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Tasks are created to represent deliverables for the project.   For each task, the start Begin and end End dates and , total labor, and expense cost budgets are set.   It is critical to set each of these attributes because they are used to calculate when and how much of the fixed price revenue is recognized.  Note in the example below there are three deliverables.  Each of the three deliverables is scheduled for subsequent months starting in October 2013. 

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Fixed Price Items

One or many fixed price items may be associated with each task based on the terms of the contract.   These elements are configured to recognize a percentage of the revenue as the task is worked.   The amount recognized at any point in time is calculated as the amount of the fixed price item multiplied by the % Complete of the task.   The % Complete of the task is calculated as the cost incurred for the task divided by the total cost budget for the task.   Costs incurred are calculated from a summation of labor and expense costs.   These costs are derived from timesheets and expense reports for actual costs and labor plans and expense plans for forecasted costs. 

For example, if John Smith’s hourly rate is $50/hour and he works for 10 hours, the total labor cost is calculated as $50 * 10 or $500.   If John Smith also incurs travel costs of $400, the total cost for his labor and expenses is $900.   John may also be forecasted to continue to work on the project for future weeks.   Costs are derived from the labor and expense plans and added to the actual costs to determine future percent complete.  

In the following example, note how the actual costs from the first two weeks of October (blue) are added to the forecasted costs from the last three weeks of the month (yellow) to contribute to the calculation of % Complete.   Assume the total cost budget for the task is $10,700.

 

Actuals from Timesheets and Expense Reports

Forecasts from Labor and Expense Plans

John Smith

Oct 1 – 6

Oct 7 – 13

Oct 14 – 20

Oct 21 – 26

Oct 26 - 31

Hours

32

40

40

40

40

Cost @ $50/hr

$1,600

$2,000

$2,000

$2,000

$2,000

Travel

$100

$300

$200

$100

$400

Total

$1,700

$2,300

$2,200

$2,100

$2,400

% Comp Calc

$1,700/$10,700

$4,000/$10,700

$6,200/$10,700

$8,300/$10,700

$10,700/$10,700

% Complete

16%

37%

58%

78%

100%

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