How are Budget, Internal Costs and Profitability calculated for my projects

Profitability at a glance

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.

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Budget, Internal Costs and Profitability for Time & Materials projects

If the project is set to Time & Materials in Harvest, here are the components we take into account to calculate Profitability:

Budget = Spent Budget
Internal Costs = Cost Rate per resource X Hours per resource + non-billable expenses

as a result:

Profitability = (Spent Budget - (Cost Rate per resource X Hours per resource + non-billable expenses)) / Spent Budget

The Spent Budget will mean different things depending on your Time&Material project settings in Harvest:

Monetary Budget?	Bill Rates?	Invoiced amount?	What's used for profitability
yes	no	no	-
yes	yes	no	Spent Budget
yes	no	yes	Spent Budget
yes	yes	yes	Spent Budget
no	no	no	-
no	yes	no	Billable Amount
no	no	yes	Invoiced Amount
no	yes	yes	Whichever is higher: Billable Amount or Invoiced Amount

Using invoiced amounts in case of non-monetary Budget

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.

Time-rounding handling for Time & Materials projects

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.

Expense handling for Time & Materials projects

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.

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Time & Materials projects with Monthly Resetting Budgets (Retainers)

For Time & Materials project you can set the project in Harvest to have "Budget resets every month".

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These Retainer projects will show up in Harvest Dashboard with a "Monthly" tag:

The Budget will represent the Total budget for the whole duration of the project (monthly budget X months). We calculate the duration of such a project starting from the first timesheet until today.

The Spent amount will cover all the used up budget across the whole duration of such project (not just current month).

The Costs will represent all the Costs incurred during the whole duration of the project (not just current month).

As a result, the profitability will also reflect the profitability of such a project across all the months it's been running, not just for the current month.

Budget, Internal Costs and Profitability for Fixed Fee projects

If the project is set to Fixed Fee in Harvest, here are the components we take into account to calculate Profitability:

Budget = Total Budget + Billable expense
Internal Costs = Cost Rate per resource X Hours per resource + all expenses

as a result:

Profitability = (Total Budget + Billable expenses - (Cost Rate per resource X Hours per resource + all expenses)) / Total Budget

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:

Monetary Budget?	Project fees?	What's used for profitability?
yes	no	Project Budget
no	yes	Project Fees
yes	yes	Project Budget
no	no	-

Time-rounding handling for Fixed Fee projects

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.

‍

Expense handling for Fixed Fee projects

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.

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Fixed Fee projects with Monthly Resetting Budgets (Retainers)

For Fixed Fee project you can set the project in Harvest to have "Budget resets every month".

Harvest Dashboard doesn't currently support calculating profitability for such projects.