Earned Revenue Setup
Configure monthly revenue targets and cost parameters for tracking earned revenue by division.
Overview
Earned Revenue Setup allows you to configure monthly budgets and cost parameters for each division (opportunity type). The system calculates earned revenue based on actual production labor hours tracked against projects, helping you understand revenue performance against monthly targets.
The earned revenue calculation uses a cost-based approach: production hours worked are converted to estimated costs, which are then converted to estimated revenue using your configured margin rates.
Accessing This Setting
- Go to Settings > Earned Revenue Setup
- Requires the Earned Revenue Setup permission
How It Works
The Calculation Flow
Step-by-step:
- Production Hours: System totals all production time entries for projects in each division
- Burdened Payroll:
Hours × Burdened Rate - Estimated COGS:
Burdened Payroll ÷ (Percent COGS / 100) - Earned Revenue:
Est. COGS ÷ ((100 - Est. Margin) / 100) - Month Revenue Estimate:
(Earned Revenue ÷ Working Days Elapsed) × Total Working Days
Example Calculation
| Step | Formula | Example |
|---|---|---|
| Hours Worked | — | 500 hours |
| Burdened Rate | — | $45/hour |
| Burdened Payroll | 500 × $45 | $22,500 |
| Percent COGS | — | 60% |
| Est. COGS | $22,500 ÷ 0.60 | $37,500 |
| Est. Direct Margin | — | 35% |
| Earned Revenue | $37,500 ÷ 0.65 | $57,692 |
| Working Days | 10 elapsed / 22 total | — |
| Month Revenue Est. | ($57,692 ÷ 10) × 22 | $126,923 |
Configuration Settings
Initial Setup Workflow
Selecting Divisions
Before configuring rates, select which divisions to include:
- Click Customize Divisions button
- Check the divisions (opportunity types) you want to track
- Click Save
Only selected divisions appear in the configuration table and reports.
Monthly Configuration Table
For each selected division, configure these values monthly:
| Field | Description | Valid Range |
|---|---|---|
| Burdened Rate | Hourly labor cost including burden (benefits, taxes, overhead) | $0+ |
| Percent COGS | Labor costs as a percentage of total Cost of Goods Sold | 0-100% |
| Budgeted Revenue | Target revenue for this division this month | $0+ |
| Direct Margin Override | Optional: Override the project-level margin calculation | 0-100% |
Understanding Each Setting
Burdened Rate ($)
The fully-loaded hourly cost of production labor, including:
- Base wages
- Payroll taxes
- Benefits
- Workers' compensation
- Overhead allocation
Example: If average hourly wage is $25 and burden adds 80%, burdened rate = $45.
Percent COGS (%)
What percentage of total job costs does burdened labor represent?
- Higher values (e.g., 70-80%): Labor-intensive work where materials are a small portion
- Lower values (e.g., 40-50%): Material-heavy work where labor is a smaller portion
This converts labor costs back to total estimated COGS.
Budgeted Revenue ($)
Your target revenue for this division this month. Used to calculate the Difference column in reports (Actual vs. Budget).
Direct Margin Override (%)
By default, the system uses the average margin from all projects in the division. Set this to use a fixed margin instead.
When to use:
- When project-level margins are unreliable
- When you want to apply a standard margin across all divisions
- When analyzing "what-if" scenarios
Changing the Month
Configuration is stored per month. To view or edit a different month:
- Select Month and Year from dropdowns
- Click Change Date
- Configure values for that month
- Click Submit to save
Previous months' configurations are preserved and can be viewed/edited at any time.
Earned Revenue Report
View calculated results in Reports > General > Earned Revenue.
Report Columns
| Column | Description |
|---|---|
| Total Hours Worked | Sum of production time entries in the period |
| # People | Distinct employees with time entries |
| Est. COGS to Date | Calculated cost of goods sold |
| Est. DM | Estimated Direct Margin (from projects or override) |
| Est. Earned Revenue | Revenue earned based on work performed |
| Est. Month Revenue | Projected full-month revenue at current pace |
| Budgeted Revenue | Your target from configuration |
| Difference | Est. Month Revenue − Budgeted Revenue |
Report Filters
- Month/Year: Select the period to analyze
- Project Manager: Filter to projects managed by a specific user
Export
Click Export to CSV to download report data for further analysis.
Data Sources
The report pulls from multiple data sources to calculate earned revenue:
Specific data used:
- Time Entries: Production time entries (
type = 'production') from the selected period - Projects: Project data including margin, opportunity type, and project manager
- Configuration: Your saved burdened rate, percent COGS, and budgeted revenue
Tips for Accurate Reporting
Monthly Review Cycle
Set Up Before Month Starts
Configure next month's values before it begins:
- Review previous month's actual performance
- Adjust burdened rate if labor costs changed
- Update COGS percentage if job mix changed
- Set realistic budget targets
Keep Burdened Rate Current
Review quarterly:
- Annual raises affect base wages
- Benefits changes affect burden
- New hires at different rates affect average
Validate Percent COGS
If earned revenue seems too high or low:
- Pull actual job cost reports
- Calculate what percentage labor actually represents
- Adjust percent COGS accordingly
Use Margin Override Carefully
The default behavior (averaging project margins) is usually more accurate. Override only when:
- Project margins are known to be incorrect
- You're modeling a specific scenario
- Early in month when few projects have data
Troubleshooting
No Data in Report
- Verify divisions are selected in Customize Divisions
- Check that configuration exists for the selected month
- Confirm production time entries exist for projects in those divisions
Earned Revenue Seems Wrong
- Check Percent COGS - this significantly affects calculations
- Verify Burdened Rate matches actual costs
- Review if Direct Margin Override is set when it shouldn't be
Working Days Calculation
The system counts Monday-Friday as working days. It does not account for:
- Company holidays
- Partial month starts/ends for projects
If viewing current month, calculations use working days through yesterday.