Calculating Contract Percent Complete

Percent complete measures the progress of an activity by calculating the percentage of the budget expended to date. When you use percent complete revenue recognition, you bill a percentage of the contract amount. You can store the percentage of completion and revise it when actual conditions change.

Percent complete for contract-level activities is calculated using consolidated balance amounts. This procedure describes how to store and calculate percent complete revenue.

Note: This procedure is required only for revenue calculation method of percent complete (revenue calculation method A or B). The revenue method and calculation is defined on Contract Parameters (BR10.1).

To calculate contract percent complete

  1. Access Percent Complete by Contract (BR65.1) to revise percent of completion for revenue recognition.
  2. Define the activity parameters to be analyzed. Use the following guidelines to enter field values:
    Activity

    Type or select an activity name. This is the activity you want to calculate percentage of completion. It can be a posting-level or contract-level activity.

    Date

    Type the date for which you want to calculate percentage complete or gross margin.

    Budget Number

    Type or select the budget for which you want to calculate percentage complete or gross margin.

    Note: If you defined billing parameters at the summary level, you must enter a budget number. Leave this field blank if you want to use the active budget when revenue parameters are defined at the posting level.
    Budget Type

    Select whether the budget is defined in amounts or units.

    Calculate Over 100 Pct (Percent)

    Select whether or not to calculate percent complete over 100% for the activity. The default is No.

    Cost Account Category Group

    Type or select a cost account category group. This field is used to calculate actuals, or costs-to-date and total budget. If you leave this field blank, the program uses all account categories with the type Cost.

  3. Select the special action Load to display the percent complete calculation. Select the Add form action to add the calculation. After you add the calculation, you can edit it as needed. Use the following guidelines to enter field values:
    Cost to Complete

    Type the cost to complete the activity, or the cost remaining to expend the total budget.

    Note: If you change the cost to complete, your percent complete changes as well.
    Percent Complete

    Type the percentage of completion for the activity.

    Gross Margin

    Type a gross margin percentage which is used to calculate revenue. The gross margin calculation for revenue recognition is based on the following formulas:

    • Gross Margin % = Gross Profit / Contract Amount

    • Revenue = 1 / (1 - Gross Margin %) x Costs to Date

  4. If you want to edit the percentage of completion calculation for multiple activities in one contract, choose the Posting Activities button to open Percent Complete by Activity (BR65.2).
  5. If you want to edit the percentage of completion calculation for an activity with multiple account categories, click the Account Categories button to access Percent Complete by Account Category (BR65.3).
    Note: Revisions in the percentage of completion may indicate changes to the budget are required.