Set up and use percent complete revenue recognition for contracts with projects

Subscription

Contracts

Project Costing and Revenue
Regional availability

  • Australia

  • Canada

  • South Africa

  • United Kingdom

  • United States
User type

Business
Permissions
  • Contract: List, View, Add, Edit, Delete, Post
  • Contract revenue templates: List, View, Add, Edit, Delete
  • Manage Schedules: Run
Configuration
  • Track time by = Project and task OR Customer, project, and task in the Configure Projects page
  • The Contract dimension is enabled in the Configure Projects page
Dependencies
  • The project Billing type must = Fixed fee
  • The project and associated task, if applicable, must be linked to the contract line

In order to use percent complete revenue recognition, a contract must be associated with a project.

Keep the following rules in mind when deciding how you want to link your projects with contracts:

  • The customer associated with the project must be the same customer associated with the contract
  • A project can only be associated with one contract. The project can be associated with one or more contract lines of a particular contract.
    As a project can only be associated with one contract, the child contract in a renewal will not be linked to the project that was linked to the parent. In this scenario, see Extend the project-contract link when a contract is renewed.
  • A contract can be associated with more than one project.
  • For multi-entity only: The project location or entity cannot be blank and is restricted to the location or entity associated with the contract. The project location or entity can be a child of the contract location or entity.
  • For hierarchical projects (where child project invoices with parent project): Associate the parent project with the contract. The Contract field on the parent project and all child projects that invoice with the parent will display the associated contract.

To set up and use percent complete revenue recognition:

  1. Create one or more percent complete revenue templates
  2. Create a fixed-fee project and associated task, as applicable. The project's Billing type must be "Fixed fee" or "Fixed fee and expenses".
  3. Create a contract.
  4. In the contract, create a contract line with Billing method = "Fixed price", specify the project's or task's fixed fee in the Flat/Fixed amount field, select a percent complete revenue template, and associate the contract line with a project and task, as applicable to the template's recognition method. Complete other contract line fields as applicable.

    Revenue schedules based on percent complete templates will not show any scheduled amounts after you create the contract line as they are dependent on the existence of the applicable source data and running Update percent complete schedules in the Manage Revenue and Expense Recognition page as of a valid date.

  5. Do one of the following as applicable to the revenue template's percentage source metric:
    • If the revenue template is based on hours, create timesheets for the applicable time period and associate each timesheet with the project and task, as applicable.
    • If the revenue template is based on Observed percent complete, update the project's or task's Observed percent completed table as of the applicable date.
  6. When it is time to calculate project revenue, go to the Manage Revenue and Expense Recognition page and execute Update percent complete schedules as of the desired date.
    • If the revenue template is based on hours: The system gathers all approved timesheet hours dated on or before the selected As of date, determines the completion percentage, multiplies the percentage against the total contract line Flat/Fixed amount, and then updates the revenue schedule if it finds revenue available to recognize.
    • If the revenue template is based on Observed percent completed: The system multiplies the percentage from the project's or task's Observed percent completed table that has the most recent As of date that is on or before the Update percent complete schedules As of date against the total contract line Flat/Fixed amount, subtracts any previously recognized amount, and then updates the revenue schedule if it finds revenue available to recognize.
  7. When it is time to recognize project revenue, go to the Manage Revenue and Expense Recognition page, execute Preview as of the desired date, and post the desired entries.