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Planview Customer Success Center

Revenue Planning

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Revenue Planning

The Revenue Planning capability supports the planning and management of financial information connected to projects. Each capability within the Planview Capability Framework has a distinct set of features and functionality, business processes, best practices, and analytics and reports that deliver value to customers in the form of specific business outcomes.

Definition and Business Outcomes

Definition

  • Supports the planning and management of all financial information connected to projects.
  • Includes the mechanism to create high-level estimates and approved or baseline budgets.
  • Provides snapshots of different financial data sets taken at key approval and governance points, enabling a standard for measuring project performance.

Business Value

We can manage project financial data in a structure that aligns with our organizational financial data model.

Business Value

We can forecast the costs and efforts required to deliver projects and their anticipated revenue or benefits.

Best Practices

Plan around the business model

Basing the financial plan on the business models of incoming opportunities helps maximize revenue and minimize costs. Develop clear guidelines on how to plan work to optimize revenue for the business model being used, whether it‘s fixed fee, time and materials, or a different or combined model. This will ensure engagement profitability at the project level and increase visibility into revenue streams at the portfolio level.

Leverage historical data

Your services groups should have data from delivering similar engagements in the past – use this to your advantage as you move forward. Look back at the forecast and actuals of similar projects to see where the most revenue was achieved and where costs deviated, using this information to adjust your project’s forecast and increase the engagement‘s overall margin.

Establish governance

For consistent profitability, services organizations should implement processes to monitor engagement planning at the portfolio or organizational level, including the revenue forecast. Ensure there is a governance checkpoint in place that includes a detailed financial plan. Ideally, this will be an automated report or dashboard from an integrated ecosystem that can also be used to monitor costs and billing when the project is in flight.

Create a single source of truth

Organizations should strive to standardize their financial processes so that the platform becomes the single source of truth for financial tracking, which will help avoid miscommunications, errors, and duplicate work. Once tools are integrated and everyone is using the same processes, you’ll be able to make accurate decisions and understand the financial status of each project across the entire portfolio.

Find the right staffing balance

The right mix of employees and contractors is particularly important for a services organization, as it will enable them to adjust appropriately when demand increases or decreases. Organizations should periodically review this ratio and the related cost to maintain an optimal balance of labor cost savings and peak functionality.

Budget non-labor expenses

In addition to labor costs, the financial plan should also account for non-labor costs such as material and supplies, travel, hardware, and software. Having pre-established categories for these costs and detailing these categories as part of the revenue planning process, along with when actuals come in, will allow for accurate planning of all project costs and the subsequent billing of expenses.

Keep resource rates up to date

Resource rates will change over time, and those changes can have a significant impact on financial planning and revenue. Understanding when resource rates are adjusted, how that’s communicated to project managers, and how it will impact financial plans is critical for engagement margins. Ensure there is a plan for updating and communicating changes to both cost and billing rates.

 

Processes and Reports

Revenue planning conceptual image.png

Revenue planning supports the planning and management of financial information for professional services engagements. Different sets of financial data can be managed at key approval and governance points, providing a standard for measuring performance, including the creation of high-level estimates and baseline budgets. When paired with the Revenue and Cost Management capability, it allows for detailed planned reporting versus actual variance reporting.

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Revenue Planning Process Steps

           

AdaptiveWork - Revenue Planning process flow.png

Revenue planning process flow

Process Step Description
Choose billing type

Choose the type of billing the project will use. The project’s Billing Type will be used to create the budgeted revenue, which can be calculated in three ways:

  • The Fixed Price or Fixed Priced Milestones type calculates revenue based on the value of the tasks, milestones, or projects.
  • The Time and Materials type calculates revenue from the combination of assigned hours and resource billing rates.
  • The Mixed type uses a combination of work items and resource rates to calculate revenue.

For non-billable projects, budgeted cost and expected revenue can be manually updated in the finance section of the project’s Properties card.

For more information:
Manage budget for labor resources

Plan resource costs and revenue by assigning resources to billable tasks with planned hours. This process typically takes place as project managers create their work breakdown structure. If the project uses fixed prices for billing, the value of the project or milestones should be set in the Fixed Price field. A value for Fixed Cost may also be added.

Use the Financial Planning panel to view the Budget Revenue and Budget Cost columns for labor. These columns automatically calculate the cost and billing rates for the hours resources are assigned on active work items, along with any fixed costs or revenue. Ensure the work schedule captures hours assigned to resources and that work item value and resource rates are accurately set.

For more information:

Enter budget for non-labor resources

Enter the budget for the non-labor resource costs required to deliver the work into the Financial Planning panel. Revenue or benefits from non-labor resources may also be added.

All updates to non-labor resources must be manually entered into their corresponding columns.

For more information:
Assess overall budget

Assess the overall project budget using the Financial Planning panel for a time-phased summary, which includes costs and revenue for both labor and non-labor resources. When the project budget is finalized, it may be assigned to a reviewing authority.

For more information:

                      

           

Revenue Planning Reports

There are several standard financial reports in the report library. These can be run with specific filters to see the appropriate financial information. See Financial Planning Report Examples and Timephase Financial Data in Reports and Dashboards for more information.

Additional reports and dashboards can be created by the administrator and shared with the organization and appropriate team members.

           

Related Capabilities

Supported Solutions