In Next Project, the calculations for Progressive Profit Recognition (PPR) are presented in the Project Overview module. For a description of the Project Overview, refer to a separate article.
Depending on the type of business conducted, Next Project can be set up (configured) in various ways. Together with how the tool is used, it affects how the amounts are presented. If you are unsure, contact Next Support for assistance.
Underlying Settings – All Projects
The calculation of SVA for ongoing and fixed-price projects occurs differently. Therefore, it is crucial that underlying settings are correctly configured.
Under the Administration - Settings - Types - Form of Compensation tab, compensation forms must be correctly marked as fixed price or ongoing.
PPR for Fixed-Price Projects
Basic Conditions
The project must be correctly marked with a compensation form calculated as a fixed price.
The project must have a budget or forecast specified.
PPR is primarily calculated based on the forecast and, secondarily, based on the budget (if there is no forecast).
Note: If there is no forecast or budget, PPR is calculated as if the project is on an ongoing basis, regardless of the specified compensation form.
Items for own cars, machinery, own materials, etc., should be correctly set up in the Price Lists with an estimated cost.
Reported hours should be correctly set up in Hourly Rates with an estimated cost.
Calculation of PPR for Fixed-Price Projects
For fixed-price projects, the column "Chargeable" or "Chargeable Period" is used. The value in this column shows the Earned revenue - booked revenue for the current period. This represents what is booked as ongoing work or accrued revenue at the current time (usually monthly or yearly closing).
Booked revenues in the Project Overview correspond to the registered revenues on the project.
The earned revenue is calculated as follows: Completion percentage * SLP revenue or Budget revenue.
The completion percentage is calculated as follows: Booked costs / SLP cost or Budget cost.
(The earned revenue can also be calculated based on SLP TG%: Earned revenue = Booked cost divided by (1 minus the forecast or budget TG%).)
Example - Entire Lifespan of Fixed-Price Projects
The following excerpt has been taken from the project overview as an example. The chargeable amount has been calculated as follows:
Completion Percentage: 68,000 / 80,000 = 85%
Earned Revenue: 110,000 * 85% = 93,500
Chargeable: 93,500 - 70,000 = 23,500
The example shows that the project has more earned than what has been billed. According to PPR, this should be adjusted according to the description above.
Note that the current project does not have a forecast. This can be observed as the columns for SLP Revenue and SLP Cost do not have any values. Therefore, the system's calculation automatically relies on budgeted revenues and costs.
Useful Columns for the Entire Lifespan of Fixed-Price Projects
Project Number
Project Name
Customer Name
Project Status
Compensation Form
Project Start
Project End
Budget Revenue
SLP Revenue
Total Booked Revenue
Budget Cost
Current forecast Cost
Total Booked Cost
Forecast Period Date (if the forecast module is used)
Earned Revenue
Chargeable
Budget and forecast columns are important as they show if there is a budget or forecast on the project and until which date the forecast is made. Therefore, the system treats this project as if the compensation form is ongoing. The rule is, therefore, that a budget or forecast must exist for the system's fixed-price project calculation to be performed correctly.
Example Fixed-Price Project - Period
Details for a specific period are sorted by activating the interval filter. In Next Project, it is a requirement to specify both a start and an end date for the interval to be valid. Therefore, it is not possible to leave one of the fields empty.
Columns for Booked, Earned, etc., which do not have a name including "period," continue to show the project's total sums. They are not affected by the specified period in the interval filter.
To see values for the current period, view columns that have "period" indicated in the name. The values in these columns are the same as before but for the current period. For example, if the Chargeable Period column shows a negative value, it means that the billed amount exceeds the earned amount for the current period.
Useful Columns for a Certain Period
Project Number
Project Name
Customer Name
Project Status
Status Period
Form of compensation
Project Start
Project End
Budget Revenue
Current forecast revenue
Booked Revenue Period
Budget Cost
Current forecast cost
Booked Cost Period
Forecast period date (if the forecast module is used)
Earned Revenue Period
Chargeable Period
Costs Exceeding Budget/Forecast
If the costs in the outcome exceed the budget/forecast, the earned revenue will be the entire budgeted/forecasted amount.
The coverage percentage in the project overview will not be as budgeted/forecasted but will be calculated using the actual outcome costs with the specified revenue. This means that as long as the cost is lower than the revenue, the coverage percentage will slowly decrease to 0%.
When costs exceed revenue, the coverage percentage will become negative. When a project turns into a loss project, according to practice, the entire loss must be reserved immediately, and profit recognition can no longer occur in Next Project.
PPR for Ongoing Projects
Basic Conditions
The project must be correctly marked with a compensation form calculated as running cost.
Items for own cars, machinery, own materials, etc., should be correctly set up in the Price Lists considering chargeable cost and price to the customer.
Reported hours should be correctly set up in Hourly Rates considering chargeable cost and price to the customer.
The project's supplier invoices must have the correct markup.
Calculation of PPR for Ongoing Projects
For running cost projects, the use of the "Earned Not Invoiced" column is recommended. The value in this column shows the sum of not invoiced, chargeable order lines, hours, and costs, including markup.
(In cases where no corrections have been made in the customer invoices of the projects, the "Chargeable" column shows the same amount as "Earned Not Invoiced." If there is a risk that corrections have been made in customer invoices, the "Earned Not Invoiced" column should be used.)
Useful Columns Tips for the Entire Lifespan of Ongoing Projects
Project Number
Project Name
Form of compensation
Project End
Project Status
Booked Cost
Earned Revenue
Current CM
Useful Columns Tips for a Certain Period
Project Number
Project Name
Form of compensation
Project End
Project Status
Booked Cost Period
Earned Revenue Period
Current CM Period
Ongoing List
A list of projects that were ongoing for a certain period can be seen in the Project Overview module.