Fixed Fee Projects
Purpose
Revenue from a fixed fee project is a challenge to capture because of its irregular nature. You estimate the price of a project over a set number of months, but the length of the project may be a guess. When a project is invoiced may not reflect when work is done by your engineers. MSPCFO helps to best represent this revenue stream vs. work done by setting algorithms to smooth out the monthly postings. In the Options Table under Time Logs a global smoothing calculation can be set for a Fixed Fee Project Discount. For a more thorough review of how MSPCFO handles Fixed Fee Projects, go to the Training & Report Videos / Webinar on Fixed Fee Projects.
When does a project start and end?
In MSPCFO, all labor needs to be included for the purpose of reporting on the revenue and costs for a project. For an Actual Rate (AR) project billing depends on the time that the engineer work on the project so revenue, costs and billing can go on until all work is done. For Fixed Fee (FF) projects, costs must include all time spent on the project. Therefore, it is important that the month the project commences and the month the final work is done are accurate.
When a project is started, a Start Month and an Estimated End Date are entered into the PSA (MSPCFO looks at the month, not the specific day). The Start Date is usually accurate, but because FF Projects can be irregular in their timing, the Estimated End Date can be inaccurate. When the project closes, there is also a Close Date in the PSA.
MSPCFO looks at either the Estimated End Date, the Close Date, or allows the MSP to put in a Date End Override in this table.
Most projects start in the month designated by the PSA Date Start and end in either the PSA Estimated End Date OR the PSA Close Date. Work can be done after this date. If work is done after the Estimated End Date and the PSA Close Date, MSPCFO allows a free-form date to be added in this table. MSPCFO uses the date being used to act as a 'true up month'.
Filters
To edit any of the projects in the list, click on the Edit button which will turn green (highlighted in yellow below).
The filters for the report allow you to look at all projects filtered by the following criteria:
1. All project that have an Open Date or Close Date greater than or equal to the month set in the Min Month filter.
2. The Min Month to include.
3. Select certain Project Types/Categories. If not set, all project types is the default.
4. Only Show Open Projects from your PSA (the filter looks at any project from the PSA without a Close Date).
5. View only projects that appear on the Health Check list (i.e. any project where work is being done after the Estimated End Date or Close Date from the PSA or the date chosen as an override date -- the system uses the month, not the day). This filter is valuable when you want to edit the projects that use a premature date to true-up the project.
6. Only show projects that are Opened in the PSA or Closed in the PSA. The default shows both.
If any changes are made, be sure to click Filter.
Table
To Extend Start Date or End Date
The projects listed are the ones that begin or end (depending on your filter) in the Min Month or after. MSPCFO looks at the labor between the Date Start (month only) and the PSA Date End (estimated end date or close date in your PSA). Projects are so irregular that the following exceptions have been built in. The settings are included in the Lookup/Options table:
1. If revenue or time is taken before the Date Start for a project and should be included, there is an override in the Lookup/Options table to "consider work done before project starts".
2. MSPs may have started with using Estimated End Date from the PSA. The Use Date Closed as End Date on New Projects will switch all newly started projects going forward to the default of using the PSA Close Date. (Note: The option is relevant for users of the Bonus module in MSPCFO. Changing the end date for existing projects may modify previous months for both project revenue and member attributed revenue.)
The last month or 'true up month' can always be later than the last month worked, close month, or estimated end date. The reports will tally the end of the project at a later date.
If an override is put in MSPCFO, nothing is changed in your PSA.
For projects that end in the current month, all work and invoices may not be posted until the end of the month. Therefore, it is good to wait until the end of the month to make sure all of the relavent information has been included.
If your company invoices part of the project after the end month (true-up month), it will show up in the end month after the invoice is sent so the values for this end month will change.
Five fields in the Projects table can be used to customize a specific project:
1. Discount: In the Options table, under Lookup/Options/Time logs/Fixed Fee Project Discount, each month prior to the end month of the project, revenue is calculated by taking a % discount of the Shadow Billable for members who worked on the project during the month. This discount is a general discount for all projects. In the Discount column in this report, the % can be overriden for a specific project. When the discount defaults to the standard discount that was set up in the Options table, the Discount Type (1) is set to Company. If you override the Discount for a specific project, the Discount Type changes to Project.
2. Hard Cap: Revenue is accrued for a project during all months before the project end month. A cap can be put on the accrued revenue in the column Hard Cap (3). This allows for a project with no revenue (ie. On-boarding) or projects that have significantly less revenue than the work that is put into them to stop the attributed revenue earlier in the project so that there is a smaller reversal in the last month.
3. Labor Revenue Offset: If the full value of the project should not be attributed to your members (i.e. an outside contractor was doing the work), you can offset the labor by a fixed dollar amount. This will give less attributed revenue to the members working on the project. It will only effect member attributed revenue. Project revenue will not be altered.
4. Use Date Closed: If the default senting for your company uses estimated end date, the column will be set to NO. You can override and use the close date on a single project basis. If the default setting for your company uses close date, then this will already be set to YES.
5. Date End Override: You can enter any end month in this column and it will override any other end date.
You can sort the table by most of the columns. To sort the table, click on the arrows in the column (highlighted in yellow). The column with an arrow in one direction is the sorted field either high-to-low (down arrow) or low-to-high (up arrow). In the example below, the table is sorted by Client name (highlighted in yellow).
Another example of using a sort - To see all projects that have not been invoiced, sort on Invoiced Labor, low to high. The first part of the list will be all projects with no current invoiced labor.
All changes to the table will take effect on the next calculation of your data.
Project Type Discounts
As described above, an overall discount on the engineers shadow billable is applied each month for all projects. The discount is set up in the Lookup/Options table. In this table on each project line, the discount can be overriden on an individual project. In the bottom Project Type Discounts portion, overrides can be put in on a project category basis.
In the example below, Project Type 10 will only give the engineers 50% revenue of their shadow billable each interim month instead of the default 25%.
You can see the change in the main table if you refresh the screen. All of the projects in Project Type 10 have a 50% discount. The standard 25% discount has not changed for other Project Types.
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