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Audience
Project managers, company managers, executives and administrators
Description
Rate cards are not just for client-facing project teams. Many teams that have internal projects also see the value of creating rate cards to associate with projects. Contracts and rate cards may be created with skill sets and specific rates may be associated with those skills. When applied to projects, Project Insight will apply the rate card rates, overriding user and project level rates. If you are a systems administrator, user manager, project manager or financial team member tracking financials, then attend this training.
Benefits
- Understand the power of setting up rate cards for rate flexibility
- Know when the contract rates are selected and used
Key Points
Transcript
This session covers how you can set up contracts or rate cards with internal burden and billing rates in Project Insight, project and portfolio management software. In Project Insight, the terminology used is contracts, but a lot of our customers also call them rate cards, so you will hear those two terms used interchangeably throughout this session.
Contracts are very powerful because you can create detailed bottom up cost and billing budgets for your projects. These budget figures can be used to create more accurate estimates can help improve your profitability. It also enables you to do forecast and planning of costs and revenue based on your scheduled projects.
While you are executing your project, you will manage your detailed budget and that includes the cost and billable amounts. If you are conducting professional services projects or billing external clients, you can track time and materials or fixed price contracts and measure your actuals against your planned values.
This is all part of your process to accurately estimate projects and then manage those projects
successfully against your budget and schedule.
Project Insight is very flexible and can be configured to your business process. Costing and billing rates can be set at an individual user level, the project level, the task level and associated with skill sets or roles in contracts.
This session concentrates on setting rates by company contract and by resource type/role inside of the contract or rate card. When a contract is applied to a project, that project’s rates are inherited from this contract. What’s great about this method is that is assures consistency of rates by skill set.
Benefits of Contracts
The benefit of working with contracts is the ability to view reports and dashboards with financial data. You are seeing a dashboard with a pie chart showing a breakdown of projects by company.
That chart is available because you assigned projects to customers as part of your process to leverage contracts and rate cards.
You also have a pie chart showing you the Budget Billable Health Status of your projects.
Project Insight can automatically calculate billable health status as a result of applying contracts to projects as well.
Set Up a Contract
The first step in setting up a contract is to have your system administrator or company manager add an organization if it does not already exist. Once your company or client organization has been created, then you can set up the contract or rate card.
Next, your project managers will associate tasks in the projects with resource types/roles. That way, the software will know what rates to apply to specific tasks.
Expand the left navigation.
Click on Administration to expand it out.
Click on Companies.
Any companies that you set up previously will be displayed.
This includes your company and any of your customers or may even external contractors or vendors.
Collapse the left navigation to give you more room.
To add a new company, click on the Add Company icon.
The only required field on the company is the name.
Enter in the name such as Customer 123.
You can enter the other data if you require.
For example, enter the address of 230 Commerce. Which is the location of the Project Insight headquarters.
Enter a phone: 555-1212
Enter a fax: 555-5555
Enter an email: info@projectinsight.com
You then have options that set how this company is used.
The first option, Enable company members to automatically communicate with all other companies sets whether or not users assigned to this company can see users assigned to other companies.
If you are setting up internal companies, then you may want to check this on because all your internal team can see each other. However, if you are setting up your clients as companies in Project Insight, you want to leave this unchecked as you would never want users from one of your clients to see users from another one of your clients.
The next option, Enable time and expense entries to be assigned directly to the company, dictates whether or not time or expense entries can be associated directly to the company without having a project or a task. Whether or not you allow this would depend on your business process. If you always require time or expenses to be entered for a task or a project uncheck this.
Enable the company to be assigned to project and subsequently invoiced, is a very important option when you are using contracts. It must be checked if you are managing client facing projects and you will be using contracts and rate cards.
Enabling the company to be assigned to new folder and item permissions, allows you to set permissions for a company. Again, this would be used if you have external clients or customers accessing Project Insight and you only wanted them to see their data.
Finally, the last option dictates whether or not the company is active. If you are no longer doing business with a company, then you can mark them as in-active but still retain their previous data in the software for reporting and reference purposes.
Leave this company set as active as you do want to use it.
Click Save.
Add a Contract or Rate Card
Now that you have set up the Company, you can add a contract or rate card to it.
Click on the name of the company that you just created.
Click on the Add Contracts icon.
The Contract Add/Edit form appears.
The only required data on this form is the Number.
This may be a number but it can also be text as well.
Enter in Rate Card for 2015.
You may also enter a description to record additional details about the contract.
There are also contract Start and End Dates.
These dates are informational only. They do not control which rate card is the active rate card.
Your company managers control which rate cards are active and your project managers control which rate cards are being used on projects.
Contract Default Rate
There is also a contract Default Burden Rate and Default Bill Rate.
These rates are used only when no other specific resource type/role rates are set up in the contract.
Entering burden rates for a contract is not normally done. Usually cost rates are specific per user and are set up at the user level. Only in special circumstances would you enter a default cost rate here.
So leave the Default Burden Rate blank.
However, you may want to enter a Default Bill Rate. This billing rate would be used if no specific resource type/role rate was set up. For example, maybe you have a number of different administrative activities and support activities. You don’t want to set up special rates for those, you just want to bill out all work without a specific rate at $90 per hour.
Enter $90 for the Bill Rate.
The Is Active checkbox is where you can control what contracts or rate cards are currently active.
Leave that checked because you are going to use this contract.
Click Save.
A contract has been created for this customer.
To see that, click on the Contracts section to expand it.
You can see that contract.
It is possible to have more than one contract per customer.
If you have more than one contract for this customer, they will all be listed.
Create Rates by Resource Type/Role
Although you can set default bill rates for the contract, the power in the Project Insight contracts functionality is the ability to set rates by Resource Type/Role.
To do that, click on the contract name.
The contract details are shown at the top. Then there is a section where you set up rates per resource type.
Click on the drop down for the Resource Type.
Choose Project Manager.
You will set the rates for this role.
The first rate you can set is the burden rate.
Most organizations do not set burden rates on a contract. They just leave the burden rate blank on the cost and use the burden rate set for each individual user.
One circumstance where you may enter a burden rate here, by role, is if you did pay your team different rates based on the tasks they are doing, then you could enter a burden rate for this resource type.
That is not that common though.
Leave the Burden Rate blank.
Enter a bill rate of $175.
This means that any task that requires a project manager will be billed at $175 per hour.
Click Save.
Click on the drop down for the Resource Type.
Choose Project Manager.
Enter a bill rate of $165.
This means that any task that requires a project manager will be billed at $165 per hour.
Click Save.
Click on the drop down for the Resource Type.
Choose Administration.
Enter a bill rate of $95.
This means that any task that requires an administration type role will be billed at $95 per hour.
Click Save.
Click on the drop down for the Resource Type.
You can see that there are a number of other different resources types/roles that you can set the rates for, so you could continue to do that for any resource type/role that would be used on the projects.
Or if there is no specific rate set for a specific resource type/role it will just be billed at the default rate, which you can see showing here.
For example, in the project plan, you indicated you needed a programmer for a certain task. Since there is no specific rate set for that resource type/role, the Default Bill Rate of $90 would just be used.
That’s very simple. You set up your rate card or contract rates for your customer. Then your planned billable amounts will be automatically calculated from those rates as you build your project.
Your project managers won’t have to worry about setting up these rates, they will be automatically applied. You will see more about that in a moment.
Copy a Contract
Say you did go through and set up billable rates for every Resource Type/Role that you have. Now, the next year roles around and you negotiate new rates for 2016.
Instead of having to enter this information from scratch for the new 2016 rate card, all you need to do is click the Copy Contract icon.
Enter in the name or number of the new contract, such as Rate Card for 2016.
If you are copying the rate card for the same company, just leave that.
Click Copy.
You will get a confirmation prompt that the copy was done.
Click OK.
Click the back icon.
The Rate Card for 2016 is also listed. You may want to leave it active, if you’re planning projects already for 2016 and want that rate card applied.
Or you could click the Edit icon and uncheck the Is Active option, and only make it active when you start to plan project for 2016.
For now, just click cancel to leave it active.
To set the rates for the new year, click on the name of the Rate Card.
Click the Edit icon for the Resource Type role that you want to change.
Click the Edit icon for Administration and change it to $105.
Click the Edit icon for Project Manager and change it to $175.
Click the Edit icon for Software Developer and change it to $185.
That’s the new rates that will be used for 2016 projects.
Click the Back icon. That returns to customer form.
Click the Back icon again to return to the customer list.
One trick that you may use if you are setting up a lot of contracts or rate cards for each customer is to set up a standard rate card and copy that as you need, instead of manually entering the data each time.
To do that, click on your company name.
You will want to use standard rate cards against your company and not a client company because they will not be specific to any one client.
Set up a contract and call it something like Standard Rates.
You can see that one has already been created.
Click on that Contract to see the details.
In there, set up all the resource type roles you have in your organization with a default billable rate.
When you need a new contract for a client, click the Copy Contract icon while this standard rate card is displayed.
Enter the contract name such as Discount Rates for 2015.
Then in the Company drop down, select the Company you want to create the rate card for.
Click Copy.
Click OK to the confirmation.
Click the Back icon twice to return to the Companies List.
Click on the Customer 123 Name.
Click on the Contract that you just created from the contracts list.
Edit the rates for each role as applicable.
Click the Edit icon and change the rate to the discounted amount.
This process saves you some data entry time and also ensures consistency across rate cards.
Apply a Contract to a Project
Next, you’re going to see how the contract gets applied to the project.
Expand the left navigation.
Collapse the Administration section because you no longer need that.
Click on Folders to expand that section.
Click on the Projects folder.
Collapse your left navigation.
Hover on the Add icon and select Project.
The project add/edit form appears.
Complete details about adding a new project is covered in the training session called Build Your First Project.
For this session, you are going to keep it simple and just enter the main data.
Enter the project name such as New Company Website.
In the Copy From Template drop down, select the Software Development Template because you want your project to be set up automatically with those tasks from the template.
Leave the rest of the information and click on the Time, Expense & Billing Information tab.
Select the Defaults
This is where you set the Company that you are doing the project for and also the contract or rate card to apply.
Click in the Companies drop down.
You’ll see a list of the Companies. The companies listed here are only those companies that had the option for the company to be assigned to a project and subsequently invoiced turned on. If that option wasn’t checked for a company, it wouldn’t appear in this list.
Click on Customer 123.
Click anywhere on the white space on the form to exit out of that drop down.
The Company is listed and it is also set as the default company.
You can assign multiple companies to a project but one of those companies is always set as the default company. There are various reasons why you might do this and that is explained in more detail later on.
Next, click in the Company Contracts drop down.
You can see all the rates cards that you set up for this customer.
Only the active rate cards are listed so you could set only one rate card to be active at one time.
Click on Rate Card for 2015.
Click anywhere on the white space on the form to exit out of that drop down.
Again, you can apply more than one rate card to a project but there is always a default one.
You may use more than one if the rates change over the course of the project. You’ll see more about this later on and the reasons why you multiple contracts.
Hover on Save and click Save & Display project.
Your project will be created with all the tasks from the task template.
Set the Project Options to use contract rates
There is one other step you need to do before you can use contracts or rate cards on a project.
Hover on Views and select Options.
There is an option called Use contract rates (if set) on task assignments and time entries by Resource Type/Role or contract default.
This must be checked, in order for the contract rates to be applied.
Check it if it is not checked.
Your systems administrator can set up default project options that are automatically applied to each new project. If you use contracts on the majority of your projects, your system administrator can turn this option on by default so project managers do not have to turn it on each time. This is covered in the Determine Your Best Configuration Options training session.
If you assign multiple resources to a task and those resources perform different roles on that task, then you also want to ensure the option: Enable Resource Type/Role to be set by task assignment is checked. This allows you to set a different Resource Type/Role per resource on the task and therefore different rate. If it is not checked, then you can only set one Resource Type/Role and therefore one rate per task.
Check it if it is not checked.
Click Save.
Set Up Resource Type/Roles on the Tasks
In order to apply rates based on the Resource Type/Role, you must ensure that Resource Type/Roles have been set up for each task.
To do that, first you want to change your task list display to show the Resource Type/Role column.
Click the Display Options icon.
Click on the Column Selection Options section to expand it out if it is not already.
In the Selected Columns, Click on Predecessors, because you want to insert your Resource Type/Role column just before that.
Click on a field in the Available Columns and type R to go directly to the columns starting with R.
Double click on Resource Type/Role.
It now gets moved to the Selected Columns section.
It is very likely that you will use this view again on this project as well as on different projects, so you may want to save the view.
Click the Edit icon on the Quick Selection.
Enter the name of the View, such as Role.
Click on My Default View if you want to make it your default view when adding new projects.
Click the Save icon.
Click the Update Display icon to see the new view.
The Resource Type/Role column now displays for each task.
Click on the arrow next to the summary scope task to expand it out.
You can see the Resource Type/Roles already assigned to each task. These were set in the template so they were automatically brought over into your project and in most cases, you wouldn’t have to change them so this saves you a lot of work.
As the project manager, you will have to ensure that all these roles are correct, so that the correct rates that were set up in the contract will be applied.
Burden and Billable Rates
To see the rates being applied, click on the Resource name assigned to this task.
You can see the Burden Rate. This rate was not set in the contract. It is being pulled from the user’s profile.
You can also see the Bill Rate. This was the rate set in the contract.
Click the X to close the Resource layer.
You can actually see those rates right on your task list view as well.
Click the Display Options icon.
Click on Start Date, 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 fields starting with the letter W.
Scroll down until you see Work Billable Rate, double click on that.
Double click on Work Billable Time.
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.
You can see the Work Billable Rate.
You can also see the Work Billable Time.
The Work Billable Time is the Work Hours multiplied by the Work Billable Rate.
Which is essentially the value of the labor for this task.
You’ll see for the Secure Project Sponsorship task, there is a strange rate listed that we did not set up in the contracts.
Click on the Resources for this task.
You can see that two resources are assigned to the task, each with a different resource type/role.
Each Resource Type/Role has a different rate according to the contract that you assigned.
You are able to set a Resource Type/Role for each resource on the task, because you turned on the setting, Enable Resource Type/Role to be set by task assignment in the project options.
If you didn't enter a Resource Type/Role for each resource or that option wasn’t turned on, it would just use the Resource Type/Role set at the task level to determine the rate to apply.
The average work billable 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.
Click the X to close the Resource Layer.
That average rate is what is showing in the Work Billable Rate when there is more than one Resource with different rates assigned to the task.
You can see how easy that was for the project manager. You didn’t have to worry about rates. All you had to do on the project plan was ensure that the work hours were correct and that the correct resource type/role was assigned to the task.
Project Insight then automatically calculated the Work Billable Time for the task.
The Work Billable Time for each task automatically rolled up to the Summary Task to get you a total for that phase.
Then all the data for each summary task rolls up to give you the Total Billable Time for the project.
This tells you that you should what you should be billing the client for the labor portion of the project.
Updating Rates
This data is displayed in real time so if you change something, it will be updated automatically.
Double click on the white space of the Determine project scope task to go into edit mode.
Click in the drop down for the Resource Type/Role and change it to Sponsor.
Now you may remember that you didn’t set up a billing rate for the Sponsor in the contract.
Hit Enter to save that change.
The Work Billable Rate got changed to $90.
That was because, that was the default billing rate you set up for the contract.
That rate was used because there wasn’t a rate set specifically for the sponsor role.
Double click on the white space of the Determine project scope task to go into edit mode.
Click in the drop down for the Resource Type/Role and change it to Administration.
Hit Enter to save that change.
The Work Billable Rate got changed to $95 because that was the rate you set for that role in the contract.
Of course the rate affects the Work Billable Time, which in turn affects the total for the summary task and the total for the project.
A best practice is to ensure the Resource Type/Roles are always set in your templates.
That reduces the amount of work you have to do when setting up your projects and you will automatically have your planned billable amounts.
More information on billing the client can be found in the Managing Project Budgets for Professional Services and Managing Fixed Price Projects training sessions.
Who Owns Contract
In some circumstances, you may not want to create a specific rate card for a customer.
You may want to just bill them at your standard rates, however, you do want to still record the fact that you are doing the project for a certain customer and you want to still bill them, just at the standard rates instead of specific rates that only apply to them.
You do not have to copy that standard rate card to every customer in order to do that but you will need to change the contract rate to apply at the project level.
Hover on the Edit icon and click Edit Project.
Click on Time, Expense & Billing Information tab.
This is a circumstance where you are going to assign two companies to the project and is the most common reason why you would do that.
You always want to have the Company Default set to the client that you are doing the work for and that you are going to bill for the work.
However, you are going to add in another company, which will be your company because that is where the standard rate card was set up.
Click in the drop down for Companies.
Click on My Company.
Click on the white space anywhere on the form to exit out of the drop down list.
Now you have both your company and the client company assigned to the project.
But the Company default is set to the Company that you are going to bill the work for.
Click in the drop down for Company Contract.
You will now see that not only are the contracts showing for your customer, but they are also showing the standard rate card that you set up against your company.
That’s why you add in more than one company, so you can assign the rate cards or contracts set up for that other company to the project.
That way, you don’t have to make a copy of your standard rate card for every single customer.
Click on My Company – Standard Rates to select it.
Click on Customer 123 – Rate Card for 2015 to remove that.
Click on the white space anywhere on the form to exit out of the drop down list.
Your standard rate card will be used for this project, even though it is a project that you are doing for a customer.
Click Save.
Manually Recalculate
You may notice that the rates haven’t actually changed yet, and they are still showing as the rates set up in the previous rate card.
Project Insight will recalculate automatically those rates in the background. You may just not see it instantaneously, as it may take a few minutes.
However, if you do want to see those changes right away, you can manually do a recalculation.
Hover on Views and select Status
Click on the Budget tab.
Click Calculate Now.
Click the Back icon.
You’ll see the rates are now those set up in the standard rate card.
That new rate is used to calculate new Work Billable Time values both at the task level, summary level, and project total.
Learn the Advanced Rate Flow
If you click on the Resource, you may have noticed that the Burden Rate didn’t change, no matter what you contract or resource type/role was applied.
That burden or cost rate always remained the same.
This was because of the rate flow that was applied.
Basically the rate flow says that if the burden rate was left blank on the contract, which it was, then use the burden rate set in that user’s profile.
That is the most common way that organizations set up burden rates because normally burden rates don’t change. You pay the User a salary or a set amount per hour and their fully loaded burden rate is based on that and other overhead costs.
Set Up Rates Correctly
It is very important that you ensure that you have your billing rates and even your costing rates set correctly before you allow your team member to enter time.
Time entries get stamped with the rate as it was set at the time those entries are made. So even if you later changed what contract was applied, it wouldn’t change those previously entered time entries.
You could still change the rate on them manually if they weren’t approved, but that could be a lot of effort, so make sure you have the rates set correctly before you change the project to an active state and let your team enter time.
More details on that can be found in the Track Your Time and Enter Expenses training session.
Click X to close the Resource layer.
Apply Companies and Contracts to Tasks
Project Insight is very flexible. You could even apply multiple contracts to the same project.
One reason why you may do this, is if a project extends over a year and different rates get applied to tasks in the new year than the previous year.
Even though you applied the contract to the project, that rate card is actually set for each individual task.
To see that, click the Display Options icon.
In the Selected Columns, Click on Predecessors, because you want to insert your new column just before that.
Click on a field in the Available Columns and type C to go directly to the columns starting with the letter C.
Double click on Company Contract Default.
Click Update Display.
Hover on the Company Contract column header and drag it wider.
You can see that the Contract set for every task is the Standard Rates contract.
Hover on the Edit icon and click Edit Project.
Click on Time, Expense & Billing Information.
Click in the drop down for Company Contract.
Click on Customer 123 – Rate Card for 2016 to add that contract..
Click on the white space anywhere on the form to exit out of the drop down list.
Click Save.
Set Up Companies and Contracts at the Task Level
To change the rate card being applied at a task level, click the Edit icon on the task.
Click in the Company Contract Default drop down,
Click on Customer 123 – Rate Card for 2016
Click Save.
The Work Billable rate for that task to use the rate from this rate card instead of the standard one.
If you changed the Company Contract Default applied to the project it would change it for all of the tasks except this one, because you have over-ridden and default and set a specific contract for this task.
Hover on the Edit icon and click Edit Project.
Click on Time, Expense & Billing Information.
Click in the drop down for Company Contract.
Click on Customer 123 – Discounted Rates for 2015 to add that contract.
Click on the white space anywhere on the form to exit out of the drop down list.
Click in the Contract Default dropdown.
Click on Customer 123 – Discounted Rates for 2015 to set that as the default rate.
Click Save.
You can see the contract applied to each task was changed to the new default contract set for the project, except where you manually over-rode that and entered another rate.