Equal Split Recognition Method for Cost Forecasting

The equal split recognition method is also sometimes called the ratable recognition method and relates to fixed fee projects.

Notes:

To forecast costs, ensure Enable Cost Forecasting is selected on the active services forecast setup record.

Cost forecasting calculations work in a similar way to revenue forecasting ones. For more information on revenue forecasting calculations, see Equal Split Recognition Method for Revenue Forecasting.

Services Forecasting looks at the Recognition Method field on a record, which must contain one of the Equal Split options, such as "Equal Split: Months". A cost forecast record is created for each monthly time period to store the values for each of the objects used when forecasting. A separate cost forecast type record is generated for each combination of time period, cost source, cost category, and cost type, provided there are qualifying records within the months spanning the project duration.

When forecasting costs, records using the equal split recognition method are always included based on the value in their Recognition Method field, whether or not you use the integration with Revenue Management.

Records Included in Cost Forecasting Calculations

Expense Budget

Warning:

To forecast expense budgets accurately, you must have budget allocations configured. Values are only displayed in the Amount Remaining and Amount Consumed fields on the budget record if there is a budget allocation. For more information on budget allocations, see Track Consumption of Individual Budgets and Setting up PSA to Track Consumption of Individual Budgets.

Budget records that meet the following criteria are included:

The recognition method is set to any of the following:
- Equal Split: Months
- Equal Split: Months/Actual Days in Part Periods
- Equal Split: Months/Part Periods
- Equal Split: Days
- Equal Split: 4,4,5
The budget type is either Billable Expenses or Non-Billable Expenses
The value in the Remaining Amount field is greater than 0

The value in the Remaining Amount field is equally split between whichever is the later of the following dates and the project end date:

Effective date of the budget
First open time period
Project start date

The costs are placed in the Unscheduled Costs field on the cost forecast record that is associated with the relevant time period.

The cost forecast type records generated for expense budgets have a Cost Source of "Equal Split: Expense Budget" and a Cost Type of "Backlog", so that expense budgets are distinguished from actuals and standard forecast values. For more information, see Cost Forecast Type Fields.

If the date used is after the project end date, the full amount from the budget record is placed in the Unscheduled Costs field on the cost forecast record associated with the final time period on the project.

If all time periods for the project are closed, zero is displayed in the Unscheduled Costs field on the cost forecast record associated with the final time period on the project. However, the budget's full remaining amount is displayed in the Unfulfilled Unscheduled Costs field. For more information on this field, see Cost Forecast Fields.

Project Cost

Project cost records that meet the following criteria are included:

The project cost's recognition method is set to any of the following:
- Equal Split: Months
- Equal Split: Months/Actual Days in Part Periods
- Equal Split: Months/Part Periods
- Equal Split: Days
- Equal Split: 4,4,5
The project cost is associated with a project.
The project cost's date range overlaps the associated project's dates.

An equal split project cost is forecasted by splitting the value in the Amount field equally across the monthly time periods in the project cost's date range, according to the selected equal split option. This date range is constrained to the project's dates. If the project cost's start date is before the project's start date, the project's start date is used instead, and if the project cost's end date is after the project's end date, the project's end date is used instead. The Approved for Forecast Actuals checkbox on the project cost record determines whether the cost amount contributes to actuals or scheduled costs, as follows:

If the Approved for Forecast Actuals checkbox is selected, the cost for closed time periods and the first open time period after that is treated as an actual cost, and contributes to the Costs Pending Recognition field on the cost forecasts for those time periods. The cost for later open time periods is treated as a scheduled cost and contributes to the Scheduled Costs field.
If the Approved for Forecast Actuals checkbox is deselected, the cost is treated as a scheduled cost and contributes to the Scheduled Costs field on the cost forecasts for the open monthly time periods. For a closed period, other than the first open period, the cost contributes to the Unfulfilled Scheduled Costs field.

The fields on the cost forecast type records show the following:

The value in the Cost Category field represents the cost category on the related project cost records. A separate cost forecast type record is generated for each cost category. For project costs with no cost category, the Cost Category field on the cost forecast type record is set to "Other Cost".
The Cost Source field is set to "Equal Split: Project Cost".
The Costs Pending Recognition field contains the sum of the split amounts for all related project cost records that contribute to actuals for a specific cost category within a given month.
The Scheduled Costs field contains the split amounts for all related project cost records that contribute to scheduled costs for a specific cost category within a given month.
The Cost Type field is set to "Actuals" for the amounts in the Costs Pending Recognition field, and "Forecast" for the amounts in the Scheduled Costs field. For an approved project cost, both an actuals and a forecast cost forecast type record can be generated for the same cost category. For an unapproved project cost, only a forecast record is generated.
A separate cost forecast type record is generated for each combination of time period, cost category, and cost type, so the Cost Type field always has a single value on each record depending on the following:
- A record that only holds an amount in the Costs Pending Recognition field has a Cost Type of "Actuals".
- A record that only holds an amount in the Scheduled Costs field has a Cost Type of "Forecast".
  
  Because a project cost with the Approved for Forecast Actuals checkbox selected can contribute to actuals for closed and current periods, and to scheduled costs for later periods, it generates separate actuals and forecast records for the same cost category. A project cost with the Approved for Forecast Actuals checkbox deselected only contributes to scheduled costs, so it generates forecast records only.

Note:

Currency conversion is not supported for project costs that use an equal split recognition method. If the project cost uses a currency other than the project currency, the amount is not converted.

For more information about the fields on a project cost record, see Project Cost Fields. For more information about the fields on a cost forecast type record, see Cost Forecast Type Fields.

Calculating Remaining Budgeted Cost

If Calculate Remaining Budgeted Cost is selected on the active services forecast setup record, the forecast calculates the remaining budgeted cost for the project. This is the value of the project's Budgeted Cost field minus the total cost already forecasted. It represents the unscheduled backlog on the project. The value is never less than zero.

The Revenue and Cost Targets Forecast Method field on the project determines how the remaining budgeted cost is distributed across time periods. The recognition method used for the rest of the forecast doesn't impact this. When this field is set to an equal split option, for example, "Equal Split: Months", the remaining budgeted cost is spread equally across the project's forecast periods, starting from the current open period.

The fields on the cost forecast type records show the following: