During the life of a contract, it may become necessary to modify the original revenue formula because of an error that was made when selecting the original revenue formula, a modification in the terms of the contract, or a modification in the reporting requirements of the contract.

Regardless of the reason for the change, you must carefully evaluate the type of revenue formula that you have been using and the formula that replaces it. Depending on the type of revenue formulas involved, modifying a project's revenue formula may require analysis of transactions posted, revenue posted, PLCs, prior year revenue, and ceilings. Perform a thorough analysis of the effect each revenue formula has on the project and general ledgers before making any modifications to the revenue formula.

The information that follows provides guidance on each type of revenue formula and describes issues to be aware of when modifying revenue formulas. This topic is divided into three basic sections:

• Basic Revenue Formula Types
• General Information on Modifying Revenue Formulas
• Specific Revenue Formula Modification Instructions