MARGIN CALCULATION AND ADJUSTMENT
Tweak it until it’s right
Let’s open the Project Summary window from either the ribbon menu or the Workflow window.
Inside the Project Summary window, you have the ability to calculate and adjust margin percentages.
Expert Estimation defines two individual margin types that can be applied to a Project. They are referred to as Overall Margin and Corporate Margin. Both are applied as percentages from within the Project Summary window.
Overall Margin is the simplest method to calculate your profit margin for the project and is the most common way to generate margin. Corporate Margin is applied in addition to the Overall Margin and can represent a company standard or default margin that needs to be applied. This is designed to help you recover a corporate overhead if that’s part of your tender and business requirements. We have a training video dedicated to Corporate Margin if you would like further information on that topic.
Both of these margin types can be calculated as a percentage of Total Costs, or as a percentage of the Project Total.
The On Total Cost markup generates margin by taking the entered percentage and multiplying it by the total costs of the project. As you go to enter the percentage you will see the Total Costs figure highlighted here for ease of reference.
This is the default margin type. If we increase the Overall Margin on Total Costs to 10%, you will see the Overall Margin is 10% of the Total Costs, and the proportional increase in Project Total, at the bottom of the Project Summary.
Our linked Knowledge Base article shows the formula used to calculate margin.
If the Overall or Corporate Margin is (should be ARE) not the exact percentage of Total Costs you expect to see, then click on the Item Margin button in the ribbon menu, and check if you have Override Margin set for any of the lines.
The alternative method is to set the Overall Margin to calculate as a percentage of the Project Total. Using this method, we can see that now the Contract Value or Project Total is highlighted.
You can see how the overall margin represents 10% of the Project Total.
The Overall and Corporate Margins are calculated independently of each other, rather than being combined and then calculated. However, when calculating margin as a percentage of Project Total, you can choose to have the calculations combined. This setting is definable in the Project Properties > Calculations window.
If you would like to know more, we have a training video dedicated to generating specific margin.
The Margin Adjustment field, at the bottom of the Project Summary window, allows you to enter a lump sum to adjust the Total Margin by. This can be used in conjunction with, or instead of, other margin calculation methods, including Overall Margin. Margin adjustment adds an adjustment amount that can be either a positive or negative number. As you make changes, you will see the Total Margin and Project Total change.
However you like to generate your margin, you’ll see the total margin to be spread across the direct cost items here. And that is margin adjustments and calculation.
For more information, see the Knowledge Base article linked below this video. If you have any further questions we’d love to hear from you. We’re here 24/7 on our Support number or via email.
Contact us today. We look forward to helping you.
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