Revenue and Cost Management
The Revenue and Cost Management capability supports tracking and controlling engagement costs and monitoring financial performance. 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 Value
- Supports collecting, analyzing, and reporting cost information to effectively budget and monitor project costs.
- Supports tracking actual costs and revenue, forecasts to complete costs, and the ability to compare actual costs against established budgets and forecasts for variance reporting.
We can manage project financial data in a structure that aligns with our organizational financial data model.
We can efficiently track and manage our engagements’ revenue and cost components.
We can quickly adjust budgets as needed to reflect any changes.
Maintain accurate data
Financial plans need to be accurate so appropriate decisions can be made. This includes the original project budget and the ongoing tracking of actuals against the budget. For actual costs and revenue that are not automatically loaded, managers should ensure they are conistently updating the financial plan with the most current information to enable accurate analysis of how projects are performing to plan.
Establish clear cost controls
Cost control is established to ensure engagements stay on track, do not experience cost-overrun, and maximize revenue. After the planning process, opportunities should have accurately defined cost and billing rates to create an expected revenue. During execution, variance tracking of actual costs to plan, having change control established, and any other cost controls in place will allow for easily identifying areas of overspend.
Accurately track labor costs
Labor costs are one of the highest expenses organizations contend with. Organizations can ensure their labor costs are accurate by defining resources as employees or contractors and having specific rates set up by resource type, role, or named individual. Organizations should have a process for allowing rate overrides to be utilized only when needed and correctly tracking the added cost for overtime.
Log time and expenses
Time reporting is the cornerstone of any services organization as it provides the basis for billing customers for work, while logging expenses allows the organization to bill customers for the extra costs created by completing work, such as the travel required to conduct a training event. Capturing and tracking both time and expenses is essential for any services organization to remain profitable.
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. When 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 and the entire portfolio.
Manage revenue and performance
An integrated billing and work strategy enables you to maximize project profit, promote visibility, and drive performance. Managers should keep a close eye on margins and performance, with a strong understanding of guidelines, so they can quickly make decisions on how to adjust when needed.
Re-baseline financial plans
When there is an approved change to a project’s financial plan, save the new plan as the current baseline. Having each change to the plan saved as a separate baseline allows you to see the progress of financial changes, and when looking back, see adjustments during a project’s initial planning to allow for more accurate budgeting.
Monitor financial health
Using the right reporting and dashboards to display the financial health of both individual projects and the overall portfolio can make or break a project if it begins to deviate from the plan. Ensure reports are consistent, accurate, and up to date, ideally in easy-to-understand dashboards, so that organizational leadership can effectively track projects and make decisions.
Processes and Reports
Revenue and cost management supports managing financial information for professional services engagements. As projects progress, their incoming costs and revenue can be compared against their original budgets and remaining effort to ensure they maintain profitability. When paired with the Billing and Revenue Tracking capability, it enables effectively billing engagements.
Revenue and Cost Management Process Steps
|Capture actual costs and revenue||
Update the financial plan with the financial actuals to capture an accurate representation of the project's revenue and expenditure. This information can be used in comparison with the project budget to track variances against estimated profitability.
Labor actual costs and revenue for work items with the Time and Material billing type are automatically rolled up to the financial plan based on predefined resource rates. This information is typically captured from timesheets, but can also be added using the data loader or calculated from manual entries on the schedule. If the work item has a fixed price, the actual revenue will be updated with that value once the work item has been completed.
Non-labor actual costs and revenue must be updated manually in the Financial Planning panel.
For more information:
|Manage project costs and remaining effort||
Ensure the work and financial plans are updated to accurately reflect work items that have been completed in addition to the remaining resource efforts and costs required to deliver the project. This up-to-date information helps managers accurately forecast cost versus revenue and understand financial variances to safeguard the project’s profitability.
For more information:
|Monitor financial performance||
Monitor and compare the budget cost and budget revenue with the actual cost and actual revenue to track the project’s progress and any financial variances. The Project Financial Highlights and Project’s Percentage Complete visualizations can be used to monitor the project’s financial performance and overall profitability.Project financial information can also be analyzed in greater detail by adding relevant financial fields into the Work Plan panel or by creating reports and constructing dashboards. Utilize this data to help make informed decisions and manage exceptions.
Revenue and Cost Management 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.
Professional Services Work Management
View and manage all work details, and report on project status and health.Read more
Manage financial information and performance for professional services engagements.Read more
Billing and Revenue Tracking
Streamline the customer billing process with an integrated ERP system.Read more