Over the years, Financial Models and how they are applied have been an important part of Parallax that we've continued to fine-tune. In 2022, we opend up the ability to assign a Financial Model to an Offering, rather than Project - but due to Project structure, we hadn't been able to offer a method of featuring both Billable (T&M, Fixed Bid, Fixed Retainer, Mixed) and Non-Billable (Internal) Offerings on the same Project.
With this update, we're making the necessary structural changes to make this goal a reality! We've now added a Project Type to Projects - this setting will allow you to differentiate work on behalf of a Client (which may be Billable or Non-Billable) from Internal work (which is always Non-Billable), and revised the Financial Models within these Types in order to more granularly distinguish between different types of Projects.
Lastly, we've through Utilization Customization, we've made inclusion/exclusion of Time Off within Utilization a customizable - so you can decide whether or not you want Time Off to factor into Utilization!
We've added new Project Types to Projects within Parallax! Check out this section to learn more or jump to the following topics:
We've also opened up inclusion/exclusion of Time Off/Holidays from Insights calculations. Check out this section or you can jump to one of these topics:
Within Financial Settings (and when creating a Project), you will now have the ability to select a Type at the Project Level.
This Project Type will then dictate which Financial Models that you can apply to each individual Offering within the Project. The idea is to categorize your Project based on it's overall purpose, allowing you to apply Financial Models that apply.
The Project Types you'll see are:
Client: This Type is exactly what you'd think - it's intended for Projects being completed for a specific Client. Within Client Projects, for each Offering you will still select a Financial Model, but they will now be grouped into two categories:
Billable Financial Models - These are not changing, and will continue to include the T&M, Fixed Bid, Retainer, and Mixed Models. Plans and billable Actuals will continue to be when filtering Insights by both Billable and Total.
(New) Non-Billable Financial Models - These represent things like prospecting or other tasks that are attributed to a Project on behalf of a Client, but for which the work completed is not billable. Plans and Actuals for these Projects will be have a $0.00 Bill Rate applied, thus accruing no Revenue. They are excluding when filtering Insights by Utilization Billable, and included when filtering by Total.
Internal - Formerly a Billing Model, the Internal Type is intended for any work that's not billable and not attributed to any specific Client. This may include regular meetings, internal projects and strategic initiatives - really any Projects that are not attributed to a Client.
Currently, there are two Models - unlike billable Projects, selecting these will not affect how Clients are billed, but instead the purpose of the projects*:
- Investment - These are Internal Project Offerings that are not actively tied to a single Client, but still represent productive work. These are initiatives that improve efficiency, result in updates to process, and otherwise represent productive work.
- Admin - These are Internal Project Offerings that are not tied to any specific outcome, and do not represent productive work. These may be weekly company meetings
*Parallax Tip - If Investment and Admin Offerings are not tracked differently why are they there?
Currently, the Investment and Admin Models exist to help you better categorize how your team is spending time within Internal Projects. While we feel there is inherent value in doing this, know that this also represents framework for upcoming updates, in which we expect to be able to differentiate between Investment and Admin Utilization in a more meaningful way.
How does this affect my current Projects?
For billable Projects, this change represents only an increase in flexibility - so there will be no change to your existing Projects.
All current billable Financial Models still exist and are not changing, they are simply being nested under the Client Project Type. As a result, you will not see any change to your T&M, Fixed Bid, Retainer or Mixed Finanicial Model Offerings, you'll just see the new Non-Billable Model available.
For non-billable Projects, with the Internal Financial model being split in two (Investment and Admin), the Admin Financial Model will be the most accurate representation of how the Internal Financial model was previously used. As a result, all Projects with non-billable Financial Models (Internal) will be migrated to the Internal Project Type, and the Admin Financial Model.
What does this mean for Insights?
The first way this will affect Insights will be your options for filtering across Insights Reports. The Financial Models filter will now include the new Non-Billable, Investment and Admin models, and you can also select All Models of each of the two Client Types (Client and Internal).
If you have any Saved Views that currently use the Internal Financial Model, you may want to update those Views to include both the Admin and Investment model type.
As you start to assign Client Projects to the new Non-Billable Model, you'll see that Revenue Reports will exclude
Revenue > Overview:
Utilization > Overview (Billable):
Since the release of Holidays and Time Off, they have been treated as a reduction in a Person's scheduled availability, rather than the consumption of non-billable Hours. In a nutshell, this meant that for each Hour of Time Off/Holidays added, the maximum availability has historically been reduced - however, we're now making this choice optional.
As an example, let's take Person 1 who is 75% Billable and works a 40h week, and is taking 8h of Time Off.
- In the past, Person 1 would be reduced to 32h of availability (and 24h Billable Capacity).
- Now, you can choose to include Time Off (and Holidays) in Utilization, keeping Person 1 at 40h of availability (and 32h Billable Capacity).
While we still feel that this represents the best way to normalize Utilization based on time present*, we understand the need for flexibility and for Parallax to support multiple ways of looking at Time Off/Holidays. As such, with this release we've made omission/inclusion of both Time Off and Holidays manageable for your Organization within our Settings > Customization page.
*Parallax Tip - Why does Parallax recommend continuing to omit Holidays/Time Off from availability?
Parallax thinks of Time Off and Holidays as representations of Time where your team is not present - rather than as non-billable time that's being logged. By omitting Holidays/Time Off, you normalize your data by not counting the time your team is not present to log either billable or non-billable time. This allows you to set more accurate Utilization, because no matter how many hours they are Available, the same percentage should be spent on Billable Projects.
Consider the example of the previously mentioned Person 1 (with a 40h Schedule and 75% Billable Capacity and 8h Time Off) and pretend they take half-day, during which they are not present:
- When including this Time Off in availability it would mean it is now impossible Billable Capacity of 75% for the week without working the remaining days at 100% Billable (32h). In this situation, the employee must try to catch up the rest of the week, with no time for true non-billable work that may be assigned.
- When excluding this Time Off you normalize your data and get a true measure of how the Person is using their time, while they are present. In this situation, the Person can maintain their 75% Billable Capacity by continuing to spend 6h on billable Projects for the remainder of the week.
As of this release, you'll now see an options under Settings > Customization to for including/omitting Holidays, Time Off or both from Capacity Calculations. You will now be able to determine whether or not Time Off/Holidays are included in availability.
Essentially, by including/excluding Time Off, you change the denominator that Plans/Actuals are divided by to calculate Utilization.
Let's continue to use Person 1 (40h Schedule, 75% Billable Capacity and 8h Time Off) as our example, but also add two Holidays for 16h. Let's say Person 1 then works 12h on Billable Projects and 4h on Non-billable Projects within the week:
- With both Time Off/Holidays omitted:
- Availability is calculated as: 40h - 16h Holidays - 8h Time Off = 16h Available
- Billable Utilization is calculated as: 12h Billable / 16h Available = 75%
- Total Utilization is calculated as: 16h Total / 16h Available = 100%
- Person 1 has reached Billable Capacity of 75% (12h).
- With only Holidays omitted:
- Availability is calculated as: 40h - 16h Holidays = 24h Available
- Billable Utilization is calculated as: 12h Billable / 24h Available = 50%
- Total Utilization is calculated as: 24h Total / 24h Available = 100%
- Person 1 would need to work an additional 6h on Billable Projects to hit Billable Capacity of 75% (of 18h).
- With only Time Off omitted:
- Availability is calculated as: 40h - 8h Holidays = 32h Available
- Billable Utilization is calculated as: 12h Billable / 32h Available = 37.5%
- Total Utilization is calculated as: 32h Total / 32h Available = 100%
- Person 1 would need to work an additional 12h on Billable projects to achieve Billable Capacity 75% (of 24h).
What is staying the same
If you do nothing, then there will be no change with this release. Your Settings > Customization will automatically default to excluding both Time Off and Holidays, which remains the recommneded setting within Parallax.
What does this mean for Insights?
The way Utilzation is calculated within Insights (specifically the denominator used for Utilization) will be affected changed by the inclusion/exclusion of Holidays and Time Off, using the calculations mentioned under What's Changing.
Additionally, if you have Time Off Excluded, we've added an Optional Column to the Utilization > Overview report, in order to more easily view Time Off that's being excluded.