Documentation Index

Fetch the complete documentation index at: https://help.ruddr.io/llms.txt

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The Percentage of Billable Hours method recognizes revenue on a fixed fee project based on how much work has been completed. It uses billable hours delivered as a measure of progress. 👉 Use this method when billable hours are a reliable indicator of project completion. Best when:
All billable hours are roughly equal in value and cost. Why you’d choose it:

• It’s the simplest and most intuitive method
• Progress is directly tied to effort (hours worked)
• Works well when:
  • Team members have similar bill rates
  • Cost differences between roles are minimal
• Easy to explain and predict

In this method, every billable hour contributes equally to progress

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Before you start

Make sure your project includes:

• A Services Revenue Budget
• A Billable Hours Budget

Both can be configured at the summary or detailed level.

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How this method works

Ruddr recognizes revenue based on how much of the total projected work has been completed. At a high level:

1. Track billable hours worked to date
2. Estimate total project hours
3. Calculate percent complete
4. Recognize revenue based on that percentage

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How Ruddr calculates recognizable revenue

For each recognition period, Ruddr:

1. Calculates total billable hours worked to date
2. Determines total projected billable hours as the greater of:
   • Budgeted hours
   • Actual hours + future allocated hours (if using allocations)
3. Calculates percent complete
4. Calculates total revenue earned to date
5. Subtracts previously recognized revenue to determine the current period entry

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Important: projects with allocations

If your project uses resource allocations:

• Projected hours can increase during the project
• This happens when:
  • Actual hours + future allocations exceed the original budget

When this occurs:

• Revenue recognition adjusts automatically
• Earlier expectations may shift based on the new projection

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Key formulas (reference)

Percent complete
Total billable hours worked ÷ Total projected billable hours Total projected hours
The great of Budgeted billable hours and (Actual billable hours + future allocated billable hours) Revenue earned to date
Percent complete × Services revenue budget Revenue for current period
Revenue earned to date − Previously recognized revenue

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How automation works

If automated revenue recognition is enabled:

• Runs weekly or monthly
• Monthly runs create entries for the previous month
• Weekly runs create entries for the prior week
• If using allocations:
  • Future forecasted entries are created
  • Forecasts are refreshed each run

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Example 1: Project stays within budget

This example shows the standard behavior when projected hours do not change. Project setup:

• Services Revenue Budget: $120,000
• Billable Hours Budget: 1,200 hours
• Monthly automation enabled
• Project stays within budget

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Month 1

• Hours to date: 240
• Percent complete: 20%
• Revenue earned to date: $24,000
• Revenue recognized: $24,000

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Month 2

• Hours to date: 600
• Percent complete: 50%
• Revenue earned to date: $60,000
• Previously recognized: $24,000
• Revenue recognized: $36,000

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Month 3

• Hours to date: 900
• Percent complete: 75%
• Revenue earned to date: $90,000
• Previously recognized: $60,000
• Revenue recognized: $30,000

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Month 4

• Hours to date: 1,200
• Percent complete: 100%
• Revenue earned to date: $120,000
• Previously recognized: $90,000
• Revenue recognized: $30,000

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Summary table

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Summary

• Revenue follows linear progress
• Each period recognizes the incremental earned amount
• Total revenue = $120,000

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Example 2: Total forecasted billable hours exceed budgeted billable hours

This example shows what happens when projected hours increase during the project. Project setup:

• Services Revenue Budget: $120,000
• Original Billable Hours Budget: 1,200 hours
• Monthly automation enabled
• Project uses resource allocations

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What changes?

In Month 3, projected hours increase because:

• Actual hours + future allocated hours exceed the original budget

Ruddr recalculates total projected hours using:

max(Budgeted hours, Actual hours + future allocated hours)

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Month 1

• Hours to date: 240
• Projected hours: 1,200
• Percent complete: 20%
• Revenue earned to date: $24,000
• Revenue recognized: $24,000

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Month 2

• Hours to date: 600
• Projected hours: 1,200
• Percent complete: 50%
• Revenue earned to date: $60,000
• Previously recognized: $24,000
• Revenue recognized: $36,000

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Month 3 (projected hours increase)

• Hours to date: 900
• Projected hours: 1,400
• Percent complete: 64.29%
• Revenue earned to date: $77,142.86
• Previously recognized: $60,000
• Revenue recognized: $17,142.86

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Month 4

• Hours to date: 1,400
• Projected hours: 1,400
• Percent complete: 100%
• Revenue earned to date: $120,000
• Previously recognized: $77,142.86
• Revenue recognized: $42,857.14

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Summary table

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Why revenue decreases in Month 3

If projected hours had stayed at 1,200:

• Percent complete would be: 900 / 1,200 = 75%
• Revenue earned to date would be: $90,000

But because projected hours increased to 1,400:

• Percent complete becomes: 900 / 1,400 = 64.29%
• Revenue earned to date becomes: $77,142.86

👉 This results in less revenue recognized in Month 3

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Key takeaway

When projected hours increase:

• Percent complete decreases
• Revenue is spread across more total hours
• Current period revenue may be lower than expected

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Learn more

• Fixed Fee Revenue Recognition
• The Revenue Recognition Ledger