COST-TO-COST Seeded Revenue Calculation Incorrectly Reduces Budgeted Revenue With the Amount of Manual Events. (Doc ID 1526105.1)

Last updated on MAY 01, 2024

Applies to:

Symptoms

For projects using the cost-to-cost revenue accrual method, Oracle Projects uses the following formula to calculate revenue (in the project functional currency) to accrue for the revenue generation run:

CCR(RUN) = Lesser of (Remaining funding available if using hard limit) and ((AC/BC (BR-ER))- AR)

Where, for a project or task: CCR(RUN) = Cost-to-cost revenue for current run

• AC = Actual total burdened cost through PA Period on or before the accrue through date
• BC = Budgeted baseline burdened cost*
• BR = Budgeted baseline revenue*
• ER = Entered event revenue
• AR = Revenue previously accrued in PA Period on or before accrue through date

Note: *Oracle Projects uses the cost and revenue budget types that you specify on the Cost-to-Cost billing extension

Actual Example:

Revenue = Lesser(66,666.67 ,((25,000.00/75,000.00 * (100,000.00 - 60,000.00)) - 33,333.33 ))

AC=25,000
BC=75,000
BR=100,000
ER (Total Manual Events)=60,000
AR=33,333.33 (the first run of revenue POC)

Revenue = Lesser(66,666.67 , ((25000/75000*(100000-60000))-33333.33))= 19999.9997

However the formula should be:

Revenue = Lesser(66,666.67 , ((25000/75000*(100000)-60000)-33333.33))=-59999.9997

The Manual events are considered but in the current Oracle formula it is reducing the budgeted revenue, but it should be reducing the current percentage of the calculated revenue for that current run.  The following is an example of how it should be calculated:

                                      1st Run of Generate Revenue   2nd Run of Generate Revenue   3rd Run of Generate Revenue
Actual Cost                                          25                                25                                                   30
Budget Cost                                        50                                50                                                    50
Budgeted Revenue                             100                              100                                                  100
Event Revenue                                      0                                10                                                    10
Actual Revenue                                     0                                50                                                    50


Scenario Expected  Revenue                 50                                 50                                                    60
Total Revenue Explanation                    *1                                  *2                                                   *3
Oracle Current Formula Calculation        50                                  -5                                                     4
Current Oracle Total Revenue                50                                 55                                                    54
Proposed Oracle Formula Calculation      50                               -10                                                      0
Proposed Oracle Total Revenue               50                                50                                                    60


*1  No Manual Revenue, and no previous revenue so the formula should just take 50% of the total revenue.
*2  No new cost, no adjustment to the budget.  Only a manual revenue event and the already accrued revenue.  Since their was no new spend, the percentage of revenue should still only be 50% of the budget amount (100).
*3  Additional $10 of cost, no adjustment to the budget.  No new manual event and the already accrued revenue.  Since we already accrued revenue of $50 and had a manual event of $10, our total revenue should only be $60.

Cause

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