How are Single Project Capacity and Aggregate Total Capacity calculated in TradeTapp? (General contractors)

TradeTapp will recommend a "Single Project Capacity" and "Aggregate Total Capacity" on any completed vendor profile that has financial data available. 

In this article, you'll learn how each are calculated and important considerations when reviewing the calculated values: 

• How Single Project Capacity is calculated
• How Aggregate Total Capacity is calculated
• Important notes about capacity calculations
• Frequently asked questions about capacity recommendations
   

How Single Project Capacity is calculated

TradeTapp recommends the least (or lowest resultant value) of the three following limiting formulas:

• 1 to 1.5 x “Largest Completed Project” (range depends on available “Working Capital”)
• 4 x “Working Capital” (Working Capital = "Current Assets" - "Current Liabilities")
• 25% x “Average Revenue” (up to rolling 3 years)
   

How Aggregate Total Capacity is calculated

TradeTapp recommends the least (or lowest resultant value) of the three following limiting formulas:

• 10 x “Equity”
• “Working Capital” / 7.5%
• 125% x “Annual Revenue”

Important notes about capacity calculations

• The "Single Project Capacity" and "Aggregate Total Capacity" are calculated independently. There is no setting that links the two calculations. 
• Capacity recommendations are different from your internal limits. 
• Capacity recommendations are not visible to Basic users or BuildingConnected Pro users. Financial, Reviewer, and Acceptor users are able to view these recommendations.
• Capacity recommendations are only as good as the quality of the data being evaluated.
• Capacity recommendations do not factor important qualitative information that your company may know or learn about a vendor. 
   

Frequently asked questions about capacity calculations

• Why is the Single Project Capacity greater than the Aggregate Total Capacity?
• Why is the Single Project Capacity or Aggregate Total Capacity $0?
   

Why is the Single Project Capacity greater than the Aggregate Total Capacity?

The "Single Project Capacity" and "Aggregate Total Capacity" are calculated independently. There is no setting that links the two calculations.

As a result, the "Single Project Capacity" can be greater than the "Aggregate Total Capacity" if the underlying calculations produce those values.

If the capacities are different than expected, review the values that contribute to each capacity calculation.
 

Why is the Single Project Capacity or Aggregate Total Capacity $0?

When calculations for the single project capacity and aggregate total capacity are run, if the lowest resulting value is negative, TradeTapp will populate $0. In these cases, we suggest checking the variables that contribute to the calculation of that capacity. 

For example, Working Capital may be low. Working Capital is the vendor's current assets minus their current liabilities. You can check the Financial Input on the vendor to see if the numbers are entered incorrectly, but if their current liabilities are greater than their current assets, that could be a reason why their capacities are $0. 
 

Want to learn more about risk assessment in TradeTapp? Download the TradeTapp Risk Assessment Overview.