Revenue forecasting is used to determine the projected revenue a contractor will receive for completing a project or scope of work. The amount of revenue earned compared to the total cost spent determines how much profit and % margin is made. Therefore, understanding projected revenue is critical to determine the profitability and health of a project.
It is often necessary to compare forecasted cost to expected revenue at a cost item level. Within Control, you can view this comparison using the revenue columns available in the CBS. The revenue fields in the CBS auto calculate based on the billing method of each line item or can be overridden by manually entering a revenue forecast.
Pay Item Position Code Column
The Pay Item tab contains a Pay Item Position column that lets you view, sort, and group pay items in a hierarchical manner much like you can in the CBS. This feature lets you expand and collapse pay items by clicking the down-arrow, while also letting you group scopes of work together into a hierarchy.
Adjusting the pay item position code column lets you see the parent-child rollup relationship between pay items, terminal pay items, and the revenue forecast method, in addition to any other price and revenue columns. This lets you see how the values for the child pay items all roll up to its parent pay item, then see the totals at a parent pay item level.
Cost Item Revenue View
It’s important to see forecasted cost and forecasted revenue side by side, in order to compare the costs and revenue on individual cost items as a subtotal of the overall project.
In Control, you can create a custom revenue data block containing six revenue-related columns. Permissions can be established to limit who may view these Revenue columns. You can view this data block within the same view as a forecasted costs data block for a side-by-side comparison.
The Revenue columns can only be populated if the associated cost items have an assigned pay item. In the example below, cost item 1 Job Overhead, does not have a corresponding pay item assignment, therefore the Revenue columns are not populated. The opposite is true for Cost item 2 which has a corresponding pay item assignment.
Cost item revenue calculation by allows as-built
For parent cost items where the allow as-built is not equal to None, where cost or quantities are being tracked, revenue values are now being calculated at the parent cost item level rather than always rolling up children revenue values to the parent. If the costs or quantities are being tracked at the terminal cost items, then those revenue values are calculated at the terminal cost items and roll up to the parent.
