Financial Metrics Explained
Understanding how your project financials are calculated helps you make better decisions and communicate clearly with stakeholders.
Revenue
Revenue represents the money you earn (or expect to earn) from the project. How it's calculated depends on your billing type.
Fixed Price Projects
Total value of all deliverables defined for the project.
Revenue recognized when deliverables are marked as invoiced or paid.
Time & Materials Projects
Calculated per team member, summed across all periods.
Only approved timesheet hours contribute to actual revenue.
Cost
Cost represents your internal expense to deliver the project. This is calculated the same way for both billing types.
Per team member, summed across all forecast periods.
Based on approved timesheet entries.
Gross Profit
Gross Profit (GP) shows how much money you're making after covering the direct cost of delivery. This is your primary profitability metric.
Calculated for both planned and actual figures.
What percentage of revenue is profit.
Example
| Metric | Amount |
|---|---|
| Revenue | $100,000 |
| Cost | $65,000 |
| Gross Profit | $35,000 |
| GP Margin | 35% |
Estimate at Completion (EAC)
EAC projects the final financial outcome of your project by combining what's already happened (actuals) with what's still planned (remaining forecast).
This tells you where the project is heading financially.
Quick Reference
| Metric | Fixed Price | Time & Materials |
|---|---|---|
| Planned Revenue | All Deliverables | Forecast × Bill Rate |
| Actual Revenue | Invoiced Deliverables | Approved Hours × Bill Rate |
| Planned Cost | Forecast Hours × Cost Rate | |
| Actual Cost | Approved Hours × Cost Rate | |
| Gross Profit | Revenue − Cost | |
| GP Margin | (GP ÷ Revenue) × 100 | |
| EAC | Actuals + Future Forecast | |