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sourceDocument: Australia Strategic Portfolio Management
sourceDocumentLink: https://servicenow-prod.fluidtopics.net/r/it-business-management

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    - australia

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ft:publication_title :

    - Australia Strategic Portfolio Management

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---

# Actual cost and effort calculation

# Actual cost and effort calculations for demands {#ariaid-title1}

Release version: Australia  
Updated June 17, 2026  
![](https://www.servicenow.com/docs/portal-asset/ico-clock) 3 minutes to read
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## Summary of Actual Cost and Effort Calculations for Demands

Actual cost and effort calculations provide insights into the expenses and time invested in demands and demand tasks, essential for demand managers.
These values are derived from approved time cards and hourly rates, allowing for accurate tracking of the costs associated with transforming demands into products, features, or enhancements.
Show full answer Show less  

## Key Features

* **Cost Calculation:** The actual cost is calculated by multiplying reported hours from time cards by the hourly rate of the resource. Efforts are similarly tracked.
* **Hourly Rate Determination:** The hourly rate is derived from a rate model, default labor rate, or system property, ensuring accuracy in cost calculations.
* **Resource Assignments:** Resource assignments link to demands and automatically transfer to work entities upon demand qualification, although task-specific assignments do not.
* **Extra Hours:** Any additional hours worked outside demand tasks must be recorded separately via the Time Sheet Portal and contribute to the overall demand cost but not to the task-specific calculations.

## Key Outcomes

Actual costs and efforts for a demand are calculated as:

* **Demand Actual Cost:** Sum of actual costs from all demand tasks plus costs from extra activities.
* **Demand Actual Effort:** Sum of actual efforts from all demand tasks plus efforts from extra activities.

If no tasks or resources are assigned, costs can still be captured through time card submissions directly against the demand, enabling complete tracking of expenditures.  
Actual cost and effort represent the realized cost and time spent on demands and demand tasks. Values are calculated from approved time cards and hourly rates.

## Overview of calculation {#actual-cost-calculation-for-demands__section_mcz_nrv_23c}

Working on demands and demand tasks involves cost and time that add to the overall expenditure of converting a demand to a product, feature, or enhancement. Demand managers should track the actual cost and effort incurred in assessment and planning activities.

* The actual cost is calculated by multiplying the hours reported in the time card by the hourly rate of the resource.
* The actual effort for a demand task is calculated based on the hours reported in the time card.
* The actual effort and cost for demand tasks roll up to calculate the actual effort and cost for the demand.
{#actual-cost-calculation-for-demands__ul_c1y_qrv_23c}

## Hourly rate calculation {#actual-cost-calculation-for-demands__section_gw1_wrv_23c}

The hourly rate for calculating actual cost is derived in the following order:

1. If a rate model is associated with the demand, the actual cost is calculated based on the hourly rate defined in the rate model.
2. If a rate model is absent or if an hourly rate isn't found in the rate model, the hourly rate is derived from the default labor rate.
3. If an hourly rate isn't found in the default labor rate, the hourly rate is derived from the default system property.
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## Resource assignments and time cards {#actual-cost-calculation-for-demands__section_cqs_csv_23c}

Resource assignments created in the demand are used for resource estimation of the work entity created from the demand. These resource assignments automatically move to the resulting work
entity when a demand is qualified and converted. However, any resource assignments for allocating resources or groups to a demand task aren't moved to the work entity.

When you submit a time card for a demand task, the actual effort and cost aren't reflected in the resource assignment. If a resource spends extra hours working on a demand that aren't associated with demand tasks, this time must also
be recorded. The resource submits the time card for recording extra hours using the Time Sheet Portal. This extra cost and effort is added to the demand but isn't reflected in the actual cost and effort for the demand tasks.

## Demand-level calculations {#actual-cost-calculation-for-demands__section_ptj_lsv_23c}

The actual cost and actual effort for the demand are calculated as follows:

* Demand Actual Cost = actual cost of all demand tasks + actual cost of extra activities
* Demand Actual Effort = actual effort of all demand tasks + actual effort of extra activities
{#actual-cost-calculation-for-demands__ul_dlc_nsv_23c}

If a demand has no task or assigned resource, you can capture the actual cost by submitting a time card against the demand. After the time card is approved, an expense line is created on the demand. The expense line is processed and
the actual cost of work for that time card rolls up to the demand in the Demand Actual Cost column.

## Cost and effort calculation example {#actual-cost-calculation-for-demands__section_sxm_ydr_pjc}

This example demonstrates actual cost and effort calculation for demand tasks and roll up to the demand.

For demand D1, the demand manager creates three demand tasks (DT1, DT2, and DT3) and assigns resources R1, R2, and R3 to each task respectively.
{#actual-cost-calculation-for-demands__table_tqr_zdr_pjc__entry__4}

| Resource | Hourly rate in the rate model | Hourly rate in the default labor rate | Hourly rate in the system property |
|-|-|-|-|
| R1 | $200 | $150 | $50 |
| R2 | $250 | $200 | $50 |
| R3 | $150 | $100 | $50 |
[Table 1. Hourly resource rates]

{#actual-cost-calculation-for-demands__table_tqr_zdr_pjc}

Each resource spends eight hours on the assigned demand task and submits a time card.
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| Actuals | Demand task DT1 | Demand task DT2 | Demand task DT3 |
|-|-|-|-|
| Actual effort | 8 hours | 8 hours | 8 hours |
| Actual cost | 200 \* 8 = $1600 | 250 \* 8 = $2000 | 150 \* 8 = $1200 |
[Table 2. Rate derived from the rate model]

{#actual-cost-calculation-for-demands__table_uqr_zdr_pjc}  
Demand roll-up:

* Demand Actual Cost = $4,800
* Demand Actual Effort = 24 hours
{#actual-cost-calculation-for-demands__ul_vqr_zdr_pjc}
{#actual-cost-calculation-for-demands__table_wqr_zdr_pjc__entry__4}

| Actuals | Demand task DT1 | Demand task DT2 | Demand task DT3 |
|-|-|-|-|
| Actual effort | 8 hours | 8 hours | 8 hours |
| Actual cost | 150 \* 8 = $1200 | 200 \* 8 = $1600 | 100 \* 8 = $800 |
[Table 3. Rate derived from default labor rate(Rate model not associated with demand.)]

{#actual-cost-calculation-for-demands__table_wqr_zdr_pjc}  
Demand roll-up:

* Demand Actual Cost = $3,600
* Demand Actual Effort = 24 hours
{#actual-cost-calculation-for-demands__ul_xqr_zdr_pjc}
{#actual-cost-calculation-for-demands__table_yqr_zdr_pjc__entry__4}

| Actuals | Demand task DT1 | Demand task DT2 | Demand task DT3 |
|-|-|-|-|
| Actual effort | 8 hours | 8 hours | 8 hours |
| Actual cost | 50 \* 8 = $400 | 50 \* 8 = $400 | 50 \* 8 = $400 |
[Table 4. Rate derived from default system property(Rate model not associated with demand and hourly rate not found in default labor rate.)]

{#actual-cost-calculation-for-demands__table_yqr_zdr_pjc}  
Demand roll-up:

* Demand Actual Cost = $1,200
* Demand Actual Effort = 24 hours
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