Let's look at a simple profitability formula:
Profitability = (Budget - Costs) / Budget
From the formula above, it's evident that we need 2 components: Budget and Costs. There are a few exceptions when we can't calculate the profitability, often related to the settings applied to either the project or resources in Harvest. Read more about these exceptions here.
If the project is set to Time & Materials in Harvest, here are the components we take into account to calculate Profitability:
as a result:
The Spent Budget will mean different things depending on your Time&Material project settings in Harvest:
In some cases, based on the above table, if you have invoices issued for this project, we will use the issued invoices totals as Spent Budget for the purposes of calculating the Profitability.
We will only use invoices that are either Sent or Paid. We will ignore invoices that are Draft or Closed (written-off).
Please note: in this case we are taking invoices issued to date and Internal Costs to date. The issued invoices may not cover all the Internal Costs to date, therefore the Profitability may be incomplete.
There's a way to enable a time rounding feature in Harvest.
Please note, Harvest Dashboard doesn't support time rounding for now, so you may see small discrepancies in the Internal Costs values between Harvest Dashboard and Harvest.
For Time & Materials project you can apply a setting to mark "Budget includes expenses" in Harvest if the Budget is chosen to be "Total project fees":
If that is enabled, the assumption is that the budget you enter has the expenses already accounted for.
If the project is set to Fixed Fee in Harvest, here are the components we take into account to calculate Profitability:
as a result:
You will notice, that on Fixed Fee project, we use Total Budget, instead of Spent Budget we use on Time&Materials projects. If the budget of a Fixed Fee project is non-monetary (represented in hours), we will use Project Fees if available:
There's a way to enable a time rounding feature in Harvest.
Please note, Harvest Dashboard doesn't support time rounding for now, so you may see small discrepancies in the Internal Costs values between Harvest Dashboard and Harvest.
For Fixed Fee project you can apply a setting to mark "Budget includes expenses" in Harvest if the Budget is chosen to be "Total project fees":
If that is turned on, the assumption is that the budget you enter has the expenses already accounted for.