Revenue Groups Overview

For projects that are part of a group or contract, you can use revenue groups to recognize revenue at the overall group (contract) level, rather than as the sum of its lowest WBS parts.

This complies with generally accepted accounting principles.

When you use Revenue Generation, a project's job-to-date (JTD) revenue is calculated as the sum of the revenue that is calculated at the project's lowest work breakdown structure (WBS) level. For example, if a project has phases and tasks, the project's revenue is calculated as the sum of the revenue that is calculated for each of its tasks.

When you run Revenue Generation, revenue is calculated as follows for revenue groups:

  1. Revenue is calculated for each subproject in a revenue group and summed together for a group total.

  2. Revenue is calculated for the overall group of projects, based on a revenue method set up at the revenue group (contract) level.

  3. The two revenue amounts are compared, and the difference is posted to an adjustment phase or task for the revenue group.

    The adjustment ensures that the revenue that is calculated by summing revenue for the subprojects is made equal to the overall revenue amount calculated at the revenue group (contract) level.

When you enable the Revenue Groups feature, for individual projects (that are not part of a revenue group), you also have the option to do an additional calculation for revenue at the project level, similar to the revenue group calculation. The sum of the revenue that is calculated at a project's lowest WBS level is compared with the overall revenue that is calculated at the project level, and any difference is posted to an adjustment phase or task.

The additional revenue calculation for individual projects is similar to using Revenue Generation's overall revenue upset limits. Upset limits allow you to set a maximum limit that the revenue calculation cannot exceed, and any excess is posted to an adjustment phase or task. The fixed limit amount is comprised of any combination of the project's compensation, consultant fee, and reimbursable allowance. Whereas with the additional revenue calculation, the overall project revenue amount that is used for the comparison and adjustment is derived using a revenue method specified at the project level.

Enable the Revenue Groups Feature

To enable the Revenue Groups feature, select the Enable additional revenue calculations at Project and group levels check box on the Revenue tab in Configuration > Accounting > Company Settings.

This setting enables the Revenue Groups menu item in Accounting > Revenue.

Set Up Revenue Groups

For each revenue group, you assign:

  • A main project with which to identify the revenue group.

  • A revenue method and optional multiplier or amount by which to calculate revenue for the overall revenue group (contract).

  • Subprojects that make up the revenue group.

  • An adjustment phase or task to receive postings for the difference between the sum of the revenue that is calculated for each subproject and the revenue that is calculated for the overall revenue group.

Set Up Revenue Methods for Subproject in Revenue Groups

You set up the revenue method by which Vision calculates revenue for each subproject, as you normally do for any project, on the Budget & Revenue tab of the Project Info Center.

Set Up Revenue Methods with which Individual Projects Calculate Additional Revenue

For individual projects (that are not part of revenue groups), if you want to do an additional revenue calculation to compare the overall project's revenue with the sum of its lowest WBS parts, you select the Calculation option in the Overall Revenue field on the on the Budget & Revenue tab of the Project Info Center at the project level for these projects. On this tab you also enter a revenue method for the project. When you run Revenue Generation, any difference between the revenue that is calculated for the overall project and the sum of its parts is posted to an adjustment phase or task.

The following is an example in which the sum of the revenue for the tasks may not match the revenue that is calculated at the project level, and the difference is posted to an adjustment task: You use revenue method P (Percent Complete + Job-to-date Reimbursable Expenses @ Cost Rates) at the project level and revenue method W (Job-to-date Billings + Work-in-Progress (WIP) @ Billing Rates) at the task level.

Revenue Generation Example

The following is an example of the calculation for a revenue group when you run Revenue Generation:

Revenue Group XYZ.00 has two subprojects, XYZ.01 and XYZ.02, to which labor and expenses are posted.

When you run Revenue Generation for XYZ.01 and XYZ.02:

  1. Job-to-date revenue for subproject XYZ.01 is calculated as $5,000 and for subproject XYZ.02, it is $7,000 — for a total of $12,000.

  2. Because the projects belong to a revenue group, Vision calculates job-to-date revenue at the overall group (contract) level, which results in an overall revenue calculation of $10,000.

  3. Vision posts an adjustment of -$2,000 to the adjustment phase, which results in total job-to-date revenue of $10,000.

Multicompany

When you use Vision's Multicompany feature, you must run Revenue Generation separately for each company in your enterprise. If you have revenue groups with subprojects that belong to different companies, you must run Revenue Generation for all subprojects in a revenue group. If a subproject is omitted, the amount that is posted to the adjustment phase or task may be inaccurate until you run Revenue Generation for the missing subprojects.

Multicurrency

If you use the Multicurrency feature, all the projects in a revenue group must have the same currency.

Parent topic: Revenue Generation Overview