Numbers & calculations
Every metric and the formula behind it — from utilization to revenue recognition.
- Metrics glossary — the formulas behind Operating's numbers
- How utilization is calculated in OperatingUtilization (sometimes lovingly called UTZ) is the most commonly used KPI for consulting company efficiency. Operating calculates UTZ like this:
- How are revenue, cost, gross profit, and margin calculated?Operating calculates project profitability by combining two money streams — work and expenses — into cost, revenue, gross profit, and margin. How revenue is calculated depends on the project's billing type; expenses affect margin based on whether they're billable and whether they carry markup.
- Why don't earned (recognized) and invoiced revenue match?Earned (recognized) revenue measures the value of work and billable expenses you've completed; invoiced revenue is what you've actually billed. The two frequently differ — and that's by design.
- How are planned revenue and planned cost calculated?Planned revenue and planned cost are the forward-looking versions of actuals, built from Allocations (or budgets for fixed price projects) and Planned expenses rather than tracked work. Like actuals, each combines a work stream and an expense stream, with planned revenue branching by billing type.
- How Operating calculates earned and forecasted revenue
- How cost capping worksCost capping stops unpaid overtime from being counted as cost. When someone tracks more time than their contracted daily, weekly, or monthly working hours, the extra hours record no cost, so a project's profitability is not penalized when people work over. This article explains the two Site settings that control it, what the cap is measured against, and which figures and columns change.
- How to choose a fixed-price forecast methodOn a fixed-price Project the total is fixed — the forecast decides when it lands. This article explains the organization-wide Fixed-price forecast method setting: what its two options do, how they differ on the same numbers, what happens when scope changes, and how your choice shows up when you record budget progress.