Project Costs

Main driver in project profitability

Assessment debit

What is included in a plan?

Fee and passthrough Revenue. Labour hours and cost by role and location. Paasthrough and non-passthrough cash cost by type

What Concur is?

SAP expense management

EAC Acronym

Estimate at completion

EAC meaning

Actual + plan

WIP Acronym

Work in progress

WIP explain

can only be booked on projects that are "In Hand", so don't just chase paperwork where revenue will be recognized

Accruals

Costs that have been artificially put into your P&L

How to accrue 3rd party cost

If third party did the job, the invoice was accepted but money has not been paid, we want to put the cost into the current period. We do not want to put them in the later period, if we have benefited in the current period.

Which software should be used to automatically accrue 3rd part costs

COUPA

WIP in single words

We have incurred a cost, but we have not yet benefitted from this cost

WIP vs Accruals

WIP - cost are put into P&L, because we are recognising revenue in this period. WIP, costs are deffered, because Revenue will be recognized in a later period.

If we want to recognize costs in a future period, what do we do with this in the current period?

We book that as WIP

Biggest item that is eroding project margin

unplanned extensions

What project extension usually mean?

More hours. Duration extends

What can we do to solve problem with

release team, charge client if he causes that

What is the second biggest cause of Margin erosion?

Resource Mix

Resource Mix

Cost of people is higher than initially planned. Maybe quality of the product is too low and team has to spend more hours to fix those problems.