The Expense Statement

The expense statement, sometimes known as the income or P&L (profit and loss) statement, is an ordered list of the revenue and expense items for the project. The item categories and ordering of the categories is by account from the chart of accounts. Typically, there are accounts listed and expense entries for labor and labor benefits, purchased materials, travel, training, facility supplies and consumables, information services for data processing, networks and computer environments, vendor charges, facility rent and utilities, freight and fuel, capital depreciation expenses, general and administrative (G&A) expenses, sales and marketing expenses, legal and contract management expenses, taxes, and perhaps others, but not deliverables. It is very unlikely that you will see a project deliverable on the controller's expense statement for the project. The expense statement is therefore a "view" of the expenses from the controller's point of view.

Table 5-1 illustrates a project P&L. Table 5-1: P&L Statement for Project

Statement Item

$0.00

Revenue from operations (Special note: project deliverables not operational)

$0.00

Direct expenses

Fixed expenses

o Rent of project facilities

$2,000.00

o Utilities of project facilities

$250.00

o Project management staff labor compensation

$80,000.00

o Project management staff compensation benefits

$16,000.00

o Network and communications chargeback

$350.00

o Total fixed expenses

$98,600.00

Variable expenses

o Work package labor compensation

$850,000.00

o Work package compensation benefits

$170,000.00

o Office supplies

$500.00

o Work package purchased materials

$45,000.00

o Travel and subsistence

$10,000.00

o Training for staff

$5,000.00

o Rental and operating leases

$3,500.00

o Total variable expenses

$1,084,000.00

Total direct expenses

$1,182,600.00

Indirect expenses

Indirect allocation of direct support expenses @ 100% of labor compensation

$930,000.00

G&A expenses (% direct)

o Independent R&D @ 2%

$23,652.00

o General executive management @ 15%

$177,390.00

o Legal, HR, finance, contracts, IT @ 12%

$141,912.00

Selling expenses @ 3%

$35,478.00

Total indirect expenses

$1,308,432.00

o Indirect rate (indirect/direct)

111%

Depreciation of capital assets

Special tools and facilities for project

$30,000.00

Software over $25,000

$525.00

Capital leases for special vehicles

$1,200.00

Total depreciation

$31,725.00

Total operating income (expense)

($1,340,157.00)

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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