---
sourceDocument: Australia Strategic Portfolio Management
sourceDocumentLink: https://www.servicenow.com/docs/r/australia/it-business-management

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    - australia

ft:locale :

    - en-US

ft:publication_title :

    - Australia Strategic Portfolio Management

ft:clusterId :

    - itbm

bundleId :

    - itbm

workflow :

    - Technology


---

# Actual cost and effort calculation

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

Release version: Australia  
Updated September 10, 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 in ServiceNow track the realized time and expense spent on demands and their tasks, based on approved time cards and hourly rates.
This enables demand managers to monitor the true expenditure involved in converting demands into products, features, or enhancements by capturing the effort and cost from both demand tasks and extra activities.
Show full answer Show less  

## Calculation Methodology

* **Actual Cost:** Calculated by multiplying hours reported in time cards by the applicable hourly rate of the resource.
* **Actual Effort:** Based on hours reported in time cards for demand tasks and additional activities.
* The actual effort and cost for individual demand tasks roll up to the total actual effort and cost for the demand.

## Hourly Rate Determination

The hourly rate used for cost calculations follows this priority:

* Hourly rate from a rate model associated with the demand.
* If absent, hourly rate from the default labor rate.
* If still not found, hourly rate from the default system property.

## Resource Assignments and Time Cards

* Resource assignments created on demands are used for estimating work and move automatically to resulting work entities once demands are qualified and converted.
* Resource assignments linked to demand tasks do not move to work entities.
* Actual effort and cost recorded via time cards for demand tasks do not update resource assignments directly.
* Extra hours worked outside demand tasks should be recorded separately through the Time Sheet Portal; these contribute to demand-level actual cost and effort but not to demand tasks.

## Demand-Level Calculations

* **Demand Actual Cost** = Sum of actual costs for all demand tasks + actual cost of extra activities.
* **Demand Actual Effort** = Sum of actual effort for all demand tasks + actual effort of extra activities.
* If no tasks or assigned resources exist, actual cost can be captured by submitting time cards directly against the demand, creating expense lines that roll up to the demand.

## Practical Example

For a demand with three tasks assigned to different resources, each working 8 hours, actual cost calculations vary based on the source of hourly rates:

* **Using rate model rates:** Higher hourly rates lead to higher actual costs (e.g., $4,800 total cost for 24 hours effort).
* **Using default labor rates:** Moderate hourly rates yield a lower total cost (e.g., $3,600 total cost for 24 hours effort).
* **Using default system property rates:** Lowest hourly rates produce the lowest total cost (e.g., $1,200 total cost for 24 hours effort).

This example illustrates how the source of the hourly rate impacts the actual cost rolled up to the demand, while actual effort remains consistent.  
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.
{#actual-cost-calculation-for-demands__ol_unx_xrv_23c}

## 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.
{#actual-cost-calculation-for-demands__table_uqr_zdr_pjc__entry__4}

| 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
{#actual-cost-calculation-for-demands__ul_zqr_zdr_pjc}