Cost rate
A3.HR or manual entry on the projectWhat an hour of a person costs the company. Sensitive data: a separate permission, never shown to a regular user.
Hours that turn into money
Project economics is part of the product from the first release rather than deferred. Without it A3.Projects would be indistinguishable from a free tracker.
Five payment models
The payment model is chosen on the project and decides how revenue is calculated. Mixing models inside one project is not allowed: that is the first source of disagreement between reports.
| Model | How it works | Revenue is calculated as |
|---|---|---|
| Fixed price | The contract value is agreed up front | Contract value, recognised by milestone or by percentage of completion |
| Time and materials | Paid against the time actually worked | Billable hours multiplied by the billing rate |
| Retainer | A fixed amount per period with an hour limit | The retainer plus overtime above the limit |
| Milestone | Payment is tied to closing milestones | The sum of closed billable milestones |
| Internal | Work for the organisation itself | No revenue, only cost is calculated |
Three rates that must never be mixed
The most common mistake in project accounting: one rate used both for cost and for the client invoice. Margin is then zero by definition.
Billing rate
Project or contract settingThe price an hour is invoiced at. It can differ by role, by project and by a specific person on a project.
Planned rate
The estimate made while planningWhat was assumed before the work started. Needed to tell planned margin apart from actual margin.
Rate precedence
Organisation, role, person, project, person on a project. The more specific value wins. A rate is valid for its own period, and changing it never recalculates entries that are already logged.
What goes into cost
- LabourApproved hours multiplied by the cost rate valid on the date of the work
- Direct costsCosts against project budget lines, from A3.Accounting or entered by hand
- SubcontractorsExternal performers on the project
- OverheadsAllocated monthly against the organisation base, switched off by default
The result follows from there
MarginRevenue minus cost
ProfitabilityMargin divided by revenue
Effective rateRevenue divided by all hours, billable or not
The budget is visible the same day, not at quarter end
Revenue and cost budgets are kept separately. Consumption updates as hours are logged rather than after a period is closed.
- Threshold notifications at 50, 75 and 90 percent and on overrun, each firing once
- A burn forecast: at the current logging pace the budget runs out on a specific date
- Three policies once the budget is exhausted: warn, require approval, block logging
- A forecast at completion from estimates on open tasks. With no estimates there is no forecast at all rather than an approximate one
Why the hours can be trusted
Economics rests on people logging time honestly. That is a question of how the product is built rather than of discipline.
Hours are not part of employee assessment
The KPI area ships without a single metric that counts time. As soon as logging affects a personal score it stops being accounting and becomes reporting.
Gaps are visible rather than papered over
Hours with no cost rate are flagged everywhere margin is shown. Otherwise understated cost would read as high profitability.
Logging takes seconds
A timer, a timesheet and a widget inside another product. Insisting on creating a task first kills cross-product tracking, so the task is created on the first entry.
Changes are recorded
The audit log covers rates, budgets, approval and edits to time entries, and permissions. The log itself has no write or delete methods.
Who sees the numbers
Economics is a separate branch of permissions and is never inherited from access to a project.
| Employee | Their own tasks and their own entries. No rates, no cost, no margin |
| Project manager | Full access to their projects, economics only with the separate permission |
| Department head | Tasks and load of their reports, timesheet approval |
| Project economist | Rates, cost and profitability across all projects |
| External participant | Public project tasks. Economic fields are not returned even through the API |
Start with manual rates
The minimal version of economics needs no integration at all: the rate is set on the project, cost is calculated from hours, budget and margin appear immediately.