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How costs are worked out
Every money figure in Perspective comes from a few simple ingredients: the rates people are paid and billed at, the equipment and licences a plan uses, the hours planned and the hours actually worked. This page explains how they combine, so you can trust the numbers and fix them when they look wrong.
Money is only shown to people who can see financials: Admin, PMO, PM and C-suite.
The ingredients
Contracts and rates
A person's cost comes from their contract. An Admin sets contracts up under Settings, Contracts:
- Pay type: Hourly or Salaried. A salary is turned into an hourly cost by dividing it by your company's standard working hours in a year.
- Rate history: each rate has a date it applies From, so a pay rise changes costs from that day on and leaves the past alone. Each rate can carry a Bill rate (what an hour of billable time is charged at) and a Standard rate (the list price before any discount).
- Overtime rule (hourly staff only): extra hours over a daily or weekly limit are costed at a multiplier, such as time and a half.
- People on this contract: who it applies to.
A person's own rates, including bill rates, can also be set on the Compensation card on their page.
WARNING
Someone with no contract and no rate costs nothing. Plans warn about this with "no contract/rate, labor not costed". Give everyone who works on plans a contract.
Equipment and licences
Resources are things that cost money: a licence has a cost per unit; equipment has an annual cost, spread across the days it is used. Add them to plans and their cost joins the plan's total.
Planned and actual hours
- Planned hours are what people are booked for on a project's active plans.
- Actual hours come from approved timesheets only. Hours not yet submitted or approved do not count anywhere.
The figures
| Figure | How it is worked out |
|---|---|
| Plan cost | Each person's planned hours each day, times their rate that day, with overtime applied, plus equipment and licences |
| Actual cost | Approved hours, times the person's cost rate on the day they were worked |
| EAC (forecast) | Actual cost so far, plus the cost of the planned work still to come, plus equipment and licences |
| Budget used (top of a project) | Actual cost against the Budget entered on the project |
| Budget (in Cost & forecast) | The cost of the project's active plans |
| Revenue | Approved billable hours, times the person's bill rate |
| Margin | Revenue minus cost |
| Realization | Revenue against what the same hours would earn at the standard rate |
| Utilization | Billable hours against the hours a person has available |
Time is billable when Billable is ticked on the timesheet row, which it is unless someone unticks it.
Why numbers can look wrong
- A plan costs nothing: someone on it has no contract or rate.
- Actuals are lower than expected: some timesheets are not approved yet. The Actuals page shows how many weeks are Awaiting approval.
- The forecast dropped: planned work dated in the past that nobody logged time against is no longer counted as still to come.
- The forecast is below the plan cost even though nothing slipped: actual cost and the forecast are worked out at straight time, while the plan cost includes overtime.
- Two different budgets disagree: the project's own Budget field and the cost of its active plan are separate numbers. Keep them in step when the plan changes.
Where you see it
- Actuals in the left menu: actual hours, revenue, cost, margin, utilization and realization across your projects, and planned against actual for each project.
- A project's Cost & forecast card and its Plan vs Actual card. See Track a running project.
- Financial planning and the Executive portfolio. See Compare portfolio options and plan the budget.