensure have 0 work hours entered.
You do not want work hours or work billable rates, time or expenses recorded against this task.
You just want the proposed billing information entered.
This eliminates any confusion on the data.
The next step is to enter the proposed billable amounts.
Double click on the white space of the task to go into edit mode.
Click in the Proposed Hours.
You could enter the total work hours that were calculated for the summary task.
As you know from other training sessions, the information from child tasks roll up to create a total for the summary task.
So the Work Hours at the summary task is the total of all the child tasks.
And the rate at the summary task level is an average rate calculated from the work hours and rates for all the child tasks.
If you are going to bill the client exactly the value of billable data that was calculated from the bottom up budget. Then in the Prop. Hours, enter the same value as the summary task total work hours.
In the Prop. Rate, enter the same value as the summary task average Work Billable Rate.
Leave the Proposed Time as that value will be calculated automatically when you save.
In the Prop. Expense, enter the same value as the summary task total Work Billable Expense.
The Proposed Total is not editable because it is also automatically calculated.
Click Save.
Again, it takes the proposed hours and multiplies it by the rate to get the proposed time, then adds the proposed expense to get the proposed total.
Now you can see that the Proposed Billable amounts match exactly the values from your bottom up budget.
That is one way an organization may track billables.
In this case, you are using the details from a bottom up budget to get the data about what you are going to bill the client.
This is a really good way to get your client billable amounts, because it is based on detailed tasks, work hour estimates and your pre-defined billing rates.
However, even though this is a bottom up billable budget, it may not be what you agree to bill the client.
Maybe billable amounts for each milestone were determined from outside your project management department or your project management processes and you are just given those values and you need to record them and manage to them.
Perhaps there was a pre-defined contract or agreement that the values came from.
Also, it could be a simple case of rounding especially if your Work Billable Total gets calculated with dollars and cents and not a nice round number. You do not want to bill your client $7,321.15, you would most likely round up.
Finally, you may want to build in some contingency, such as a 10% or 20% contingency. This is where you could do that as well.
Double click on the white space of the task to go into edit mode.
You could still do some calculations and put in proposed hours and a proposed rate to get the Proposed Time, however, that is not really required and you can just put in a total value for labor instead.
Erase the Proposed Hours and Proposed Rate.
Type in $6,500 in the Proposed Time because you are going to round up.
Leave the Proposed Expense as $1,000.
Click Save.
Now your Proposed Billable Total is different than your Work Billable Total.
You do not even need to separate Time and Expenses on the proposed amounts. You can just have one billable amount.
Click on the Edit icon on the milestone task. Erase the Proposed Time value.
Put the total billable amount in the Proposed Expenses.
Click Save.
You can put in as much detail or as little detail as you want in the proposed columns.
Essentially, you want to ensure the Proposed Total is the correct amount and break it down by labor and expenses if you require and even hours and an average rate.
If you do not need a breakdown then just put the total amount in the Proposed Expenses.
Accessing Quick Selections
Project Insight will remember that this is the last view you were using and the next time you display this project, it will display it with this view. However, you may change this view or you may want to apply this view to different projects. You can save that view and easily switch to it.
Click on Display Options.
Click the Edit icon on the Quick Selection.
Enter the name of the View, such as Billing Milestones.
Click the Save icon.
Now you can easily click in the drop down and switch your task view to this one. This view is available for any project that you work on.
Click the Update Display icon.
So you can see how you can change views easily depending on what you are doing, in this case it is a view for billing purposes.
Work Billable versus Proposed
The data you are seeing now is your planned project billable amounts. This is what you think the project will take, which is the Work Billable data and the amount you agreed to bill when the activities are complete which is the Proposed data.
It is possible that as the project progresses, your Work Hours may have to be adjusted or additional activities added. You hope this will not happen, but of course in projects it may. This can happen for a variety of reasons, for example, maybe you had a senior resource assigned to the task so it would take only 20 hours, but that resource got assigned to other activities and now a junior resource has to do it and its going to take them twice as long.
Double click on the white space for the Determine project scope activity to go into edit mode.
Change the Work Hours to 40.
Click Save.
You can see the Work Billable Total has changed,
Also, the Work Billable Total for the summary task has changed.
You can see it is increased but you can still only bill the client the original agreed to amount which is what is recorded in the Proposed Expenses.
That is why you want to record that Proposed amount in separate columns, that won’t get changed as the project progresses and you can report on that.
Actuals
As your project progresses, your team will start recording actual time against the project.
Tracking time is covered in detail in the Track Your Time and Enter Expenses training session so you are only going to see just one way that it can be entered here.
Click on Determine project scope.
The Task Detail form appears.
Click the Time tab.
Enter Actual Hours.
The Actual Hours are the total number of hours you worked on the task.
Because you are logged in as a project manager, you are seeing some extra data when you do time entry, such as actual rate, billing hours and billing rate but your team members are only going to see the actual hours and possibly an Is Billable option.
Leave the Is Billable option checked and click Save.
In the gray blank line, enter 2 for actual hours.
Uncheck the Is Billable option.
Click Save.
Depending on how your system administrator configured your system, you can possibly enter both billable and non-billable time against a task.
The same theory applies to Expenses.
Click on the Expense tab.
Again, you will see some extra data columns because you are a project manager.
Enter $500 in the Actual Cost.
Leave Is Billable checked.
Click Save.
In the gray blank line, enter $200 for Actual Cost.
Uncheck Is Billable.
Click Save.
To see that, click on Views to return to the Task List. It remembers that last view that you set.
Click the Display Options icon.
In the Selected Columns, click on Resources to put the new fields before that.
In the Available Columns, double click on Actual Hours and Actual Expense.
This is where you can see the total actual hours entered and the total amount of expenses entered. You could see other actual data such as rates, etc. This is costing data.
Since you are doing a client facing project, you will concentrate on billables data for now.
Scroll down to the Billable section.
This is data about which of those total actual hours and expenses was set as billable.
Double click on Billable Hours, Billable Rate, Billable Time, Billable Expenses and Billable Total.
Click Update Display.
Click and drag the column headers to see the full labels.
You can see the total hours entered.
And the total expenses entered.
But next to that you can see how many of those actual hours were set as billable.
Only 6 of the total 8 hours can be billed to the client.
Then you have the billable rate, multiplied by the billable hours gives you the Billable Time.
Then there is the Billable Expense.
Again, in this case the Actual Expense was more than what was identified as Billable.
And finally you have the Billable Total to-date.
Invoice Data
Project Insight allows you to put any approved time and expenses onto invoice reports and export that to your accounting system. The details for that are covered in the Generating Invoices and ERP Integration training session, however, you will see how to display that invoice data on your project.
You are going to switch to another project that is already in progress and that has had time and expense entries already invoiced so you can see that.
In your navigation in the top section, click on Projects.
That’s a quick link to take you directly to your projects folder without having to open the left navigation.
Click on the Website Development Project for Customer ABC.
This basically has all the same tasks as the other professional services project that you created except there are time entries that have been invoiced.
Click the Update Display icon.
In the Selected Columns section, click on Resources to insert the column before that field.
In the Available Columns section, scroll to the Is for Invoice data
You will see Invoiced data columns. Again, this invoice data follows the same rules. You have the Invoice Hours.
Multiplied by the invoice rate.
Gives you the Invoice Time.
Add in the Invoice Expenses.
And that gives you the total Invoice amount.
Click the Update Display icon.
Scroll to the right to see that data.
Click on your columns headers and drag to see the full column labels.
You can see what was invoiced versus the planned and actual.
Freeze Panes
There is a lot of data that you have on one view. To make this information easier to view, you may want to freeze your headers and left panes.
Scroll to the left so that the name of the task is showing.
Right click on the column header that you want to freeze.
Right click while you are hovering on the name column header.
Click Freeze Header and Left Panes.
Now you can scroll left and right to see all the data columns, and the task name remains visible.
Expand out some of the other summary tasks, so not all the data can be displayed on one form.
You can also scroll up and down and the header remains visible.
That is one navigation technique you can use to see large amounts of data on one form.
Full Screen
Secondly, you can also double click on the header to go to full screen viewing mode, giving you more space to view information.
Double click on the header to return to normal display mode.
You can also right click anywhere on the header and select Toggle Full Screen to do the same thing.
Right click again on the header and select Toggle Full Screen to turn it off.
That is another navigation best practice you can utilize when viewing large amounts of data.
Project Level Budget Data
You have been viewing all of this information at a task level. It automatically rolls up to the summary task level.
And it also rolls up to the project level.
And you can view that information here on the task list, but you can also view it on the project status form. This may be a view that your executives prefer instead of looking at a detailed task list.
Hover on the Views menu and click Status.
Click the Budget tab.
The first column displayed shows the Cost/Actual values
While the second column shows the Billable amounts.
Again, the billable amounts are what we are focussed on in this session.
You can see the Target Budget - Billable, which was the high level target billable amount you entered when you created the project.
You can see the Work Total – Billable or what you should be billing based on your bottom up budget.
You can see your proposed totals or what you agreed to bill the customer.
Since you only entered proposed amounts for one milestone task on the project, this is low in this example, but normally it would be closer to your Work Total - Billable.
Then you have the Actual Total – Billable value as well.
In the early stages of the project, there will be a big variance here because not a lot of work has been done, so when you look at Actuals versus Work Billable Total in terms of profitability the Actuals are what you have done to-date versus the Work Billable Total which is what you planned to do for the entire project.
There are planned and earned value metrics that can be used for measurements while the project is in progress. i.e. what you planned to bill by this time period, versus what you did bill - which is the earned value.
Recovery and Profitability Reports
All of this data is also available at your portfolio level.
Click on Reports.
Click on Project Reports.
Click Create Project Report.
Click on the Column Selection Options section to expand that out.
In the Selected columns, double click on each field to remove all but the name or highlight several of them and click the left arrow.
Let’s just add in our total values.
In the Available Columns, double click on:
Work Total – which is the total internal, budgeted cost to want to stay within
Work Billable Total - which is the total amount you plan to bill the client
Proposed Total – what you agreed to bill the client
Actual Total – the totals as they come in from the work and/or time and expense entries
Billable Total – the total labor and hard costs as they come in based on your billable rates
And Invoiced Total – the actual labor and hard costs that have been approved and placed on an invoice report in Project Insight
You also want to add in some profit data, scroll down to the Ps.
You can see the different profit figures you can put on your report.
Click on a profit data element, such as profit – actual and click Show Tooltip for Selected Columns to review the different profit figures available and which ones you want to put on the report.
You can also put Recovery Billable Percents.
Scroll down to the Rs and double click on Recovery Billable Percent.
Click Run Report.
Hover on the Recovery Billable Percent column and drag the column wider to see the full label.
Rest your cursor on the label to see a description.
This is the Target Billable Total divided by the Work Billable Estimate at Complete.
Other Professional Services Reports
There are a number of other professional services type reports that you may find useful. You won’t see how to create all those reports in this session but you will get an idea as to what is available and you can build them yourself.
Click on Reports.
Click on Projects if it is not already clicked.
Click on the My Saved Reports section to expand it out.
The reports starting with the letters PS are all the saved professional services type reports
Click on the Client – Actual Profit report to run it.
This report shows two graphs.
You are able to have up to four different graphs on one single report.
The first bar chart, shows by customer, the actual profit, the actual total and the target billable total. Since these projects are in progress, the actual are still relatively low compared to the target billable.
The second chart is a pie chart that shows a breakdown of projects by status so you can see really quickly whether or not there are projects that may be in trouble.
Finally below the charts is a tabular report showing the project data that is driving the charts.
Of course you can click on a project name to go to the project details.
Click on the Reports icon again.
Project Insight remembers that you were running project reports and that you had expanded out the saved reports section. This is a usability feature.
Click on Client – Fixed Price Performance – Current Quarter.
This report shows a chart of the target budget billable or what you think you originally thought you would bill the client versus the Work Billable Estimate at Completion which is what it looks like you are going to bill the client based on the current project status.
And then again below that is a tabular report of the data from which the chart is being calculated.
Click on the Reports icon again.
Click on Client – Fixed Price Projects.
This is the same kind of data, except from the costing perspective, what you initially thought it would cost versus the new projects costs at completion based on current project progress.
Click on the Reports icon again.
Click on Planned Projects – Planned Project.
This type of report will give you financial metrics on what you think you may be billing clients, versus the cost and therefore, what the planned project dollar value is and the planned profit percent.
This report can really help you with planning. You can see what projects are anticipated to give you the highest profit amount and then you can give those projects higher priority.
Of course, all the values rollup to gives you totals at the portfolio level and you can sub-total or group this by department customer and so on.
Click on the Reports icon again.
Click on Roll up by Client – Cost Budget v Actual.
This tabular report shows you by customer what the planned costs were going to be, versus what the actual costs are and the variance between both.
Again, as your projects near completion or get completed you will hopefully see these variances narrow.
Those are some examples of very useful professional services reports.
One Click Access to Professional Services Reports
You were running these reports from the reports menu, but you can make them accessible with one click from the main reports menu.
Click on Save Report.
Click on the option to Include in Report Menu.
Click Save.
Now hover on Reports, hover on Project Reports and that report will show there for easy one click access from anywhere in the system.