Definitions

We have thought long and hard about changing our vocabulary from Phases to Contract Items because that is the function they serve. Each phase is a contract item with a contract-defined billing format that will be used when invoicing. Fixed Fee: This format is the most commonly used. It is for contracts where a stipulated sum of fees will be charged for the work. Whether it takes you 2 hours to 2 years to complete the work, this will be billed based solely on a percent complete basis. Hourly: T...

Earned Value is how much of your fee you have earned on a phase-by-phase basis. Here are the calculations for each phase billing format. - Fixed Fee - Fee times percent complete. - Hourly - Billable timeslip hours times the billing rate. - Cost Plus - Billable timeslip hours times the staff pay rate with cost plus multipliers applied. - Hourly NTE - Same as hourly but capped at the target fee. - Cost Plus NTE - Same as Cost Plus but capped at the target fee.

Fee Burn is the amount of the Net Fee that you have burned thru internally. There are two calculations for Fee Burn, one for Labor (time slips) and one for Contracts (projects). For Labor, Fee Burn is the cost of Direct Labor plus Overhead plus Profit: Direct Labor + Overhead + Profit. For Contracts, it is the sum of the calculated Fee Burn from Labor plus non-billable direct expenses. Because this is a reflection of your Net Fee it does not include consultants as their fees have already been ...

Addons – extra things you billed to your client. Backlog – the Gross Fee minus the Earned Value. This is how much work is left to be completed. Billing Rate – the amount per hour that will be charged if the time will be billed hourly. Billing Value – Hours times Billing Rate Cash Profits – Income minus the lines between Income and Cash Profits. Discounts – reductions on invoices. Earned Value – this is the amount of the fees that have been earned based on work completed. Expenses – the to...

Fixed Fee - This is a fixed amount you will charge for the work. Sometimes called Lump Sum or Stipulated Sum. This can be billed in progress billings or as a single lump sum when the work is completed. Hourly - This indicates that you will bill your client based on hours worked multiplied by one or more defined billing rates. This is sometimes referred to as Time and Materials or T&M. Our system allows you to enter a target amount that you believe will be the billed amount when all is said and ...

Earned Value is a term used in the AE industry to indicate how much fee has been earned based upon work performed. If a project has a fee of $1,200 and 18% of the work has been completed the then Earned Value would be 18% of $1,200 or $216. The million-dollar question is how is the 18% level of completion determined? Usually, it comes from years of experience and looking at what has been produced. Some folks will look at how many hours they believe a project or task is going to take to complete...

Our system calculates the Earned Value (https://basebuilders.ladesk.com/552051-What-is-Earned-Value) of the project in 3 different ways depending upon the billing method of the phases involved. Here are the three methodologies applied to five Billing Formats (https://basebuilders.ladesk.com/857258-Billing-Formats): Fixed Fee – Percent Complete times the Fee Amount. Each phase of a project has a percentage complete value. This value is manually entered by the user - hopefully an experienced sage...

Backlog is a measure of the value of work you have under contract that has not been completed. Theoretically, each day as you work on a project you are whittling away at your backlog. The calculation is your Fees minus your Earned Value.

Backlog is the difference between your contracted fees and your Earned Value (https://basebuilders.ladesk.com/509305-How-is-Earned-Value-Calculated). But what about hourly and cost-plus billing contracts that have an open-ended target? In this case, you should set a target amount that you believe will be the resulting value of the final billings. Yes, this is a moving target that will need to be adjusted from time to time as you navigate through a project. And to those who say that they have no...