Equal Split Recognition Method

The "Equal Split" revenue recognition method is also sometimes called the Ratable recognition method and relates to fixed fee projects and milestones.

A revenue forecast record is created for each monthly time period to store the values for these objects for use in Revenue Forecasting.

Notes:

If you do not want PSA to use the value in the Bookings field on the project record as the total revenue in revenue forecast calculations, you can specify an alternative numeric field in the Total Revenue Field on Project field on the active revenue forecast setup record. For more information, see Specifying the Field Containing the Total Project Revenue (% Complete and Equal Split Revenue).

If you do not want PSA to use the value in the Milestone Amount field on the milestone record as the total amount in revenue forecast calculations, you can specify an alternative numeric field in the Total Revenue Field on Milestone field on the active revenue forecast setup record. For more information, see Specifying the Field Containing the Total Milestone Revenue (Deliverable, % Complete, and Equal Split Revenue).

Warning:

Depending on how you recognize revenue, you must set the Actuals Template or recognition method on either a project or a milestone but not on both.

Calculating Duration

PSA uses the project or milestone duration to calculate revenue forecasts for the "Equal Split" recognition method.

Project

The duration of a project is calculated using the Start Date and End Date fields on the project record.

Milestone

The duration of a milestone is calculated using the following fields on the milestone record.

Fields on Milestone Record Used to Calculate Milestone Duration

Field

Notes

Start Date If the date in this field falls before the project start date, after the project end date, or if this field does not contain a value, the date in the Start Date field on the project record is used.
Actual Date

If the date in this field falls before the project start date or after the project end date, the date in the End Date field on the project record is used.

If this field does not contain a value, the date in the Target Date field on the milestone record is used.

Target Date If the date in this field falls before the project start date or after the project end date, the date in the End Date field on the project record is used.

Calculating the Split Amount for Full Periods

If you are using the "Equal Split: Months/Part Periods" recognition method, when the duration of a project or milestone consists of full periods, such as full months, the total scheduled revenue is split equally between those periods.

If you are using the "Equal Split: Months" or "Equal Split: 4,4,5" recognition method, the revenue is split equally between the monthly periods. These periods do not have to be full periods.

Note:

The calculation works in exactly the same way for the "Equal Split: Months" and "Equal Split: 4,4,5" recognition methods in PSA. If you are using the integration between PSA and Revenue Management, see Using Equal Split Months Calculation Types and About Recognition Years and Periods for information on how the calculation works in Revenue Management.

Calculating the Split Amount for Part Periods

This information in this section applies if you are using the "Equal Split: Months/Part Periods" recognition method.

If the start period within the project or milestone duration is a part period:

  • The number of months is calculated as the number of calendar months spanning the project or milestone duration minus one month.
  • One month's revenue is split between the start period and the end period.
Note:

This does not apply if the start part period and the end period fall within the same month. In that case, the total scheduled amount is allocated to that month.

Monthly revenue is calculated as the total scheduled revenue divided by the number of months. The number of days in a month is not relevant to this calculation. For example, February (28 or 29 days) is allocated the same monthly revenue as March (31 days).

The revenue for the start part period is calculated as:

(Number of days in start part period / Total days in start time period) * Monthly revenue

The revenue for the end period, which is not necessarily a part period, is calculated as:

Monthly revenue - Revenue for start part period

The sum of the revenue in the start period and the end period adds up to one full month's revenue.

Calculating the Split Amount for Days

This information in this section applies if you are using the "Equal Split: Days" recognition method.

When you run a revenue forecast, daily revenue is calculated as:

Total scheduled revenue / Total days in the project or milestone duration

The monthly revenue is calculated as:

Daily revenue * Number of days in monthly time period within the project or milestone duration

This means, for example, if your project or milestone starts on March 4, there will be 28 days’ worth of revenue for that month.

Calculating the Split Amount for Days in Part Periods

This information in this section applies if you are using the "Equal Split: Months/Actual Days in Part Periods" recognition method.

When you run a revenue forecast, revenue for the first and last part periods is calculated based on the number of days on the project or milestone in those periods, as a proportion of the total number of days on the project or milestone:

Total scheduled revenue/Total days within the project or milestone duration * Number of days in the period

The remainder is then split equally across the whole periods.

Calculating with Closed Periods

This section explains how the revenue forecasts are calculated when relevant records are marked as "Equal Split" and there are closed time periods within the project or milestone duration.

Example for Equal Split Recognition Method