OGantry Project Types

Today we will be explaining the 3 different types of projects available in OGantry and when to use each type of project. The project type impacts how revenue, cost, and margins are calculated and distributed across time and positions.

• Fixed Bid Projects are projects where the client pays a fixed amount for a deliverable. The revenue of these projects does not change based on how much effort there is on the project.

• Time and Materials Projects are projects where the client is billed by the actual hours worked per employee at that employee’s hourly bill rate.

• Monthly Retainer Projects where the client pays a fixed monthly fee for a service and the fee does not change if the effort changes.

For all project types project costs include labor and expenses. Labor costs can be employee(direct), contract or open position. Monthly and daily expenses can be assigned at both the project and position level. Expenses assigned at the position level impact the position margin, projects at the project level impact the project margin.

Summary of how different project types are treated...

	Fixed Bid	T&M	Monthly Retainer
Revenue Treatment	Total is fixed for the life of the project. Distributed based on working days and positions	Total is variable for the life of the project. Calculated based on working days and positions.	Total is fixed for each month of the project. Distributed based on working days and positions
Cost Treatment	Calculated based on number of hours worked in a month using hourly cost and position level expenses.	Calculated based on number of hours worked in a month using hourly cost and position level expenses.	Calculated based on number of hours worked in a month using hourly cost and position level expenses.
Work Exception Impact	Impact cost and revenue recognition (how revenue is split by month)	Impact cost and total revenue	Impact cost and revenue recognition (how revenue is split by month)

Fixed Bid Project Detailed Explanation:

Fixed Bid Projects are projects where the client pays a fixed amount for a deliverable. The revenue of these projects does not change based on how much effort there is on the project.

An example of this would be a client contract for a mobile application with an agreed upon set of features for $3M. If the project runs 2 months or 12, the revenue for this project would not change. The cost and margins would.

Revenue for a fixed bid project is input as a single value for the life of the project. Positions on the project are added and each position has an hourly cost associated with it - either as an input value or pulled from the employee's cost.

How is revenue calculated, split by month and split by person?

Fixed bid project revenue is distributed across months based on the amount of working hours in the month for each position on the project. Changes to time, assigned employee, or allocated hours will impact the distribution of the revenue, but the total revenue of the project will not change unless manually changed at the project level.

Note: You can use fixed bid locks to lock the monthly revenue at the close of each month. This will ensure that any previous months revenue recognition will not be impacted by any changes to the project. Once a month is locked, the remaining project revenue will be redistributed to the unlocked months. For example, if you have a $3M project running from January to October and plan to recognise $500K in January and $500K in February. You January and February, the remaining $2M will redistribute across March through December based on the amount of working hours in each month for each position on the project

How are costs calculated, split by month and split by person?

Fixed bid project costs are calculated based on the amount of working hours in the month for each position on the project. Changes to time, assigned employee, or allocated hours will impact the position and project level costs and the associated margins. .

How do work exceptions affect the revenue and cost calculations?

Work exceptions reduce the cost for the specifically impacted time as the cost for the employee for holiday or other work exception is not assigned as cost to the project. For example, if an employee has work exceptions for 10 out of 20 working days in a month, the cost for that position for that month will be half what it would be for a 20 working day month with no work exceptions.

Time and Materials Projects Detailed Explanation:

Time and Materials Projects are projects where the client is billed by the actual hours worked per employee at that employee’s hourly bill rate. The example mobile project would be billed per month based on the actual work effort for the assigned employees on the project for that month.

How is revenue calculated, split by month and split by person?

The monthly revenue for these projects changes based on the bill rate/s assigned to each position on the project and the number of work hours in the month. Monthly hours are reduced based on holidays and other work exceptions. Changes to time, assigned employee, or allocated hours will impact the revenue and margins.

How are costs calculated, split by month and split by person?

Time & Material project costs are calculated based on the amount of working hours in the month for each position on the project. Changes to time, assigned employee, or allocated hours will impact the position and project level costs.

How do work exceptions affect the revenue and cost calculations?

Work exceptions reduce both the revenue and the cost for the specifically impacted time as the cost for the employee for holiday or other work exception is not assigned as cost to the project. For example, if an employee has work exceptions for 10 out of 20 working days in a month, the revenue and the cost for that position for that month will be half what it would be for a 20 working day month with no work exceptions.

Monthly Retainer Project Detailed Explanation:

Monthly Retainer Projects where the client pays a fixed monthly fee for a service and the fee does not change if the effort changes. An example would be if a client wants to spend $100K per month for a set bandwidth. The revenue would be set at $100K per month and would only change if a manual change is made to each month.

How is revenue calculated, split by month and split by person?

Revenue is initially split based on the monthly retainer amount set at the project level. This can be adjusted at the specific month level if there is a change. Revenue for a specific person in a given month is prorated based on the percent of the hours that person is projected in that month. Ex. if you are projected for 50% of the hours you will be allocated 50% of the revenue.

How are costs calculated, split by month and split by person?

Monthly Retainer project costs are calculated based on the amount of working hours in the month for each position on the project. Changes to time, assigned employee, or allocated hours will impact the position and project level costs.

How do work exceptions affect the revenue and cost calculations?

Work exceptions reduce the cost for the specifically impacted time as the cost for the employee for holiday or other work exception is not assigned as cost to the project. For example, if an employee has work exceptions for 10 out of 20 working days in a month, the cost for that position for that month will be half what it would be for a 20 working day month with no work exceptions.

Questions? Give us a shout at info@ogantry.com