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Earned Revenue Setup

Required Permission
Earned Revenue Setup - You must have the Earned Revenue Setup permission to access this setting.

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

  1. Go to Settings > Earned Revenue Setup
  2. Requires the Earned Revenue Setup permission

How It Works

The Calculation Flow

Step-by-step:

  1. Production Hours: System totals all production time entries for projects in each division
  2. Burdened Payroll: Hours × Burdened Rate
  3. Estimated COGS: Burdened Payroll ÷ (Percent COGS / 100)
  4. Earned Revenue: Est. COGS ÷ ((100 - Est. Margin) / 100)
  5. Month Revenue Estimate: (Earned Revenue ÷ Working Days Elapsed) × Total Working Days

Example Calculation

StepFormulaExample
Hours Worked500 hours
Burdened Rate$45/hour
Burdened Payroll500 × $45$22,500
Percent COGS60%
Est. COGS$22,500 ÷ 0.60$37,500
Est. Direct Margin35%
Earned Revenue$37,500 ÷ 0.65$57,692
Working Days10 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:

  1. Click Customize Divisions button
  2. Check the divisions (opportunity types) you want to track
  3. Click Save

Only selected divisions appear in the configuration table and reports.

Monthly Configuration Table

For each selected division, configure these values monthly:

FieldDescriptionValid Range
Burdened RateHourly labor cost including burden (benefits, taxes, overhead)$0+
Percent COGSLabor costs as a percentage of total Cost of Goods Sold0-100%
Budgeted RevenueTarget revenue for this division this month$0+
Direct Margin OverrideOptional: Override the project-level margin calculation0-100%

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:

  1. Select Month and Year from dropdowns
  2. Click Change Date
  3. Configure values for that month
  4. 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

ColumnDescription
Total Hours WorkedSum of production time entries in the period
# PeopleDistinct employees with time entries
Est. COGS to DateCalculated cost of goods sold
Est. DMEstimated Direct Margin (from projects or override)
Est. Earned RevenueRevenue earned based on work performed
Est. Month RevenueProjected full-month revenue at current pace
Budgeted RevenueYour target from configuration
DifferenceEst. 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:

  1. Review previous month's actual performance
  2. Adjust burdened rate if labor costs changed
  3. Update COGS percentage if job mix changed
  4. 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

  1. Verify divisions are selected in Customize Divisions
  2. Check that configuration exists for the selected month
  3. Confirm production time entries exist for projects in those divisions

Earned Revenue Seems Wrong

  1. Check Percent COGS - this significantly affects calculations
  2. Verify Burdened Rate matches actual costs
  3. 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.