How To Trend Bill Rates For Budget Planning In OpenAir
Trending bill rates will provide you with valuable information for budget planning.
Top Step’s recommendation for bill rate trending is to set up reports and chart views by contract type: hourly contracts, fixed-fee contracts, and overall performance for an overall company or entity view.
Consider all hours worked on the contract, billable and non-billable, to compute an effective bill rate. We have often seen organizations use just billable hours or focus on the definition of a workweek as the limit for effort on a project, which skews the effective bill rate.
Trending bill rates provides input to capacity planning and is a good analysis tool to compare year over year budgets. By trending bill rates by type of offering or engagement, you will have essential data to determine if bill rate increases are warranted.
How
To trend bill rates, define a custom calculation for real-time bill rate reporting by period. Typically bill rate calculations are defined as invoiced totals by total hours. One thing to keep in mind is the type of invoice total being used for trending – using the Total Invoiced value will skew bill rate calculations if expenses are also billed to the customer.
The recommended calculation for bill rate analysis is: Invoices Fees / Timesheet Approved Hours
Timesheet approved hours are important rather than using timesheet all hours since only approved hours may be considered for time billing. Although fixed fee projects do not have this dependency, using a consistent equation across all types of contracts will ensure consistency across reports.
To break bill rates into ‘types’ such as hourly or fixed fee, use a custom field on projects to identify the type of contract funding the customer project. By using report filters on custom calculations, you are able to create a Fixed Fee Bill Rate value and an Hourly Bill Rate value. For an Overall Bill Rate value, simply calculate the bill rate without any contract type filters.
Prepaid projects pose a unique challenge in this approach, as they will inflate the bill rate when including the total prepaid amount. It is recommended these contract types either replace the invoiced amounts with revenue earned amounts for the calculation or be excluded from bill rate trending until the project is closed.
The following four reports are recommended for trending bill rates:
- In Progress Hourly bill rate trending – filtered by active project stages (excluding completed project)
- In Progress Fixed Fee bill rate trending – filtered by active project stages (excluding completed project)
- In Progress Overall bill rate trending – filtered by active project stages (excluding completed project)
- Completed Overall bill rate trending
Dashboard charts can be created to compare trending across the In Progress reports and a single dashboard chart for completed project bill rates.
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