4Manage Project Contract Revenue

This chapter contains the following:

Project and Contract Revenue Components: How They Work Together

Project and contract components work together to create revenue distributions. The contract contains the instructions for calculating revenue amounts, and the associated project contains the cost transaction details. When you generate revenue, revenue distributions are created for the contract.

Expenditure items and events are the transactions for projects and contracts. Revenue method classifications determine how transactions recognize revenue.

The revenue method determines how revenue rates are derived. Enter a revenue method on a revenue plan, which you create for a contract and assign to contract lines to provide a set of instructions for recognizing revenue.

Create billing controls for a contract or contract line to define the valid transaction dates, billing resources, and amount limits for transactions associated with the contract.

Generate revenue to calculate the revenue amounts for a contract.

The following figure illustrates the components of a project and a contract that determine revenue amounts, and the relationships between the components.

Figure showing relationship between project and contract
components and how these work together to generate revenue.

Revenue Method Classification

Assign a predefined revenue method classification to a revenue method. The revenue method classification determines whether the revenue amount is calculated based on rates, amounts, or progress.

Revenue Method

Create revenue methods for revenue plans to use for recognizing revenue. The revenue methods contain revenue recognition instructions in the form of the revenue method classification and rate definition schedule types.

You must assign a revenue method to a revenue plan, which will give the revenue recognition instructions to a specific contract or contract line. A revenue method can be used by more than one revenue plan.

Caution: Enable the revenue method for intercompany billing if it will be used for intercompany billing only.

Revenue Plan

A revenue plan contains a set of instructions for recognizing revenue on a contract or contract line. Create a revenue plan within a contract that uses the revenue method you require. Assign the revenue plan to one or more contract lines that are enabled for billing.

Note: Revenue cannot be recognized for a revenue plan on hold.

Billing Control

A billing control defines the type of permitted transactions (using billing resources), transaction date range, and maximum invoice and revenue amounts for a contract or contract line. Create a billing control within a contract at either the contract or contract line level. The revenue amount cannot exceed the hard limit amount of a billing control. If the revenue amount exceeds the soft limit, revenue recognition will still occur, but you will receive a warning.

Expenditure Item

The project and task for an expenditure item are matched to the associated contract line during revenue generation. Revenue recognition can occur if the transaction date and billing resource for the expenditure item pass the contract billing controls.

If the expenditure item is mapped to more than one eligible contract line, the processing order is determined as follows:

  • The contract billing sequence determines the processing order of multiple contracts.

  • The contract billing controls determine the processing order of multiple contract lines within a single contract.

  • The contract contribution percentage determines the eligible amount of revenue to recognize for each contract line.

Oracle Fusion Project Billing creates a billing transaction for each unique combination of expenditure item and contract line. The billing transaction is the source for creating revenue distributions.

Event

Revenue events are automatically created during revenue generation if the revenue method is percent spent or percent complete.

Manual events are also processed during revenue generation. Oracle Fusion Project Billing creates a billing transaction for each event. The billing transaction is the source for creating revenue distributions.

Summary Revenue Amounts: Explained

Oracle Fusion Project Billing calculates summary revenue during revenue generation. Summarized revenue amounts enable you to identify problems with actual revenue for a contract, contract line, or the projects associated with a contract line. After you identify problems at the summary level, review the details to determine if there are individual transactions for which revenue was incorrectly calculated.

View the actual cost and revenue for a contract, contract line, or associated project, and compare it to the following amounts and values to review profitability:

  • Actual margin

  • Actual margin percentage

  • Budget variance

  • Budget variance percentage

  • Forecast variance

  • Forecast variance percentage

Summary Revenue Amounts

The following table lists the formulas that calculate the summary revenue amounts for a contract, contract line, or associated project.

Value Formula

Actual margin

actual margin = (actual project revenue - actual cost)

Actual margin percentage

actual margin percentage = (actual margin * 100) / actual project revenue

Budget variance

budget variance = (actual project revenue - budget revenue)

Budget variance percentage

budget variance percentage = (budget variance * 100 / budget revenue)

Forecast variance

forecast variance = (actual project revenue - forecast revenue)

Forecast variance percentage

forecast variance percentage = (forecast variance * 100) / forecast revenue

Impact of Legal Entities and Multiple Contract Line Associations

Oracle Fusion Project Billing summarizes actual revenue by contract, using the ledger currency and accounting calendar from the primary ledger of the legal entity that owns the contract. Budget revenue, forecast revenue, and actual cost are summarized by project and task, using the ledger currency and accounting calendar from the primary ledger of the legal entity that owns the project.

For intercompany contracts only, the contract and associated project legal entities are not required to be identical, so the contract and project ledger currencies and accounting periods can be different. Therefore, actual contract revenue only is displayed for intercompany contracts. When a project or task is associated with multiple contract lines in the search results, actual project revenue, actual cost, budget revenue, and forecast revenue for that project or task is repeated for each contract line. This multiple reporting causes the totals (other than actual contract revenue) to be stated incorrectly. In this situation, review revenue and profitability by project in the Project Work Area or Project Manager dashboard.

Processing Revenue for Contracts: Worked Example

This example demonstrates the steps involved with generating revenue, reviewing exceptions, summary revenue, and billing controls.

The following table summarizes key decisions for this scenario.

Decisions to Consider In This Example

Which business unit does the contract belong to?

Vision Operations

Is this an external contract, intercompany contract, or interproject contract?

External

How frequently is revenue recognized?

Monthly

Generate all revenue for a contract, or only the items previously recognized?

All

Generate and view a summary of ineligible data?

Yes

Is this a multicurrency contract?

No. The contract currency and the ledger currency of the contract business unit are the same.

Summary of the Tasks

  1. Generate revenue for a contract.

  2. Review billing transaction exceptions.

  3. Review summary revenue and billing controls.

Prerequisites

  1. Create a project.

  2. Create an external contract with one contract line, and associate the project to the contract line. Submit the contract for approval.

  3. Approve the contract.

  4. Create a financial plan, assign resources, and create the budget version.

  5. Execute the project.

  6. Create and process cost transactions. The transaction dates must be within the active date range of your contract.

Generate Revenue for a Contract

  1. On the Contract Revenue Overview page, click the Generate Revenue task to open the Generate Revenue process page.

  2. Click Parameters.

  3. Enter the information as shown in this table. Use the default values for all other parameter fields.

    Field Value

    Business Unit

    Vision Operations

    From Date

    Enter the first day of the month that contains your project transactions.

    To Date

    Enter the last day of the month that contains your project transactions.

    Billing Type

    External

    From Contract Number

    Enter your contract number.

    To Contract Number

    Enter your contract number.

    Pending Adjustments Only

    No

    Generate Ineligible Data

    Summary

  4. Click Submit.

  5. Click Close.

Review Billing Transaction Exceptions

Check for revenue-specific billing transaction exceptions. One approach is to search for exceptions by parameters such as contract name, project name, or message. Another approach is to search for and review billing transaction exceptions from the Overview page.

  1. On the Overview page, click the Manage Billing Transaction Exceptions task.

  2. Enter the search attributes as described in the following table.

    Field Value

    Business Unit

    Vision Operations

    Billing Type

    External

  3. Click Search. Expenditure items or events that encountered an exception during revenue or invoice generation are returned in the search results.

  4. Review the Severity and Messages for the exceptions.

  5. Click Done.

  6. On the Overview page, enter the search parameters as described in the following table.

    Field Value

    Business Unit

    Vision Operations

    Billing Type

    External

  7. Click the Search icon.

  8. In the Billing Transaction Exceptions region, click Number of Billing Transaction Exceptions for any exception.

  9. Review the exception details in the Exceptions by Transaction Type region.

  10. Click Done.

Review Summary Revenue and Billing Controls

Review summary revenue for the contract, contract line, and associated project. You can check the billing controls to review the consumed and available funds.

  1. On the Overview page, click the Manage Summary Revenue task.

  2. Enter the search parameters as described in the following table.

    Field Value

    Business Unit

    Vision Operations

    Interval

    Inception to Date

    Accounting Period

    Enter the accounting period for your transactions.

    Billing Type

    External

    Contract Number

    Enter your contract number.

  3. Click Search.

  4. In the Contract Number: Summary region, click Contract Lines.

  5. Review the summary for the contract line associated with your revenue transactions.

  6. Click Associated Projects.

  7. Review the summary for the project associated with your revenue transactions.

  8. Click Billing Controls.

  9. Review the amounts for the Soft Limit, Hard Limit, and Revenue Funds Available.

  10. Click Done.

Revenue Accounting Entries: Examples

This example describes the types of revenue accounting entries that are automatically created using the central accounting setup in Oracle Fusion Subledger Accounting. Revenue and invoices are generated in Oracle Fusion Project Billing. For revenue, the credit is to the appropriate revenue account, and the debit is to the unbilled receivable account. For invoices, the credit is to the deferred revenue account, and the debit is to the appropriate receivables account. Revenue accounting is initiated in Oracle Fusion Project Billing, and invoice accounting is initiated in Oracle Fusion Accounts Receivable. Oracle Fusion Subledger Accounting sends the revenue and invoice accounting to Oracle Fusion General Ledger.

Revenue and Invoice Accounting Entries

The following table contains an example revenue accounting entry.

Entry Distribution Account Debit Credit

SLA1

RDL1

Unbilled Receivables

40

0

SLA1

RDL1

Revenue

0

40

The following table contains the corresponding invoice accounting entry.

Entry Receivables Item Account Debit Credit

SLA2

AR1

Accounts Receivable

40

0

SLA2

AR1

Deferred Revenue

0

40

FAQs for Manage Project Contract Revenue

What's at-risk revenue?

A contract line attribute that when enabled, allows you to recognize revenue to a separate revenue at risk account. For example, enable the at-risk attribute when you want to recognize revenue for additional funding that is not officially approved and accepted by all parties yet.

How can I recognize revenue before my contract is funded?

Create a new contract line, enable the at risk feature, and associate projects or tasks to the new contract line. Enter the additional funding amount at the contract line or associated project level. Link the new contract line to a new or existing revenue plan. Create a new bill plan and associate it to the new contract line, but place the bill plan on hold to prevent invoicing the new amount until the contract amendment is officially accepted.

How can I change the soft limit or hard limit amount for invoicing or revenue recognition?

Request for the contract administrator to edit the soft limit or hard limit amounts in the contract billing controls. If the contract in not in draft status, the contract administrator must place the contract under amendment to make the edits.

How can I change the types of transactions that can be invoiced and recognized for revenue?

Request for the contract administrator to edit the billing resources in the contract billing controls. If the contract is not in draft status, the contract administrator must place the contract under amendment to make the edits.

Why is the summarized actual revenue different from the sum of the revenue distribution amounts?

A difference between the summarized actual contract revenue and the sum of the revenue distribution amounts is due to transactions with non-summarized revenue. To identify the non-summarized revenue, review the revenue generation results for your contract, and take the necessary corrective action on any unsuccessful summarization processes.

Can I invoice or recognize revenue for a billing event without a completion date?

No, you can't invoice or recognize revenue for a billing event that doesn't have a completion date. You must specify the completion date on the Edit Event page or in the Project Billing Event Create, Read, Update, or Delete Web Service to make a billing event eligible for invoicing or revenue recognition.

Why can't I select an organization from the list of values on the Manage Project Costs page?

You must do the following to ensure that an organization displays in the Expenditure Organization choice list:

  1. Classify the organization as an expenditure organization.

  2. Assign the organization to the branch of the department or organization tree version used by the selected business unit.

  3. Flatten the department or organization tree version.

  4. Activate the department or organization tree version.

  5. Run the Maintain Project Organizations process.

Can I delete an event?

Yes, you can delete an unprocessed event. You can't delete an event that was invoiced or recognized for revenue. Additionally, you can't delete an event that was created by a billing extension, was previously reversed, or was a reversing event.

How can I locate transactions with unrecognized revenue?

Transactions not fully recognized can be viewed on the Manage Events page and on the Manage Project Costs page. Search using Billable Status as billable and Revenue Status as unrecognized or partially recognized. To further narrow the search results, also search using Transaction Date or Event Completion Date on or before the last day of the current accounting period. Billing events without an event completion date are not selected for revenue recognition. You can review the output reports of the Generate Revenue process to identify why the unrecognized transactions are treated as ineligible.

Can I adjust revenue in a closed accounting period?

No. You can adjust revenue for transactions in accounting periods that are in either Open or Close Pending statuses. If you change the status of a closed accounting period to Open or Close Pending, you can adjust revenue for a transaction in that accounting period. Any adjustments to previously existing transactions and all new transactions (including manual events set to be reversed in the next accounting period) will be processed in the oldest Open or Close Pending accounting period following the accounting period in which the transaction date occurs, if that accounting period is closed.

Manage Project Contract Revenue: Generate Revenue

Revenue Amounts: Explained

Oracle Fusion Project Billing calculates and stores several types of revenue amounts during revenue generation.

The types of revenue amounts are:

  • Potential

  • Eligible

  • Qualified

  • Revenue to be recognized

Potential Revenue

If the revenue method classification of the revenue plan for the contract line is as-incurred, as-billed, or rate-based, Oracle Fusion Project Billing calculates potential revenue for billing transactions originating from expenditure items, from bill rates, burden rates, labor multipliers, or transfer price rules and schedules. The following table describes the formulas used to calculate potential revenue.

Amount Formula

Labor bill rate (when an override does not exist)

Standard rate * quantity * ((100 - discount percentage) / 100)

Labor bill rate (when an override exists)

Override rate * quantity

Labor markup (when an override does not exist)

Raw cost * ((markup percentage - discount percentage) / 100)

Labor multiplier

Raw cost * (1 + labor multiplier)

Labor burden

Raw cost * (1 + compiled multiplier)

Nonlabor bill rate (when an override does not exist)

Standard rate * quantity *((100 - discount percentage) / 100)

Nonlabor bill rate (when an override exists)

Override rate * quantity *((100 + markup percentage - discount percentage) / 100)

Nonlabor markup

Raw or burdened cost * ((markup percentage - discount percentage) / 100)

Nonlabor burden

Raw cost * (1 + compiled multiplier)

Transfer price (Basis calculation method)

Transfer price basis amount * (transfer price schedule markup percentage / 100) * (transfer price rule markup percentage / 100)

Transfer price (Rate or burden calculation method)

Potential amount * (transfer price schedule markup percentage / 100) * (transfer price rule markup percentage / 100)

The potential amount is calculated from either rates or burdening.

Eligible Revenue

Oracle Fusion Project Billing uses the following formula to calculate the eligible revenue amount for a billing transaction originating from an expenditure item:

  • Potential revenue amount * contribution percentage / 100

Qualified Revenue

The qualified revenue amount for a billing transaction is dependent on the billing controls for the contract or contract line. The qualified amount is equal to the amount of eligible revenue for a billing transaction that passes the hard limits of all applicable billing controls.

Revenue to be Recognized

The difference between qualified revenue and recognized revenue for a billing transaction.

Revenue: How It Is Calculated

Oracle Fusion Project Billing generates revenue based on the transactions that you charge to your contracts and their associated projects. You configure your contracts to recognize revenue based on your company policies. Submit the Generate Revenue process when you are ready to recognize revenue for a contract.

Settings That Affect Revenue Amounts

Generate revenue for a single contract or range of contracts in a business unit. The following table describes some key parameters of the Generate Revenue process.

Parameter Description

Billing Type

Values are:

  • External

  • Intercompany

  • Interproject

Multicurrency Values Only

Select Yes to only generate revenue for contracts with a different contract currency than the ledger currency of the contract business unit.

Pending Adjustments Only

Select Yes to recalculate and create revenue only for fully or partially recognized transactions in Adjustment Pending status.

This is useful when adjusting revenue for actual versus estimated burden schedule rates.

Generate Ineligible Data

Values are:

  • None. Ineligible data is not included on the Generate Revenue process output report.

  • Summary. A summary count of ineligible data only is included on the Generate Revenue process output report.

  • Detail. A summary count and a list of ineligible objects is included on the Generate Revenue process output report.

For contract types with billing controls enabled, transactions must pass all matching billing controls to be recognized for revenue. If a transaction does not find a matching billing control, the transaction is considered ineligible and revenue is not recognized. If a transaction matches one or more billing controls, but does not pass all of them, revenue is not recognized and a billing transaction exception is created.

The revenue plan contains detailed instructions for recognizing revenue for all contract lines associated with that revenue plan. It also points to a revenue method, which determines the schedule type to be used to derive rates and contains the assigned billing extensions that are copied to the revenue plan. The revenue method in turn points to a revenue method classification that determines the overall approach to recognizing revenue.

How Revenue Is Calculated

The Generate Revenue process performs the steps in the following table to recognize contract revenue.

Step in the Process Description

Identify eligible transactions

Identifies the transactions eligible for revenue recognition.

Adjust revenue

Adjusts revenue for transactions in the Adjustment Pending revenue status.

Map expenditure items

Maps expenditure items from associated projects and tasks to contract lines.

Create revenue events

Creates revenue events for billing extensions.

Calculate eligible revenue

Calculates potential and eligible revenue based on contract terms.

Check billing controls

Verifies that the transactions pass all matching billing controls.

Calculate revenue amount to recognize

Calculates qualified revenue and revenue for recognition.

Create billing transactions

Creates billing transactions and billing transaction exceptions.

Create revenue distributions

Creates revenue distributions for recognized revenue.

Update transactions

Updates revenue status on billing transactions and transactions.

Summarize revenue

Calls the subprocess to summarize revenue by contract and project.

Call accounting

Calls the process to create accounting events. This is an optional step.

Invoice and Revenue Rates: How They Are Determined

Oracle Fusion Project Billing uses bill rates, burdening, and transfer price schedules to derive standard bill rates, multipliers, markups, and bases for calculating potential revenue when the revenue method classification on a revenue plan is as billed, as incurred, or rate based. Similarly, bill rates derive invoice amounts when the invoice method classification on a bill plan is rate based.

Settings That Affect Rates and Overrides

The specific schedules to use to calculate invoice and revenue amounts are stored on either the bill plan or revenue plan. They are based on the schedule types specified on the invoice method and revenue method as listed in the following table.

Schedule Type Rate Source

Labor schedule, bill rate

Standard employee bill rate schedule

Standard job bill rate schedule

Nonlabor schedule, bill Rate

Standard nonlabor bill rate schedule

Labor schedule, burden

Standard labor burden schedule

Nonlabor schedule, burden

Standard nonlabor burden schedule

Labor and nonlabor schedule, burden

Standard burden schedule

Labor schedule, transfer price

Standard labor transfer price schedule

Nonlabor schedule type, transfer price

Standard nonlabor transfer price schedule

Tip: When the labor or nonlabor schedule type is bill rate, you can enter labor or nonlabor bill rate overrides on the bill plan or revenue plan.

How Bill Rates and Bill Rate Overrides Are Calculated

Oracle Fusion Project Billing uses this order to determine the labor bill rate for a billing transaction originating from an expenditure item:

  1. Employee bill rate override

  2. Employee job assignment override with job bill rate override

  3. Job bill rate override

  4. Labor multiplier override

  5. Standard employee bill rate schedule

  6. Employee job assignment override with standard job bill rate schedule

  7. Standard job bill rate schedule

Oracle Fusion Project Billing uses this order to determine the nonlabor bill rate for a billing transaction originating from an expenditure item:

  1. Nonlabor bill rate override for a specific expenditure type, resource, and organization

  2. Nonlabor bill rate override for a specific expenditure type and resource

  3. Nonlabor bill rate override for a specific expenditure type

  4. Standard nonlabor bill rate schedule for a specific expenditure type, resource, and organization

  5. Standard nonlabor bill rate schedule for a specific expenditure type and resource

  6. Standard nonlabor bill rate schedule for a specific expenditure type

Percent Complete Revenue Amounts: How They're Calculated

Oracle Fusion Project Billing uses the percent complete revenue method to recognize revenue as progress is measured and recorded.

The Generate Revenue process:

  1. Calculates the percent complete amounts

  2. Creates revenue events with the percent complete amounts

Prerequisites and Settings That Affect Percent Complete Revenue Amounts

The following prerequisites and settings impact the percent complete revenue for a contract line:

  • The percent complete on the contract line or associated project must be greater than zero.

    • To ensure the percent complete is greater than zero:

      • Ensure the project progress numbers are up to date and then update the progress for the entire contract.

      • Manually enter percent complete.

      • Override percent complete after the update from project progress.

  • The contract line amount or the funded amount for each project and task associated with the contract line must be greater than zero.

  • The To Date parameter of the Generate Revenue process is a date that is on or after the last day of the current accounting period.

  • The contract line amount or the funded amount for each project and task associated with the contract line must be greater than zero.

  • The contract line must be assigned to a revenue plan that uses the percent complete revenue method.

  • The revenue plan contains a calculation level that creates events for the contract line or associated project.

The following table describes the effects of the calculation level selection.

Calculation Level Description

Associated project

The percent complete revenue method creates separate events for each project and task associated with the contract line. Each event contains the project and task associated with the contract line.

Contract line

The percent complete revenue method creates one event for the contract line. The event contains the total of all percent complete amount for all projects and tasks associated with the contract line. The event doesn't contain a project or task.

How Percent Complete Is Calculated

The application performs the following activities when you update the progress:

  • Retrieves all project progress amounts for all tasks for the associated projects of each contract line associated with a percent complete revenue plan.

  • Calculates percent complete at the contract line level, if the calculation level in the revenue plan is contract line.

  • Calculates percent complete at the associated project and task level, if the calculation level in the revenue plan is associated project.

  • Updates the percent complete attributes for all applicable contract lines or associated projects, based on the calculation level selected in the revenue plan.

The following examples show how percent complete is calculated at the contract line level and associated project level based on effort and cost.

Contract Line Percent Complete Effort Example

When progress is based on effort, the following formula calculates the percent complete for the contract line.

Percent complete equals left parenthesis, sum of,
left parenthesis, baseline budget effort multiplied by  Physical Percent
Complete, right parenthesis, for every task associated to the contract
line, right  parenthesis, divided by left parenthesis Sum of Baseline
Budget Effort for every task associated to the  contract line, right
parenthesis
Task Baseline Budget Effort Physical Percent Complete Earned Value Effort Percent Complete

1

8

20

160

 

1

8

50

400

 

Line 1

16

 

560

35

Associated Project Percent Complete Effort Example

When progress is based on effort, the following formula calculates the percent complete for the associated project.

Percent complete equals left parenthesis, sum of,
left parenthesis, baseline budget effort multiplied by  Physical Percent
Complete, right parenthesis, for every subtask that is part of the
associated task, right  parenthesis, divided by left parenthesis Sum
of Baseline Budget Effort for every subtask that is part of the  associated
task, right parenthesis
Task Baseline Budget Effort Physical Percent Complete Earned Value Effort Percent Complete

1.1

2

50

100

 

1.2

6

10

60

 

1

8

 

160

20

Contract Line Percent Complete Cost Example

When progress is based on cost, the following formula calculates the percent complete for the contract line.

Percent complete equals left parenthesis, sum of,
left parenthesis, baseline budget cost multiplied by Physical Percent
Complete, right parenthesis, for every task associated to the contract
line, right parenthesis, divided by left parenthesis Sum of Baseline
Budget Cost for every task associated to the contract line, right
parenthesis.
Task Baseline Budget Cost Physical Percent Complete Earned Value Cost Percent Complete

1

1000

20

20000

 

2

500

50

25000

 

Line 1

1500

 

45000

30

Associated Project Percent Complete Cost Example

When progress is based on cost, the following formula calculates the percent complete for the associated project.

Percent complete equals left parenthesis, sum of,
left parenthesis, baseline budget cost multiplied by Physical Percent
Complete, right parenthesis, for every subtask that is part of the
associated task, right parenthesis, divided by left parenthesis Sum
of Baseline Budget Cost for every subtask that is part of the associated
task, right parenthesis.
Task Baseline Budget Cost Physical Percent Complete Earned Value Cost Percent Complete

1.1

250

50

12500

 

1.2

750

10

7500

 

1

1000

 

20000

20

2.1

400

60

24000

2.2

100

10

1000

2

500

25000

50

How Percent Complete Revenue Amounts Are Calculated

The following examples show how percent complete revenue amounts are calculated for the contract line and associated project.

Contract Line Percent Complete Amount Example

The following formula calculates percent complete revenue event amounts for the contract line.

Contract Line Percent Complete Revenue Amount equals
left parenthesis, left parenthesis, Contract Line Percent Complete
multiplied by Contract Line Amount, right parenthesis, minus Sum of
Existing Revenue Events, right parenthesis.
Percent Complete Contract Line Amount Sum of Existing Revenue Events Percent Complete Event Amount

30

2000

100

500

Associated Project Percent Complete Amount Example

The following formula calculates percent complete revenue event amounts for the associated project.

Associated Project Percent Complete Revenue Amount
equals left parenthesis, left parenthesis, Associated Project Percent
Complete, multiplied by Associated Project Funded Amount, right parenthesis,
minus Sum of Existing Revenue Events, right parenthesis.
Percent Complete Associated Project Funded Amount Sum of Existing Revenue Events Percent Complete Event Amount

20

1300

80

180

50

700

20

330

Percent Spent Revenue Amounts: How They're Calculated

Oracle Fusion Project Billing uses the percent spent revenue method to recognize revenue as progress is calculated.

The Generate Revenue process:

  1. Calculates the percent spent amounts

  2. Creates events

Prerequisites and Settings That Affect Percent Spent Revenue Amounts

The following prerequisites and settings impact the percent spent revenue for a contract line:

  • A baseline cost (or cost and revenue) budget version must exist for all projects associated with the contract line.

  • All existing actual costs for projects associated with the contract line must first be summarized.

  • The To Date parameter of the Generate Revenue process is a date that is on or after the last day of the current accounting period.

  • The contract line amount or the funded amount for each project and task associated with the contract line must be greater than zero.

  • The contract line must be assigned to a revenue plan that uses the percent spent revenue method.

  • The revenue plan contains a calculation level that creates events for the contract line or associated project.

The following table describes the effects of the calculation level selection.

Calculation Level Description

Contract line

The percent spent revenue method creates separate events for each project and task associated with the contract line. Each event contains the project and task associated with the contract line.

Associated project

The percent spent revenue method creates one event for the contract line. The event contains the total of all percent spent amounts for all projects and tasks associated with the contract line. The event doesn't contain a project or task.

How Associated Projects Actual Cost is Calculated

The associated projects actual cost is the inception-to-date (ITD) actual cost. Inception-to-date actual cost is derived by summing the actual costs summarized by accounting period up to and including the maximum accounting period with a period end date that is on or before the To Date of the Generate Revenue process. To include current period costs in the calculation, use a To Date that is on or after the last day of the current accounting period.

How Percent Spent Revenue Amounts are Calculated

The following examples show how percent spent revenue amounts are calculated for the contract line and associated project.

Contract Line Percent Spent Example

The following formula calculates the percent spent revenue for the contract line.

Event Amount equals left parenthesis, left parenthesis,
left parenthesis, left parenthesis Sum of ITD Actual Cost for every
task associated to the contract line, right parenthesis, divided by
left parenthesis Sum of Total Budgeted Cost for every task associated
to the contract line, right parenthesis, right parenthesis, multiplied
by Contract Line Amount, right parenthesis, minus Sum of Existing
Invoice Event Amounts for the Contract Line, right parenthesis.
Task ITD Actual Cost Total Budgeted Cost Contract Line Amount Sum of Existing Revenue Events Percent Spent Event Amount

1

60

300

 

 

2

40

100

 

 

Line 1

100

400

1000

100

150

Associated Project Percent Spent Example

The following formula calculates the percent spent revenue for the associated project.

Event Amount equals left parenthesis, left parenthesis,
left parenthesis, left parenthesis Sum of ITD Actual Cost for every
subtask that is part of the associated task, right parenthesis, divided
by left parenthesis Sum of Total Budgeted Cost for every task that
is part of the associated task, right parenthesis, right parenthesis,
multiplied by Associated Project Funded Amount, right parenthesis,
minus Sum of Existing Invoice Event Amounts for the Associated Project,
right parenthesis.
Task ITD Actual Cost Total Budgeted Cost Associated Project Funded Amount Sum of Existing Revenue Events Percent Spent Event Amount

1.1

40

100

 

 

 

1.2

20

200

 

 

 

1

60

300

600

75

45

2.1

30

60

 

2.2

10

40

 

2

40

100

400

25

135

Calculating Revenue Amounts from Billing Transactions: Example

This example illustrates how Oracle Fusion Project Billing creates billing transactions and determines the different types of revenue amounts during revenue generation.

Scenario

In our example, two expenditure items were charged to a project that is associated with one contract line. The contribution percentage for this contract is 100%. To limit the types and amounts of transactions that can be recognized for revenue on the contract line, the contract has three billing controls, in the amounts of 500, 200, and 100.

Billing Transaction and Billing Control Details

Two temporary billing transactions were created from the expenditure items during revenue generation. The billing transactions were checked against the billing controls. In our example, all three billing controls apply to Billing Transaction 1, so it must pass each billing control. Billing Transaction 2 must only pass the first two billing controls, because the third control (100) is only for travel expenses.

Three billing controls are present for the contract header and the contract line. The first billing control contains funding for the entire contract, and was created at the contract header level. The second billing control is the funding amount for the contract line. The third control is for the same contract line, but limits the amount of travel expenditures that can be charged to that line.

Line Billing Resource Hard Limit Revenue Funds Consumed Revenue Funds Available

Contract Header

 

500

460

40

1

 

200

130

70

1

Travel

100

10

90

Analysis

The following table displays the details for the temporary billing transactions.

Expenditure Item ID Line Billing Resource Potential Revenue Amount Eligible Revenue Amount Qualified Revenue Amount Recognized Revenue Amount Amount Remaining to Recognize

1

1

Travel

60

60

40

0

40

2

1

Labor

50

50

0

0

0

The following table displays the billing controls and the funds available before and after revenue generation.

Line Billing Resource Hard Limit Funds Available Before Expenditure Item 1 Funds Available After Expenditure Item 1 Funds Available After Expenditure Item 2

Contract Header

 

500

40

0

0

1

 

200

70

30

30

1

Travel

100

90

50

50

The qualified revenue amount cannot exceed the revenue funds available. In our example:

  • Expenditure Item 1 fully passed the second and third billing controls, but only $40 of the $60 passed the first billing control.

  • For Expenditure Item 2, $30 of $50 passed the second billing control, but nothing passed the first billing control, which was fully consumed by Expenditure Item 1.

  • Oracle Fusion Project Billing created a billing transaction for Expenditure Item 1. The qualified revenue amount is $40, the recognized revenue amount is $0, and the amount remaining to recognize is $40.

    Note: The amount remaining to recognize is the difference between the qualified revenue and recognized revenue. The exception amount is the difference between the eligible revenue and the qualified revenue.
  • The second temporary billing transaction for Expenditure Item 2 was deleted because no revenue was recognized.

  • A billing transaction exception in the amount of $20 is created for Expenditure Item 1.

  • A billing transaction exception in the amount of $50 is created for Expenditure Item 2.

Revenue Distributions and Final Transactions

Revenue distributions are created from the billing transactions. The revenue status of a distribution is Partially Recognized if the difference between the eligible amount and the qualified amount is not zero. The status is Fully Recognized if the difference between the eligible amount and the qualified amount is zero. The revenue distribution for this example is described in the table below.

Distribution Line Revenue Status Recognized Revenue

RDL1

1

Partially Recognized

40

The last steps involve updating the billing transaction and expenditure items. The following table describes the updated billing transaction.

Number Line Billing Resource Eligible Revenue Qualified Revenue Recognized Revenue Revenue to Recognize

1

1

Travel

60

40

40

0

The following table describes the updated expenditure items.

Expenditure Item ID Revenue Status Revenue Exception Recognized Percentage Recognized Revenue

1

Partially Recognized

Yes

67

40

2

Unrecognized

Yes

0

0

Note: Revenue is recognized for the exceptions if additional funds are added to the contract, or if the project and task on the expenditure item is funded by a new contract line with sufficient funds.

Generate Revenue Report

Use the Generate Revenue Report to review the revenue generation results for your contracts. The report provides a summarized view for items that were processed successfully, with warnings, and with errors. Additionally, the report optionally provides summarized or detailed descriptions of items that were not processed because they were considered ineligible.

Additional details for revenue generation exceptions are listed on the Manage Billing Transaction Exceptions page.

View the report after you generate revenue from the Contract Revenue Tasks panel.

You must do the following to obtain results for this report:

  • Have existing contracts and transactions that need revenue recognition.

  • Submit the Generate Revenue process.

Report Results

The following table describes the sections of the Generate Revenue report. It also describes the value you must select for the Generate Ineligible Data parameter to populate the corresponding section.

Section Description Generate Ineligible Data

Process Summary

Summary statistics of:

  • Billing events

  • Billing transactions

  • Ineligible contracts

  • Ineligible revenue plans

  • Ineligible contract lines

  • Ineligible associated projects

  • Ineligible expenditure items

  • Ineligible events

No, Summary, Detail

Billing Event Errors

Billing extension events that were not created, along with message details for the cause of each unique error.

Detail

Ineligible Contracts

Contracts that were excluded from revenue generation, along with message details for the cause of each unique error.

Detail

Ineligible Revenue Plans

Revenue plans that were excluded from revenue generation, along with message details for the cause of each unique error.

Detail

Ineligible Contract Lines

Contract lines that were excluded from revenue generation, along with message details for the cause of each unique error.

Detail

Ineligible Associated Projects

Projects associated with contract lines that were excluded from revenue generation, along with message details for the cause of each unique error.

Detail

Ineligible Expenditure Items

Expenditure items that were excluded from revenue generation, along with message details for the cause of each unique error.

Detail

Ineligible Events

Events that were excluded from revenue generation, along with message details for the cause of each unique error.

Detail

Export Revenue Details Process

The Export Revenue Details process lets you export revenue distributions from Oracle Fusion Project Billing to third-party general ledger applications. You then import the revenue distributions into your third-party revenue application to create revenue accounting entries to post in your general ledger.

Navigate to the Scheduled Processes page, click Schedule New Process and select the Export Revenue Details process.

Parameters

Business Unit

Select the business unit for which you want to export the revenue distributions.

Billing Type

Select the type of billing to export the revenue distributions. The types are External, Intercompany, and Interproject.

From Contract Number

Enter the starting contract number for the range of contracts.

To Contract Number

Enter the ending contract number for the range of contracts.

Export Revenue Data Report

The Export Revenue Details process stores the revenue distributions and other attributes in a CSV file. You can import this file to third-party general ledger applications for accounting.

If the report has errors, then:

  1. Review the error message detail for each revenue distribution and fix the issues.

  2. Resubmit the Export Revenue Details process.

FAQs for Manage Project Contract Revenue: Generate Revenue

What's a billing transaction exception?

A billing transaction exception represents the amount of a transaction that could not be invoiced or recognized for revenue. The exceptions are created during invoice and revenue generation. If you have a billing transaction exception, perform the indicated corrective action on the transaction, then generate the invoice or revenue again.

Numerous conditions can cause billing transaction exceptions, but the conditions can be grouped into problems in the following areas:

  • Billing resources

  • Billing controls

  • Currency conversion

  • Intercompany setup

  • Rates

What's the difference between transactions with unrecognized revenue and billing transaction exceptions?

Transactions with unrecognized revenue are transactions that Oracle Fusion Project Billing either did not attempt to recognize revenue, or the application reversed the revenue that was previously recognized.

Billing transaction exceptions represent the revenue for transactions that the revenue generation process attempted but could not fully recognize.