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Question

Why doesn't the Profit % equal the Fee % in the JSR?

Solution

This is related to the parallel question, why is net margin not equal to fee? In short, this is because profit percentage is based on revenue while fee percentage is based on cost.

  • Profit is a percentage of revenue (Net Profit/Revenue).
  • Fee is a percentage of cost (Fixed Fee/Applicable Project Cost).


In the example below, the fee is 10% calculated on labor and expenses.

  • Total Labor and ODC is set up and displayed as a Total Indicator on the JSR report. It is defined in the Cost Report definition.
  • Fee Amount (Actuals calculation method) is 10% of the Total Labor and ODC amount.
  • The formulas for Profit % and Fee % are also defined in the Cost Report definition and use different factors based on revenue or cost.



In the JSR report example:

  • The Fee Factor (10.00%) at the top of the report is derived from the project Accounting tab.
  • The Fee % (10.00%) line item in the report is the result of the calculation from the Cost Report definition. The formula allows the Fee % line on the JSR report to match the percentage in the project setup (Accounting tab).







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