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Profitability Analysis on a Project Service Quote | Project Operations

https://dynamicscrmclub.files.wordpress.com/2023/09/updatedcalculations-2.png

So, while working on Project Operations Quotations, you see this below tab called as Profitability Analysis.

And below are the fields that you see –

In case you are trying to find what each of these fields mean and how they calculate – this post if for you!

Chargeable Calculations

Now, let’s look at how the Profitability Analysis fields calculate –

  1. Let’s open the Quote Lines and see what we have. We have 1 Quote Line which has a budget of $50. Hence, you saw Total Revenue to show as $50K already in the beginning of this post.
  2. When you start adding Quote Line Details in the Quote Line, for example some services as below –
    I’ve added a Chargeable Quote Line of 40 hours of Consulting at $200/hour for a Consulting Lead role.

    This will show up on the Profitability Analysis

  3. Now, let’s look at how this is calculated.
    Total Chargeable Costs come from the Cost Price list of the Contracting Unit this Quote/Opportunity is in.
    So, 40 x $150 =. $6000

    Here’s the Org Unit on the Quote (that came in from the Opportunity)

    And it has a Cost Price List associated with it which has Role Prices set for each Role.

    Which has a Cost Price of the Consulting Lead Role set to $150.

  4. Similarly, the Total Revenue now reflects the Equivalent Sales Price with respect to the Role in the Org Unit. The Sales Price is associated with the Quote in the Project Price List tab as shown below. Also, please be mindful of the Start Date and End Date of the Price Lists added so that Prices are picked from the right Price List.

    And the Sales Price for the Consulting Lead for the current Org Unit is set to $200.

    Hence, the calculation
    $200 x 40 = $8000.

  5. This also then calculates the Gross Margin to show a positive 25% and the Project is Profitable.

Non-Chargeable Calculations

Now, let’s look how non-chargeable calculations are considered –

  1. Let’s say there’s an Account Manager role added to the Cost Price list as shown below-
  2. And in the Quote Line, the Account Manager is considered as a Non-Chargeable Role for this Quote.
  3. Now, if there’s a Quote Line Detail added for the Account Manager Role in this Quote Line – it’ll be added to Non-Chargeable Costs. I’ve added 2 hours of effort for this Quote Line Detail entry.
  4. This will reflect the Total Non-Chargeable Cost to be $85 x 2 = $170.
    And the Adjusted Gross Margin will show 22.88% instead of 25%. Adjusted Gross Margin shows the adjustment considering Non-Chargeable Components in this Quote.

Hope this helps!

Thank you!

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