Margins

To view a deliverable’s margin data and statistics, click it’s margin gauge:

margin of a deliverable

The information that displays includes the following:

number one red circle sm

The calculated activity, or other costs, such as external services

number two red circle sm

The calculated margin

number three red circle sm

The actual margin

number four red circle sm

The margin forecast

margin gauge

The percentage value displayed in the deliverable’s margin gauge can be based on the deliverable’s actual margin or on its margin forecast. By default it displays the actual margin. To change this, do the following:

  1. Go to the back office and open the Project settings page.

    You must have the Support staff role in order to access the back office.
  2. Located the Margin indicators are based on section.

  3. Select the appropriate check box and then scroll down and click Save.

Calculated margin

The calculated margin (letter c red circle) is calculated depending on the invoicing method:

  • Time & Material: The total amount of calculated costs divided by the calculated sales (letter a red circle).

  • Fixed Price: The total amount of calculated costs divided by the total value of the invoicing schedule plus the amounts from manually created invoices(letter a red circle).

  • Subscription: The total amount of calculated costs divided by the order value of the deliverable (letter a red circle).

Calculated costs (letter b red circle) are based on the calculated activities of the deliverable. In this example there are two activities calculated:

Activity Calculated cost rate Hours calculated Costs

Developing

$100

200

$20,000

Design

$90

100

$9,000

Total costs

$29,000

The calculated cost (letter d red circle) of an activity is displayed beneath the activity.

Actual margin

A deliverable’s actual margin is based on its actual costs and actual sales.

Actual costs

Actual costs are based on all hours spent on the deliverable. The total number of hours spent is multiplied by the cost rate of the employee who submitted the spent hours.

The following example shows how the actual costs are calculated. In this situation, two employees tracked time on a fixed price deliverable:

Employee Cost rate employee Activity Hours spent Costs

Mikey Johnson

$90

Developing

32

$2,880

William Smith

$100

Design

12

$1.200

Total costs

$4,080

Actual sales

Since the revenue for fixed price deliverables is based on the invoice schedule, the total amount of all the billing periods is used to calculate the actual sales. If someone created an invoice manually, that invoice amount will also be added to the total.

To have a realistic actual sales value, VOGSY calculates the actual margin in proportion. How to determine the proportion can be configured in the Project settings.

There are three options to choose from:

  • Schedule: The percentage of the schedule is used. For example: If 25% of the time is passed, 25% of the total amount of the invoice schedule will be used.

  • Budget: The percentage of budget spent is used. For example: when 30% of the budget is used, 30% of the total amount of the invoice schedule is used for calculating the actual margin.

  • Completion: The percentage of completion determines the actual sales. The completion can be set manually by tapping on the completion indicator. When the deliverable has a completion percentage of 75%, the actual sales will be 75% of the total amount of the invoice schedule.

    The default setting is Completion.

Based on the above example this would be the calculation of the actual margin, when the total amount of the invoicing schedule is $37,500 and the completion is 15%:

Actual costs

Hours spent x cost rate employee

$4,080

Actual sales

Invoicing schedule ($37,500) x Completion (15%)

$5,625

Actual margin ($)

Actual sales - Actual costs

$1,545

Actual margin (%)

Actual margin ($) / Actual sales

27.5%

Margin forecast

Forecasted margins are a snapshot of your project’s financial future. They are calculated based on the invoicing method of the project’s deliverables as well as the amount of hours that have been worked by all resources associated with the deliverable. This calculation offers a full view of your project’s potential income and expenses, giving you a clear financial forecast.

Time and Materials deliverables

The margin forecast for Time and Materials projects is calculated in the following manner: Forecasted sales - Forecasted costs.

  1. Forecasted sales is calculated by adding the following:

    • Planned hours

    • Submitted hours for the current week

    • Approved hours

      Planned hours

      $8000

      Submitted hours

      $5000

      Approved hours

      $7000

      Forecasted sales

      $20000

      These amounts are based on the sales rates of the activity calculations.

  2. The same hours used to calculate the forecasted sales are also used to calculate the forecasted costs, except the cost rates of the assigned resources are used.

    Planned hours

    $5000

    Submitted hours

    $3125

    Approved hours

    $4375

    Forecasted costs

    $12500

  3. The difference between the forecasted sales and the forecasted costs is the margin forecast.

    Forecasted sales

    $20000

    Forecasted costs

    $12500

    Margin forecast

    $7500

  4. The margin forecast percentage is calculated by dividing the forecasted sales into the margin forecast.

    Margin forecast

    $7500

    Forecasted sales

    $20000

    Margin forecast percentage

    37.5%

Fixed price projects

The margin forecast for fixed price projects is calculated in the following manner: Forecasted sales - Forecasted costs.

  1. The forecasted sales is derived from the project’s invoice schedule:

    invoice schedule
  2. To calculate the forecasted costs, the following hours are used:

    • Planned hours

    • Submitted hours for the current week

    • Approved hours

      Planned hours

      $500

      Submitted hours

      $1000

      Approved hours

      $1000

      Forecasted costs

      $2500

      These amounts are based on the cost rates of the assigned resources.

  3. The difference between the forecasted sales and the forecasted costs is the margin forecast.

    Forecasted sales

    $5000

    Costs

    $2500

    Margin forecast

    $2500

  4. The margin forecast percentage is calculated by dividing the forecasted sales into the margin forecast.

    Margin forecast

    $2500

    Forecasted sales

    $5000

    Margin forecast percentage

    50%