Interest in UniPhi – Purpose and Function

Overview

The Interest feature in UniPhi is used to calculate financing or capital holding costs on project expenditure over time. It allows organisations to apply an interest rate to project costs based on their cash flow phasing, helping to model the true financial impact of funding a project.

This functionality is particularly useful for projects where costs are funded through loans, capital reserves, or investment funds, such as construction, infrastructure, or property development projects.

By applying interest automatically, UniPhi can include financing costs in project financial modelling, feasibility analysis, and forecasting.

Interest can be accessed by drilling into a project and going to the Edit subnavigation of that project in the Summary Module.

Key Components of the Interest Feature

Interest Code

The Interest Code determines which financial category or cost account the interest will be recorded against.

This code typically aligns with the project’s Chart of Accounts (CoA) structure.

When an interest code is selected, UniPhi allocates calculated interest values to that account within the project’s financial model.

If no interest code is selected, interest calculations are not applied.

Apply To

The Apply To setting controls which financial datasets the interest calculation will affect.

Available options typically include:

• Budget

• Forecast

• Budget and Forecast

  
  

Applying interest to both budget and forecast allows organisations to evaluate both the planned financial model and the current projected outcome of the project.

Interest Rate

The Interest Rate defines the percentage used to calculate the financing cost.

This rate represents the cost of borrowing or the cost of capital associated with funding project activities.

The interest rate is applied to project costs based on their timing in the project cash flow.

Offset (Months)

The Offset determines when the interest calculation begins relative to project expenditure.

An offset allows organisations to delay the start of interest calculations by a specified number of months. This is useful when financing arrangements begin after the project has started or when interest-free periods apply.

How Interest Calculations Work

Interest calculations in UniPhi are driven by the phased cost profile of the project.

The general process is:

1. Project costs are distributed over time using cost phasing within the budget or forecast.

2. UniPhi tracks the cumulative value of project expenditure.

3. The configured interest rate is applied to this value across the project timeline.

4. Interest costs are generated and recorded against the selected interest code.

   
   

Because the calculation is tied to cost phasing, the timing of expenditure directly affects the amount of interest generated.

Projects with longer durations or delayed revenue streams typically accumulate higher interest costs.

Important System Behaviour

When interest auto-calculation is enabled, UniPhi recalculates the financial model associated with the selected interest code.

Existing uncontracted phasing values related to that code may be cleared to allow the system to generate updated values based on the interest configuration.

This ensures the interest values remain consistent with the project's latest cost phasing.

Best Practice When Using Interest in UniPhi

To ensure accurate interest modelling:

1. Maintain accurate cost phasing. Interest calculations depend on the timing of project expenditure.

2. Use the correct chart of accounts structure. Interest should be assigned to the appropriate financial category.

3. Apply interest to the correct financial dataset. Decide whether interest should affect the budget, forecast, or both.

4. Configure offset values carefully. This ensures the interest model reflects actual financing arrangements.