Glossary of economic and project terms

The glossary will help you understand terms that are directly related or closely related to Navigo. For each term, you will find a technical definition, a simplified explanation and especially a description of what the term represents in Navigo, how it is calculated and where it is displayed.

For clarity, we have divided the concepts into two parts:
Glossary of economic terms
Glossary of project and company terms

Glossary of economic terms

Cash flow

= cash flow = inflows and outflows of funds. Cash flow for a period is the difference between cash receipts and cash outflows for that period.

If you plan all revenue and external costs (subcontracting) for your projects in Navigo, Navigo will calculate the financial balance of your contracts and clearly display it in the CF chart. Other monthly expenses (mainly salaries, overheads, etc.) can be added to this difference.

Price (Selling price)

= the exchange ratio between the goods being exchanged, usually showing the amount of money needed to exchange a good or service.

In Navigo, the price of the entire project is entered in the Planned price field when planning the job, in the Contract price field in the job detail, and in the Expected price field in the case of a business opportunity. In addition, the selling price may occur for statements of work and subcontracts. Thanks to the set selling price, individual statements of work can be invoiced directly. Navigo also uses the term “cost price”, but this only represents costs.

Gross margin

Gross profit/loss

is the difference between the revenue and the cost of the sold performance (turnover – direct costs – overhead)

What gross margin do we use in Navigo?

  • Expected – most often entered by salespeople in the project details in the Business Expectations section.
  • Planned – is entered in the project plan as a fixed amount or percentage of the planned project cost.
  • Forecasted – is shown in the project thermometers as the actual calculated difference between projected revenues and projected and actual costs.
  • Actual – is shown in the project thermometers on closed contracts as the difference between actual revenues and costs.

Circulation

= the consumption of labour and resources in monetary terms in order to achieve a return. The expense may or may not be accompanied by a real outflow of cash(expenditure). Depreciation of fixed assets is an example of an expense that is not effectively accompanied by a cash outflow. The opposite of costs is revenue.

Turnover

  • Turnover is the sum of a firm’s revenues (from the sale of goods, products and services in the ordinary course of the firm’s business, less claims and discounts) in a given period. VAT is not included in the turnover.
  • In Navigo, turnover is the sum of invoices issued and cash receipts.
  • Aggregate amount of invoices issued to customers. Usually by month or cumulatively, i.e. for all months since the beginning of the year. Company engine.

Added value

= the effort in monetary terms added by the entrepreneur to externally purchased inputs from suppliers(turnover – external costs)
In Navigo, the added value is displayed in the Performance Indicators (KPIs).

Receiving

= any increase in the assets of the enterprise, regardless of whether it was achieved on sale. Income is in the broad sense any increase in assets, in the narrower sense only an increase in cash.

The receipt of assets may be in relation to revenue (payment of an invoice issued, receipts for services/products and goods received directly in cash) or an addition to assets not arising in relation to a sale (e.g. a gift received, a loan granted, an increase in the owner’s contribution to the business).

In Navigo, cash receipts and payments of invoices issued are considered as income.

The opposite of income is expenditure and together they represent the basic value variables monitored in the context ofcash flow management.

Direct (unit) costs

= costs that can be directly allocated to individual outputs (products or services) without budgeting (e.g. costs of materials, semi-finished goods, etc.).

In Navigo, we divide direct costs into:

  • External costs = costs of subcontracting = costs incurred outside the enterprise that are linked to individual contracts, representing the sum of invoices received for contracts and treasury expenditure items allocated to contracts.
  • Own direct costs = internal reported costs of the job (materials consumed, direct labour costs, mileage, etc.)

Overheads (overhead)

= costs of a specific enterprise that cannot be expressed as unit (direct) costs, i.e. they cannot be allocated to individual products or services, they must be budgeted for individual performance. Typical examples of overhead costs are depreciation and repairs of fixed assets, overhead labour costs, energy consumption, property tax, rent and others.

In Navigo, you can set an overhead hourly rate that is automatically added to the user’s entered hourly rate. Therefore, not only the direct wage costs but also an adequate part of the overhead costs are taken into account when reporting the work.

You are not only paying the salary of the employee who does something directly for the customer, but also the rent, cars and the work of your accountant. All these costs must be added to each hour worked.

Revenue

= the aggregate of funds received for goods sold or services rendered in the relevant time period. Unlike turnover, it also includes payments that were later refunded.

Disbursement (profit/loss)

= any outflow of funds, regardless of whether it is earmarked.

An expense may be incurred in connection with the incurrence of a cost (e.g. payment of an invoice received for the purchase of goods or services, purchase of valuables, cash fuel, etc.), withdrawal of a deposit or reduction of share capital, a gift, repayment of a loan or borrowing.

In Navigo, cash disbursements and payments of invoices received are considered as expenditure.

The opposite of expenses is income and together they represent the basic value variables monitored in the context of cash flow management.

Retrieved from

= the amounts of money received by an enterprise from all its activities during a period, irrespective of whether they are recovered during that period. The opposite of revenue is cost.

Project and company terms

Allocation

= a project task assigned to a specific person with a specified number of hours available to the researcher. In Navigo, you can enter the number of hours directly or plan the allocation as well as the entire project using the financial budget. Navigo calculates the hours available to a particular solver for a task using the set hourly cost of the solver (hourly super gross wage + hourly overhead rate). Therefore, the amount of hours will vary for different researchers if they have different salaries (junior vs. senior).

EVM (Earned Value Management)

In English, “Achieved Value Analysis” is a method used in project management to monitor and evaluate the status of a project. The principle of the EVM method is to determine what the value of what we have done is, and how much it cost us compared to the value we had planned to create at that point in time. This value can be expressed in money, man-days or any other quantity in which we are able to express the necessary values.

Executive officer

This is the person who handles financial and legal matters with Navig. For example, contract signings or price adjustments.

Gantt chart (Gantt)

= a type of bar chart named after its pioneer H. L. Gantt. A Gantt chart is used in project management to graphically represent planned activities over time. In its basic form, the Gantt chart does not contain relationships between activities, but in its extended form, thanks to modern software tools, the diagrams also show the continuity of activities by means of broken arrows or lines leading from the beginning or end of one activity to the beginning or end of another activity.

The Gantt chart in Navigo shows the status of your planned project (using WBS or a simple budget) in terms of timing, but it also acts as a tool where you can plan the entire project just based on the timing parameters. In Gantt, you can view not only the start and end of the project, its subprojects, WBS elements, but also all subcontract dates, allocations, projected revenue and any other necessary milestones. The Gantt chart is displayed in each project plan, but you can view it across multiple or even all of your projects.

Key user (Navigo coordinator)

This is the person who is responsible for the way projects are managed in a company that uses Navigo3 for project management. The key user helps with the initial setup of the system, as he is most familiar with the company’s processes and project management methods, and is informed about new features and changes in Navigo3.

The EVM chart is created automatically in Navigo. You need to have the basic project data filled in (cost plan, start and end date), then individual curves are created based on how you plan and execute the project. The curve labeled Actual Cost is made up of the cost of the job, the Planned Value curve is made up of the plans for the actual work and subcontracts, and the Achieved Value curve will begin to appear when you have entered at least one completion status for the project.

KPIs (Key Performance Indicators)

KPI is an abbreviation of the English original “key performance indicators”, in Czech it is translated as “key performance indicators” or “key metrics”. They are indicators, metrics or performance metrics assigned to a process, service, organizational unit or the entire organization that express the desired performance.

Navigo’s project KPIs offer several different metrics to track the performance and success of projects and the entire organization(turnover, gross profit, costs, volume of contracts signed, volume of business opportunities, etc.).

Milestones

A milestone in Navigo is a point in the project timeline. Milestones can be contractual (Contract Date type) or set by the project manager based on the project plan (Normal Milestone type).

The Milestones function allows you to specify important project deadlines and link various parts of the plan (subcontracts, allocations, future revenue, WBS elements, etc.) to them. As soon as a date entered as a Milestone changes, your entire plan will automatically update in time so that everything linked to the Milestone is linked to it.

Expected price

= expected selling price of the trading opportunity. It is most often entered into Navigo by salespeople in the project details in the Business Expectations section, along with the project’s chance of success that they expect for the opportunity. During the course of a trading opportunity, the odds and expected value may change.

Planned price

= the amount, usually the assumed contract price, specified in the project plan, which will be invoiced subsequently. After subtracting the gross profit and any reserve, you are left with the portion available for the contract. You can further plan this into subcontracts and your own work.

Projects

A project is a time-bound and coherent set of activities and processes aimed at implementing, creating or changing something. Projects need to be managed within the company.

In Navigo, projects are divided into opportunities (business opportunities) and contracts (implementation). You can use a number of tools in Navigo to manage, plan and evaluate your contracts(WBS, Gantt chart, KPIs, EVM, etc.) and simple graphical thermometers will inform you about the current project balance and prediction of the outcome.

Opportunities (Business Opportunities)

= projects in the commercial phase that become contracts after the contract is signed.

Contract price

= the amount stated in the contract as the total price of the contract, which will be invoiced upon completion. They are usually entered by traders in the project details under Contract Dates after the contract is signed, when the project changes from an opportunity to a contract. In most cases, this value is then entered in the contract plan itself as the planned price.

Thermometers

The thermometer in Navigo is our original simple graphical representation of a project based on its financial plan. The thermometer is generated automatically for each project or part of it by creating a plan and then implementing it (statements of work, subcontract performance, invoicing, etc.). The thermometers are displayed across Navig – so you can see the financial balance and prediction of the results of all projects, each project separately, as well as the balance of each part of the project down to the level of the smallest items.

Spent profit

= the difference between the planned gross profit and the actual gross profit which is lower than planned or the loss on an already closed project.

Utilization

Translated as “usage”, “utilization”, in Navigo it represents the percentage of a user’s daily work time that a given employee is expected to report and work on projects. Utilisation rates are usually 80-85% for executives, but much lower for managers, who spend more time managing subordinates, holding meetings, etc. The difference between the daily hours and the time used must be taken into account when calculating the overhead rate(overhead costs).

WBS (Work Breakdown Structure)

It is most often translated into English as “Hierarchical Structure of Work” or “Hierarchical Structure of Activities”. It is a simple analytical method used in project management that aims to decompose a project into more detailed elements in a tree structure up to a level of detail that can be assigned responsibilities, workload and time horizon. The individual decay elements are always the products or results of activities. This technique helps to determine costs in advance and to monitor the progress of delivery.

In Navigo, the WBS is not only used for planning but also for project management, it allows you to continuously evaluate the costs of individual project phases and, thanks to the ability to export and import the WBS in the form of an Excel spreadsheet, you can create templates of the projects that occur most frequently in your company. You can create any number of subcontracts, allocations (tasks) and planned revenue on each element of the WBS, so you are always in control of the project. For each scheduled part, a simple thermometer is displayed to show the current project balance and prediction of results.

Contracts

= projects under implementation. You can use a number of tools in Navigo to manage, plan and evaluate your contracts(WBS, Gantt chart, KPIs, EVM, etc.) and simple graphical thermometers will inform you about the current project balance and prediction of the outcome.