@coachbriannakeller
Do we deduct reimbursable expense from Net service revenue in order to find the total project budget left to pay for labor?
The quetsion below states non-reimbursable, but what if it was reimburable would we still deduct?
An architect is preparing an initial project budget using the following fee information:
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There is a total fee of $300,000 for the entire project team.
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40% of the total fee is allocated for all consultants.
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8% of the net fee is allocated for the architect’s non-reimbursable expenses.
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7% of the net fee is allocated for the architect’s contingency.
What is the available budget for project labor?
Hello!
If you look at pg. 625 in the AHPP - The elements of a project budget include:
- gross fee
- consultant fees
- net service revenue
- project contingency
- non-reimbursable direct expense budget
- project labor budget by phase of service
- current percent complete by phase of service
- budgeted resource forecast by phase of service
Net Operating Revenue is used to pay for salaries, operating expenses, admin, office taxes..etc. It’s the revenue after deducting the consultant fees, other reimbursable and non-reimbursable project related (see AHPP pg. 414 for more information).
Net Service Revenue basically is a project budget prior to deduct the non-reimbursable expenses & contingency, but reimbursable expenses are not included.
Let me know if this helps clarify!
Coach Keller