Project Invoicing using ] project-open [

1. Project Invoicingusing ]project-open[ Version: 0.7Date: May 12th, 2009Author: Frank Bergmannfrank.bergmann@project-open.com

2. Benefits • Free and open-source, SaaS available • Reduce administrative overhead • Don’t loose invoiceable hours anymore • Separate between billable and non-billable time • Integrated with timesheet management, budget management, vacation management and project tracking

3. Features • Elegant invoices • Invoice templates customizable by the user • Management of customer data, customer contact and multiple billing addresses per customer • Project billing from very simple to very complex • Ad-hoc invoicing – write your invoice in 20 seconds • Billing time and material projects • Billing complex projects – warranty, discounts and non-billable time • Billing wizard for billing logged hours • Price lists per customer or default global price list. Prices per “material” or service type • Multi currency. Automatic currency updates available (add-on) • Powerful financial reporting, including data-warehouse (add-on module) • Configurable billing modes • Material per task or per logged hour • Force billing on sub-projects

4. Configuration & Parameters • Log on super-projects? • Invoice from scratch? • Logging hours with budget control? • Budget-control switched on? • Material per task or material per hour?

5. Overview We will guide you through ]po[ invoicing based on 4 real-world cases: • “My First Invoice” – Invoicing a simple fixed price contract • “Fractioned Invoicing” – Writing more then one invoice per project • “Warranty and Presales” – Dealing with non-billable time • “Time and Material” – Invoicing timesheet hours

6. My First Invoice The Case: • You are an employee of “Tigerpond Inc.”. Tigerpond offers consulting and IT services. • We have just received an order from “Big Customer” for 3 days of training services. Actions: • Create a project so that you can log hours and other costs • Choose “Create Invoice from Scratch” to create an invoice manually

7. Overview • There are different types of projects: • Fixed Price • Time & Material • Mixed • Recurring (Service Contracts, …)

8. Simple Fixed Price Invoicing • Create a Project • Write an Invoice • Mark the invoice as paid

9. Time & Material based Invoicing • Create a Project • Define a number of tasks • Estimated, Billable and Logged Hours • Material to describe the type of service • Log some hours on the project • Use the “New Customer Invoice from Timesheet Tasks” wizard to create an invoice

10. Understanding Materials • “Material” is a type of service • Material is the link into the customer’s price list • Billable vs. non-billable materials

11. Understanding Timesheet Tasks • Tasks describe an activity of one or more persons • Task Characteristics • Estimated, Billable and Logged Hours • Material to describe the type of service • Billable/Non-Billable time is per Task and not per logged hours. Each project may have a task for unbillable time.

12. Understanding the Price List • The price list maps materials to prices • There is a default price list defined in the “Internal” company • Specific price lists can be defined per customer • UoM is usually “hour” here. The other UoMs are used for simple invoicing and may be used in future extensions of the system.

13. Tracking the Project Progress • Number of logged hours per task vs. • Task progress (not the same!) • Compare task progress with time logged for early indications of the project being late

14. Invoicing Monthly Activities • UoM: Month • Modelling: One project with multiple sub-projects • This way, the financials will accumulate • Define this project as an “SLA” to enable use for the helpdesk module

15. Project Quoting using ]po[ • Create a schedule via GanttProject or OpenProj • Define the materials in ]po[ • Use the Wizard to create a quote

16. Details

17. Summary The Problem • Project invoicing frequently represents an important challenge • Not all billable hours are captured or invoiced • High workload for senior management to manage invoicing Why? • Project management is a continuous negotiation process • Project scope changes during the project execution • Negotiation results may documented informally or not documented at all • Bug vs. Feature: It can be very challenging to decide whether a service is billable (feature/ extension) or non billable (bug/ warranty) The Solution • ]po[ allows to capture informal negotiation results • ]po[ allows to model complex projects and contracts • ]po[ provides integrated timesheet management • ]po[ flexible invoicing wizards allow to create invoices based on captured information

18. ]project-open[ Billing Benefits • Increases the number of billable hours • Reduces the administrative overhead • Reduces the senior management’s time for invoicing • Shortens the time from project to cash • Provides accurate profit & loss per project and customer by integration with project controlling • Integration with travel expenses management allows to distinguish between billable and non-billable travel costs.

19. ]project-open[ is Open-Source Software • Cost efficient • Flexible and adaptable • Low up-front risk • No vendor lock-in

20. Functional Description

21. Sample Scenario Costs Revenues • Provider and customer agree to an initial project plan with a number of phases and deliverables • After finishing the first project phase, provider bills customer for part of the work. However: • The project team has already started tasks of the next phase • Not all deliverable of the 1st phase have been finished • Additional deliverables have been added to both the 1st and 2nd phase. • A 2nd invoice is based on a modified project plan. It needs to include the hours that have been delivered before issuing the 1st invoice. 1 Project Plan InitialQuote Sales 1st phase 2nd Phase Support ExternalProviderBills TravelExpenses 2 1stPartialInvoice BillableHours Project Plan Sales ChangeRequest 1st phase 2nd Phase Support 3 2nd Invoice ExternalProviderBills TravelExpenses BillableHours

22. Sample Scenario Schema The Customer Invoice ChangeRequest Specs Quote Order eMail eMail eMail The Project Sales / Planning Execution Milestone 2nd Phase Sign-Off Support PurchaseOrder TravelExpen. Invoice Timesheet Loggingby Employees External Providers

23. Supported Contract Types Overview “Ideal” Contract Types • Fixed priceCustomer and provider close a fixed-price project. • Fixed price with partial/multiple invoicingThe fixed price project consists of several independently invoiced phases. • Time and materialProvider bills customer for time and external costs, plus a defined margin. • Periodic Recurring invoices for support contracts etc. • "Many Small Projects“Invoicing of independent helpdesk tickets or small but repeating projects such as translation. “Real-World” Contract Types • Fixed price + warrantyProvider needs to provide additional service to fix errors or mistakes • Fixed price + change requestsA fixed price contract forms the base of the project, but additional elements are added during the project during “change requests” or when correcting deficiencies. • Maintenance contract + extra timeCustomer and provider have agreed on a monthly maintenance fee, but extra services exceed the covered amount of services and have to be billed in addition

24. Additional Use-Cases • Employees might correct hours in the past. How to invoice these hours?

25. “Fixed Price” Without Project Schedule ]po[ can create invoice documents “manually”: • Go to the your project’s financial page and click on “New Customer Invoice from Scratch” • You get an empty invoice form where you can enter your project details • A template renders your invoice ready to be sent to the customer 1 2 3

26. Fixed Price with Project Schedule 1 • The PM creates a project schedule using GanttProject • The PM can add the information on “estimated” and “billable” hours for each task. • The PM starts the wizard “New Customer Invoice from Timesheet Tasks” • The Invoicing Wizard allows to select “planned” or “billable” units to create the… • …invoice 2 3 5 4

27. “Time and Material” Contracts • “New Customer Invoice from Timesheet Tasks” lets you create an invoice based on a project schedule • From the schedule you can select individual 1 2

28. Mixed “Fixed Prices” with “Time and Material” It is best practice for “Time and Material” contracts to specify project tasks according to the billing type of different tasks. Here is an example: • Sales and Presales: Not billable • Implementation and training: Fully billable • Travel Time: Billable 50% of the time, with a maximum of 8hours/journey • Warranty Support:Clear product deficiencies are not billable • Paid Support:Product enhancements are fully billable

29. “Time and Material” Contracts • “New Customer Invoice from Timesheet Tasks” lets you create an invoice based on a project schedule • From the schedule you can select individual 1 2

30. “Time and Material” Contracts • This billing mode allows you to • Planned Units • Billable Units • All Reported Units • Reported Units in Interval • All Unbilled Units 1 2

31. Tools

32. Tools Overview The ]project-open[ solution consists of a number of building blocks to capture project billing information plus a number of tools to process the captured information: Capturing Financial Information • Project Plan/Schedule:Defines the project phases and their tasks and deliverables. Prices are defined via “Service Types” (i.e. “Senior Developer Hour”, …) per task. • Timesheet Logging:Allows employees to log hours on projects and tasks • Travel Expenses:This module captures travel expenses, including partially billable expenses. • Provider Management:Captures external provider costs Capturing Fuzzy Information • Project Filestorage:Allows PMs to store change requests and other project documents for reference • Project Forum:Forum discussion can be used to capture “notes” about informal negotiation results for reference • CRM Mail Tracking:Captures mails going back and forth between the PM and the customer. Processing Invoicing Information • Quoting Wizard:Calculates a quote based on the project schedule with its “billable hours” duration per task. • Invoicing Wizard:Calculates (partial) invoices based on: • module captures travel expenses, including partially billable expenses.

33. Tools: Project Plan/Schedule • ]po[ allows for project and subprojects of any level • ]po[ supports the external GanttProject Java Application to define schedules quickly • Each Task includes three timesheet hours: • Planned Hours:Best guess for task duration • Billable Hours:Hours billable to customer and • Logged Hours:Actually logged hours by staff

34. Tools: Timesheet Logging • Sophisticated timesheet logging with permissions per project, subprojects or task • Logging per day or per week • Optional approval workflow for PM to confirm hours logged to a project

35. Tools: Travel Expenses

36. Tools: Invoicing Wizard

37. The Project Sales / Planning Execution Milestone 2nd Phase Sign-Off Support How to Create an Invoice Create an invoice from Gantt chart task durations. ]po[ maintains a price list per customer. • ]project-open[ offers a wide range of options on how to create an invoice, taking advantage of all available information • ]project-open[ provides maximum flexibility in terms of how to combine all available information to create invoices. Invoice Create an invoice from timesheet information (actual hours logged by employees) Timesheet Invoice Quote Create an invoice from one or more quotes. Invoice Quote Quote Invoice Create an Invoice from “scratch” (manually entering quote lines)

38. Document Type Permissions • ]project-open[ allows to specify per profile who should be able to read or write certain financial documents. • The table at the left shows a typical configuration. • The configuration at the left implies a workflow between project managers (create quotes and purchase orders) with accounting (write invoices) • The configuration can be modified using ]project-open[ maintenance screens. Employees ProjectManagers Accounting Quote - read and create project’s Quotes read, create and modify everything read, create and modify everything DeliveryNote read and create project’s Delivery Notes - read project’s Invoice (but no right to create) read, create and modify everything Invoice - read and create project’s Purchase Orders read, create and modify everything PurchaseOrder - read, create and modify everything read project’s Provider Bills (but no right to create) Bill (ProviderInvoice) - TravelExpense read own expenses, create new travel expenses read project’s travel expenses read, create and modify everything read project’s timesheet costs TimesheetCost log hours (which creates timesheet cost items) read, create and modify everything

39. Decentralized Invoicing • The ]project-open[ workflow engine allows to formalize important processes, while other processes may be kept flexible. The Customer Invoice Quote Order DeliveryNote The Company Bill (ProviderInvoice) TravelExpense TimesheetCost PurchaseOrder Providers

40. Solution • ]project-open[ provides a single place to store and process both formalized and semi-formalized data including quotes, timesheet, documents, email traffic etc. • ]project-open[ has been designed for the level of flexibility needed by small and medium service organizations (3-300 employees). • ]project-open[ workflow engine can enforce certain policies such as order or sign-off phases in larger organizations • ]project-open[ includes wizards to create quotes and invoices from production information such as planned or spent hours • The ]project-open[ workflow engine allows to formalize important processes, while other processes may be kept flexible.

41. Process Overview • Sales & Quoting • Project Planning • Project Execution • Timesheet Logging • Project progress tracking • Project cost tracking

42. Quoting Options in ]project-open[ • Quoting using Project Plan: • Create a project schedule via GanttProject • Assign “materials” to tasks • Use the Timesheet Quoting Wizard to sum up the planned hours multiplied with the customer’s price list. • Repeating Project Structures: • Create a “new project from template” to create a copy of a previous project. • Complex Projects: • Write a quote using MS-Word, • Create a new ]po[ project in status “quoting” • Store the MS-Word in the ]po[ project’s Filestorage • Create a ]po[ quote document for financial tracking

43. Sales & Quoting • The Sales & Quoting phase starts during the first contact with the customer. • Deliverables: • A textual description of the scope of the project (MS-Word document) • A “quote” document as a baseline for the invoicing process • PO can keep track of potential projects and the size of the sales pipeline • A PO workflow can check the completeness of quote information before a “potential” project becomes executed. • PO allows to store unstructured information such as email, meeting and conversation protocols together with the project as a reference for the invoicing process.

44. Project Planning • The planning phase intents to specify the tasks to execute the project. It may overlap with the sales phase or start afterwards • Deliverables: • A detailed project plan consisting of a number of tasks • Each task consists of a number of “planned” and “billable” hours, apart from other project information

45. Project Planning • The planning phase intents to specify the tasks to execute the project. It may overlap with the sales phase or start afterwards • Deliverables: • A detailed project plan consisting of a number of tasks • Each task consists of a number of “planned” and “billable” hours, apart from other project information

46. Thanks for your attention ]project-open[ Ronda Sant Antonio 51, 1o 2a08011 Barcelona Spain Tel: +34 933 250 914 Cell: +34 609 953 751 Fax: +34 932 890 729 www.project-open.comwww.project-open.org

47. wastebasket • Keeps track of unbilled hours • Calculate Work In Progress (WIP) for accounting purposes

48. Issues Addressed • Many different types of contracts • Difficult distinction between billable and non-billable hours • Contracts with many different parameters • Difficulty to assign delivered hours to specific projects • Difficulty to assign hours to multiple concurrent projects of a single customer • Re-assignment of delivered services between projects (for example: product development vs. customer server) • Difficulty to distinguish between service hours delivered as part of a fixed-price contract and additional billable hours • Informal negotiations during the project execution lead to a complex situation with respect to billable and non billable project item. The results from informal negotiations can be captured in the KM module and kept together with the project. • Difficulty in the financial department to determine services to be “activated” in the balance sheet, for example for product development vs. customer service • Difficulty to capture the results of informal negotiations for the invoicing process • The informal negotiations make it very difficult for a billing department to write an invoice

49. Contract design • List of deliverables • Project phases & milestones • Billing conditions and parameters • Project Execution • Advance on defined deliverables • Change requests modify the list of deliverables • Change requests modify the effort to produce deliverables • Project Management represents an ongoing negotiation process between all project stakeholders. Negotiation results are documented together with the project. • Project Closing • Sign-off of individual deliverables • Billing of individual project phases or milestones

50. Challenges • Service organizations need to provide flexible responses to customer requirements • The scope and contents of projects may change during the project lifecycle • Projects may contain fixed-cost as well as variable cost phases. • It is difficult to distinguish billable hours from non-billable sales and warranty parts. Senior management may lose considerable time resolving this type of questions. • The customer may be “flexibly” mixing planned with already delivered work to be invoice • Difficult distinction between billable and non-billable time. • Partial invoicing at the end of project phases or milestones • Invoicing may depend on a lot of fuzzy information from different sources: • Verbal agreements between sales and the customer • Change requests incurred during the project execution • Timesheet information about planned, billable and logged hours • External costs of material and freelance project members • The initial quote and its rules • Verbal agreements between sales and the customer • Change requests incurred during the project execution • Timesheet information about planned, billable and logged hours • External costs of material and freelance project members