Overview

Let's go over the types of Projects (Client, Internal) and Billing Models (T&M, Fixed Bid, Fixed Retainer, Non-Bill, Investment and Admin) that we support!

Project Types

Within the Financial Settings of each Project, you'll select a Project Type based on whether it is completed on behalf of a Client or as part of normal business operations.  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 on behalf of a specific Client. Offerings of this type are assumed to be Billable, since it's work you're doing for a Client.
• Internal - The Internal Type is intended for any work that's not billable and associated with normal business operations.  This may include regular meetings, internal projects and strategic initiatives - really any Projects that are not attributed to a Client.  They will always be all Cost, no Revenue.

Client Financial Models:

Time & Materials (T&M)

T&M is the most common Financial Model.  It is when the revenue for the offering equals the sum of each Role/Person's Bill Rates based multiplied by Hours worked.

• The bill rate is pulled from the Rate Card but can be overwritten on the project’s Financial Settings page. Create or edit rate cards within Settings > Rate Cards.
• Has an optional budget cap called an NTE (not to exceed), that will bill hours at $0.00 after cap is reached.

T&M Offerings calculate: Hours x Rates = Revenue.

Fixed Bid

Fixed Bid is when the price is a set price that does not change for the duration of the project.  It evenly disperses that Revenue across every Hour of the Offering, ignoring Bill Rates.  Here's how it works:

• All People on your Project will have the same Rate working backwards from the Project Revenue.
• Prior to Sale, this is called a Blended Rate, and can be manually entered, or calculated based on a Rate Card. 
• Once the Project begins by moving to In Progress status, that Revenue becomes static and the Bill Rate applied to each Person changes as Hours change.  We call this the Effective Rate.
• Revenue will never change based on increases/decreases in Hours once a Fixed Bid Project is In Progress* - instead the Effective Rate will change.
• All roles from point of sale should end up with same bill rate; all roles added after point of sale should come in as zero-bill UNLESS offering goal values are updated in Financial Settings.
• Updating planned time will impact previously calculated Effective Rates.

Fixed Bid Projects are effective when selling a contract to deliver X features for Y money. We start with Y money and calculate Rates so that you always hit Y revenue goal.

Fixed Bids are calculated as: Revenue / Hours = Effective Rate.

Fixed Retainer

A Retainer Financial Model is very similar to Fixed Bid - the only difference is that Revenue is attributed to individual Periods (weeks or months) instead of the entire Project:

• Retainers can be either weekly or monthly.
• There is no one Effective Rate for a Retainer - instead each week or month has a different Effective Rate.
• The Revenue in each (week/month) is split evenly across all Hours in that week/month.*

Retainers are best for clients with long-term goals and needs. They essentially buy your time and priority for a set amount of projects over a set timeframe.

Weekly Retainers are calculated as: Weekly Revenue / Weekly Hours = Weekly Effective Rate***

Monthly Retainers are calculated as: Monthly Revenue / Monthly Hours = Monthly Effective Rate***

Non-Billable (Client)

The Non-Billable (Client) Model represents 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. We typically recommend including these in your Billable Utilization, however, you can determine this in Settings > Customization.

Internal Financial Models:

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, such as weekly company meetings.

Where do I find and manage the Billing Model?

The Billing Model is managed by Project Offering, and is visible in the following places:

1. The Listing Page (Sales Pipeline or Active Projects)
2. In the Shaper and Assignments View 
3. On the Project Details Page
4. Under Financial Settings

That last one, Financial Settings, is where you will manage the Financial Models for each Project. It is found on the Project Details Page.  You can find out more through our article on Financial Settings.