VPVI - 36The Basics of Project Management using Deltek Vision Tools and Reporting

Thomas Lee, Spiezle Architectural Group CFO & VP Finance / Administration

• 15+ years’ experience working in Deltek Vision and the architecture

industry

• From 2004 to 2013 – Chief Financial Officer at the Spiezle Architectural

Group

• From 2013 to 2016 - Chief Financial Officer for Ayers Saint Gross, a 180+

person architectural firm with offices in MD, DC & AZ. However, I live in

NJ, so after 360 hotel nights and 180,000 commuting miles, I moved back home

and…

• Back at the Spiezle Architectural Group, a 90+ and growing architectural

firm with offices in NJ, PA, NY and MD. Working on acquisitions in

Philadelphia area, DC and FL. Our practice groups are K-12, Higher

Education, Healthcare, Senior Living, Landscape, Interiors, Corporate &

Government

• Been published several times surrounding ESOPs (Employee Stock Ownership

Plan)

• Drexel University graduate and passed the CPA exam in PA and currently hold

a license in MD and NJ.

• TLee@spiezle.com Please reach out anytime

• I Love Deltek Vision!

A little about me.. Tom Lee

Purpose of PM 101

We want

everyone to

have a basic

understandin

g of

accounting

principles

We think it’s

best that

everyone in our

firm understand

key financial

metrics and

business

indicators

We want to

provide

resources to

help you manage

projects

successfully

and profitably

Not exclusively for PMs... We have administrative and other

less experience production employees attend a “scaled down”

version

Learning Objectives

Understand

and apply

basic

accounting

terminology

used in the

industry

Understanding how

rates, profit and

multipliers

are calculated and

why they are

important

Progress

Reports for

consistent

project

monitoring

Basic Accounting & Project Management

Terminology

Benchmarking vs. Financial Performance

Goals

Deltek Tools Available

What we’ll be covering...

Terminology

Cash Basis:

The recognition of revenue depends upon the collection of cash and payment

of

expenses. We use what most firms use for tax reporting.

Accrual Basis

The recognition of revenue occurs when it is earned / billed and when

expenses are incurred. We keep our financial records this way because the

bank, valuation company and Board of Directors prefer this method.

Revenue Recognition

Since we are a multi-company firm, we maintain the above

separately for SAG and SGI…

Project Fee Types

Lump Sum Fixed Fee

Specific / Firm amounts based on a stated scope of service

Hourly

Based on our hourly rate schedule and often used when the scope of

service is not defined

Hourly NTE

Based on our hourly rate schedule and contains a “ceiling” on hourly

service

Percentage

Is tied to the actual construction cost of the project on a percentage

basis

Job To Date

(JTD) Labor

hours and

dollars spent as

of the current

date

Estimate To Complete

(ETC)

From project planning,

labor hours and dollars

estimated from the

current date to project

completion.

Estimate At Completion

(EAC)

Most important component.

It will show overall

project profitability at

project end. JTD + ETC =

EAC

Project Planning Terms

Please Keep Plans Updated!!!

When looking at a project and its performance, we analyze using the

following components:

Gross Fee: Total fee paid to the firm for ALL services

including consultants

Direct / Consultant Expense: The cost included in our

Gross Fee that is paid to us. We have a Paid When Paid

(PWP) obligation. Also includes Reimbursable & Non-

Reimbursable Expenses

Net Service Revenue (NSR): Gross Fee (-) Direct /

Consultant Fee.

Direct Labor: Our labor charged to billable projects.

We “dilute” using Adjusted Salaried Job Costing

Project Financial Terms (Income Statement)

Gross Profit: NSR – Direct L all project related

Overhead: Rent, Utilities, ESOP Payments, Medical, Marketing, Bonus

and “Indirect Labor” expenses (like vacation time, my salary, “non-

billable time”)

Net Profit: Gross Profit (-) Overhead

Project Financial Terms (Income Statement)

It creates an adjusted hourly job cost rate for each salaried

employee for each timesheet posting.

It adjust to represent the actual (true) cost of a salaried

employees labor and this new adjusted job cost rate is then

reflected on project reports.

For example... Mike is salary and gets paid $1,000 a week or $25

per hour. Week 1, Mike works a 40 hour work week, each hour posted

is job costed at $25 per hour. Week 2, Mike worked 50 hours BUT

still got paid $1,000, so each hour costed in this period would be

job costed at $20 per hour.

What is Adjust Salaried Job Costing?

Project Performance Benchmarks & Goals

Project Performance Benchmarks

Net Labor Multiplier

Cost of OUR labor to produce OUR fee. Net Service Revenue / Direct Labor

Overhead Multiplier

Calculated by dividing overhead expenses by direct labor. Shows how much

overhead / fixed cost expenses are spent for every labor dollar charged to

a project.

Gross / Net Revenue Per Employee

Gross and Net Revenues / Full Time Equivalent (FTE)

Gross Profit

How much profit is generated from each gross dollar billed. Gross revenue

less consultants, less direct expenses, less direct labor

Benchmark – Net Labor Multiplier Shows how much net

revenue each $1 of labor

is generating. Our firm

goal for 2019 is 2.85.

Why?

Too much labor on

projects

Our fees aren’t high

enough

Our labor mix may be “top

heavy”

All items we are fixing

in 2019 to up our 2020

goal to 3.0

Benchmark – Net Revenue Per EE Shows how much net

revenue each employee is

generating including

Principals and all

administrative staff.

Our firm goal is 139K.

Why lower?

May have too many staff

or probably “not the

right staff”.

Our fees aren’t high

enough or the “referendum

factor”

These take time to fix

and again hope to be

exceed to median in 2020.

Benchmark – Overhead RateShows how much fixed cost

or indirect cost the firm

incurs per each direct

labor dollar spent. Our

firm goal is 156% and we

are around 146%. Why?

We realized that our NLM

and gross profit % may be

lower that expected, so we

adjusted some 2nd half

year spending. We also do

a very good job of

managing our fixed cost

budgets.

We may be short 1

administrative staff

Benchmark – Other Key Indicators

Operating Profit is

another key indicator

that we track monthly as

our 2019 goals are:

On Net Revenue: 18%

On Total Revenue: 12%

At this time, we are 14%

on Net Revenue and 9% on

Total Revenue

This is mainly due to our

consultant cost have been

higher than expected YTD

and with increased

billings the remainder of

the year should help

increase these %s

Financial Performance Reviews

Every other Monday

morning, all PMs meet

to review Resource

Planning. In

preparation for that

meeting, ETC labor is

adjusted and the

screen to the right is

reviewed.

Bi-Monthly… PMs are required to review

Monthly EAC Reporting / Meetings

Project Managers and / or Principals review

this report monthly and sometimes meetings

are schedule. We focus on Revenue, Hours,

EAC NLM, EAC Gross Profit and when the last

time a Project Plan was updated

Fixed Cost Budgets

Fixed cost managers are

accountable for budgets and

managing expenses as well...

Every month, variance

analysis with explanation

must be supplied

Getting into the weeds

Individual Project Performance is important as it rolls up into

the corresponding Practice Group.

Each Practice Group rolls up into the overall firm’s financial

performance.

Making good decisions at the project level is where it all starts!

Our most important report... When 5 level organizations are used at the project

level (and throughout Deltek), downloading

financials by Practice Group is easy.