Understanding revenue forecasting in Operating
Written By Lauri Eurén
Last updated 1 day ago
Revenue forecasting answers one question: if your team executes the current plan and performance so far continues, what will this project (or a group of projects) earn in total? This article explains how Operating builds that forecast, how it differs from planned and earned revenue, what the forecast cut-off date does, and how the forecast behaves for each billing type. It is written for anyone who reads project financials — project leads, finance, and leadership.
Three ways Operating measures revenue
Operating tracks revenue from three angles. Keeping them straight is the key to reading any financial report correctly.
Planned revenue is what your current plan expects to earn, looking forward across the whole Project. Where it comes from depends on the billing type: on per-hour Projects (time-and-materials and capped time-and-materials) it is calculated from Allocations — allocation percentage × working hours × billing rate; on fixed-price Projects it comes from the Budget, distributed across the timeline by the revenue recognition method, with Allocations shaping how it is spread rather than setting the total. Either way it includes both confirmed and tentative work, and it does not yet know what has actually happened.
Earned revenue (the actuals) comes from completed work. On per-hour Projects it is calculated from Time entries at their billing rate; on fixed-price Projects it is determined by the revenue recognition method. It only ever describes the past.
Forecasted revenue is a hybrid — an estimate at completion. It takes earned revenue for the part of the Project that has already happened, then adds planned revenue for the part still to come. It is the best current answer to "what will this Project earn in total?"
Forecasted revenue is not planned revenue. Planned revenue shows only the initial plan. Forecasted revenue replaces the past portion of that plan with what actually happened, so it stays anchored to reality as the Project progresses.
The forecast cut-off date
The forecast cut-off date is the line between "what happened" and "what we expect."
Everything before the cut-off uses actual tracked time and expenses.
Everything on or after the cut-off uses planned Allocations.
In Operating's words: plans are used from the selected date onwards, and actuals before it. The cut-off is usually set to today, which gives you "actuals to date, plans from here forward." You can also set it to the start of the current month for period-aligned reporting, or to a date in the past for historical what-if analysis.
You set the cut-off date in the Project Portfolio report toolbar; it appears once you choose a forecasted unit (see "Where you'll see forecasting" below).
Confirmed and tentative work in the forecast
Allocations are either confirmed (scheduled work the team is committed to) or tentative (conditional work, such as a deal that has not closed).
Only confirmed Allocations feed the forecast.
Tentative work is shown alongside the forecast as a separate, greyed-out value. It represents upside if the tentative work materializes, but it does not move the forecast itself.
This is consistent with how fixed-price recognition already treats uncertainty: on a confirmed fixed-price Project, tentative Allocations receive zero recognized revenue, so they never dilute the forecast.
How forecasting works for each billing type
The forecast follows the Project's billing type.
Time-and-materials. Revenue is earned directly from hours worked, with no ceiling. The forecast is a straightforward substitution: actuals before the cut-off, planned hours × rate after it. The total moves up or down directly with how much work is planned. On the Project's Status tab this appears as a Projected outcome — earned revenue to date plus plans for the rest of the Project, compared against the budget so you can see whether you are tracking over or under.
Capped time-and-materials. Like time-and-materials, but total earned revenue cannot exceed the Budget. After the cut-off, planned revenue accumulates period by period until the remaining Budget is used up; once a Budget is exhausted, every later period forecasts zero revenue, even where work is still planned. Those planned hours are still shown (as time value) so resource planning stays accurate — they just generate no further revenue. Each Budget caps independently, and unused room in one does not roll over into the next.
Fixed-price. The contract value is fixed, so forecasted revenue always lands exactly on the Budget. Operating sums the actuals earned before the cut-off, subtracts that from the total Budget, and distributes the remainder across future planned work in proportion to each period's weight. Because revenue is fixed, the meaningful forecast here is about cost and margin: the Status tab shows projected profit and margin as fixed revenue minus projected costs, compared against your planned profit.
Non-billable. Revenue is always zero and a forecast is not meaningful. Costs are still tracked for profitability analysis.
Where you'll see forecasting
Project Portfolio report. Choose a forecasted unit — Forecasted revenue, Forecasted costs, Forecasted gross profit, or Forecasted margin % — to see estimates at completion across your Projects. The Forecast cut-off date control appears in the toolbar whenever a forecasted unit is selected.
Project Status tab. Each Project's Status tab shows a forecast summary. Per-hour Projects show a Projected outcome against budget; fixed-price Projects show projected profit and margin.
Related articles
Understanding planned vs. actuals
How revenue recognition works for fixed-price projects
Billing types (per hour, capped T&M, fixed price)
Project budgeting & profitability