To calculate interim result

Forecast in interim result

Interim results are mostly calculated at the end of a financial year during which the project is in progress. To calculate the interim result, LN determines the costs and revenues for a project. You can choose what must be included in the generated interim result, including :

  • Forecast.
  • Commitments.
  • Costs. Note that, if the forecasting method looks at forecast as well as commitment, the forecast can overlap, because commitments can be part of the forecast. An example explains the various possibilities. In the example, the following numbers hold for a given cost type.

Total actual costs = 100 Total of hard commitments = 20 Total of soft commitments = 30

EEC example

The leading forecast method in the Project Progress Parameters (tpppc0100s000) session is estimated-extra-costs (EEC). For this forecast method, the Use Commitment as Basis parameter of the Project Progress Parameters (tpppc0100s000) session does not influence the interim result, because the extra costs are added to the budget and cannot overlap with cost or commitments. Set the Type of Hard Commitment list to Cost in the Project Progress Parameters (tpppc0100s000) session. The valid EEC is USD 10, which means that you estimate a USD 10 budget overrun. In the Generate Financial Interim Results (tpppc2260m000) session, select the check boxes for which you want to generate an interim result. This gives the following figures: Costs 120 Commitments 30 Forecast 10

If the Type of Hard Commitment list is set to Commitment in the Project Progress Parameters (tpppc0100s000) session, the selected check boxes in the Generate Financial Interim Results (tpppc2260m000) session generate the following figures: Costs 100 Commitments 50 Forecast 10

Note

To calculate the estimated extra-costs, the forecast must be reduced to zero the moment the work is carried out. This means that, when costs and commitments are recorded, you must empty the forecast for that part of the scope. If you do not do this properly, an overlap occurs between the forecast amount on the one hand, and the cost or commitment amounts on the other hand. This results in a generated interim result with the commitment amounts added up as part of the forecast and as commitments in the interim result.

EAC example

If the leading forecast method is estimate-at-completion (EAC), the value of the estimate to-complete (ETC) is used to generate the financial interim result. You cannot use the value of the estimate at-completion, as this overlaps with costs and commitments and thus leads to a miscalculated interim result. For the handling of the forecast in the financial interim result, refer to the following section.

ETC example

If the leading forecast method = Estimate-to-Complete The valid ETC = 60 The Type of Hard Commitment list is set to Commitment in the Project Progress Parameters (tpppc0100s000) session. In the Generate Financial Interim Results (tpppc2260m000) session, the selected check boxes generate the following figures for this example: Costs 100 Commitments 50 Forecast 60 If the Use Commitment as Basis for Forecast check box in the Project Progress Parameters (tpppc0100s000) session is not selected, you count the forecast and commitments twice.

The Type of Hard Commitment list is set to Cost. In the Generate Financial Interim Results (tpppc2260m000) session, the selected check boxes will give the following figures: Costs 120 Commitments 30 Forecast 60

If the Use Commitment as Basis for Forecast check box in the Project Progress Parameters (tpppc0100s000) session is not selected, the forecast and the commitment is a double entry.