Project Costing

Project Costing is the processing of expenditures to calculate their cost to each project and determine the GL accounts to which the costs will be posted. Costing is performed for the following types of expenditures:

1. Pre-approved expenditures.
  • Labor
  • Usages & Miscellaneous Transactions
  • Expense reports

2. Burden transactions.
3. Expenditures submitted from Oracle Internet Expenses.
4. Supplier Costs (Supplier invoice from AP).
5. Imported expenditures.
6. Adjusted expenditures in Oracle Projects that need re-costing.
 

Project Costing Process

1. Labor :

  • Define an expenditure type of overtime and straight. You can assign a cost rate if the expenditure type has same rate for all employees/jobs
  • Define the rate schedule of employee & job. Enter the rate of each employee.($100 /hour)
  • Define the labour costing rules . Assign the rate schedule defined in point ii to the organization labour costing rules.
  • Enter a pre approved expenditure of overtime. Enter the employee, expenditure type & qty as 10. Submit & Release the batch
  • Run the program ‘PRC: Distribute Labor Costs’. Verify the cost. The amount should be 10 * 100 = 1000
  • Run the program ‘PRC: Interface Labor Costs to General Ledger’
2. Non Labor Resources :

  • Define an expenditure type of usage. You can assign a cost rate if the UOM is not currency
  • Define the Non Labour resource and assign the expenditure type created in step i. Assign a cost rate for the project organization/OU. ($100 /Ea)
  • Define the rate schedule of the NLR. This rate is used for billing rate. The cost rate is taken from the NLR or expenditure type form.
  • Enter a pre approved expenditure of Usage. Enter the organization, expenditure type & qty as 10. Submit & Release the batch
  • Run the program ‘PRC: Distribute Usage and Miscellaneous Costs’. Verify the cost. The amount should be 10 * 100 = 1000
  • Run the program ‘PRC: Interface Usage and Miscellaneous Costs to General Ledger’

3. Non-labor expenditure type :

  • Define an expenditure type of supplier invoice/expense report/wip/inventory/misc transaction. You can assign a cost rate if the UOM is not currency. The UOM of NLE is mostly currency and the amount comes from invoice/expense report/inv/wip. You should assign a rate for Misc expenditure type
  • Define the rate schedule of the Non labor expenditure type. This rate is used for billing rate. The cost rate is taken from the NLR or expenditure type form.
  • Enter a pre approved expenditure of expense report/wip/inventory/misc transaction. Enter the organization, expenditure type &. Submit & Release the batch.
Pre approved expenditure for supplier invoice is not available. You need to enter an invoice in oracle payables with the project details. Validate and account the invoice. Run PRC: Transaction Import / PRC: Interface Supplier Costs program. You can follow the same method of expense report/wip/inventory

 
  • Run the program ‘PRC: Distribute Usage and Miscellaneous Costs’/ ‘PRC: Distribute Expense Report Costs’ /’ PRC: Distribute Supplier Invoice Adjustment Costs’. Verify the cost.
  • Run the program ‘PRC: Interface Usage and Miscellaneous Costs to General Ledger’

Overview of Costing in Oracle Projects

Asshown in the illustration, Costing in Oracle Projects includes the following major steps:
1. Enter and approve expenditures through the Oracle Projects user interface, or import transactions (for example, through Transaction Import).
You can use Transaction Import to import unaccounted and accounted transactions. If you import unaccounted transaction, then you must run the costing processes for the transactions. If you import accounted transactions, then no additional processing is needed.

2. Distribute costs and derive default accounting.

3. Generate cost accounting events.
The generate cost accounting events process performs the following tasks:
  • Collects cost distribution lines in Oracle Projects and uses AutoAccounting to determine the default liability accounts for raw and burden costs
  • Generates cost accounting events for Oracle Subledger Accounting
4. Create accounting in Oracle Subledger Accounting and transfer the accounting entries to Oracle General Ledger. Depending on the parameter values you select, the create accounting process performs the following tasks:
  • Creates subledger accounting entries for unaccounted accounting events. If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle SubledgerAccounting overwrites default accounts, or individual segments of accounts, that Oracle Projects derives using AutoAccounting.
  • Transfers accounting entries to the Oracle General Ledger interface tables.
  • Initiates the journal import process in Oracle General Ledger. The journal import process uses the summary interface information stored in the Oracle General Ledger interface tables and automatically creates journal entries for posting in Oracle General Ledger.
  • Initiates posting of journal entries in Oracle General Ledger.
Note: You can optionally run the Subledger Period Close Exceptions Report to view information about unprocessed accounting events, accounting events in error, and transactions that are successfully accounted in final mode in Oracle Subledger Accounting, but not posted in Oracle General Ledger. This report provides you with the ability to separately tie back and determine whether accounting entries are posted in Oracle General Ledger.

11i Process


Costing Processes


Calculating Costs

This section briefly describes how Oracle Projects calculates costs for expenditures.
Each transaction has two cost amounts when processed, raw and burdened. Oracle Projects calculates these amounts for each detail transaction when you distribute costs using any of the following processes:

  • Distribute Labor Costs
  • Distribute Usage and Miscellaneous Costs
  • Distribute  Expense Report Adjustments
  • Distribute Supplier Cost Adjustments
The raw cost is the actual cost of the work performed, and the burden cost is the indirect cost of work performed. The burden costs are created to apply overhead costs to projects to provide an accurate total cost figure. The burdened cost is the total cost of the expenditure, or the sum of raw cost and burden cost. Oracle Projects calculates the burden cost using the raw cost and a burden multiplier.

Calculating Labor Cost
The PRC: Distribute Labor Costs process handles labor items using quantity and rates as follows:
  • Raw cost is the result of multiplying hours by a rate.
  • Burden cost is the result of multiplying raw cost by a burden multiplier.
  • Burdened cost is the sum of raw cost and burden cost.
Note: You can define a unique labor costing algorithm using the Labor Costing Extensions

Calculating Cost for Usages, Expense Report and Miscellaneous Transactions
Oracle Projects calculates the cost for usages and miscellaneous transactions as follows:
  • Raw cost is equal to quantity (if quantity is in currency, for example, a currency amount), or alternatively, raw cost is the result of multiplying quantity by a rate (if quantity is not in currency). You can define cost rates for usage and miscellenous costs as follows:
cost rates by expenditure type
cost rates by non-labor resource and owning organization for usages (optional); overrides expenditure type cost rate
  •  Burden cost is the result of multiplying raw cost by a burden multiplier.
  •  Burdened cost is the sum of raw cost and burden cost.
Calculating Burden Cost and Total Burdened Cost
Oracle Projects calculates burden cost by multiplying raw cost by a burden multiplier.
This calculation is represented in the following formula:
Burden Cost = Raw Cost x Burden Multiplier

Oracle Projects calculates total burdened cost by adding burden cost to the raw cost amount. This calculation is represented in the following formula:
Total Burdened Cost = Raw Cost + Burden Cost
You use the burden multiplier to derive the total amount of the burden cost.

Calculating Cost for Supplier Invoices
Oracle Projects calculates the raw cost for supplier invoices using the cost amount entered as the invoice amount for the invoice in Oracle Payables.
  • Raw cost is equal to the supplier invoice amount from Oracle Payables.
  • Burden cost is the result of multiplying raw cost by a burden multiplier.
  • Burdened cost is the sum of raw cost and burden cost.
Oracle Projects calculates the burdened cost for supplier invoice transactions during the following processes:
PRC: Interface Supplier Costs
PRC: Distribute Supplier Invoice Adjustment Costs

Expenditures


Time Card, Expense Report, Usages, Inventory, Work in Process, Miscellaneous Transaction and Burden Transaction
An expenditure is a group of expenditure items, or transactions, incurred by an employee or an organization for an expenditure period. You charge expenditures to a project to record actual work performed or cost incurred, and you charge commitments to future, committed costs you expect to incur.

You must charge all actual expenditure items and future commitments to a project and task. Examples of actual  expenditures are timecards, expense reports, usage logs, and supplier invoices. Examples of commitments are requisitions and purchase orders.
The following are examples of expenditures and commitments:
  • You have worked eight hours on Monday, June 6 for project A, task 1 doing Professional work (expenditure)
  • You travelled twenty miles on Tuesday, June 7 for project X, task 1 using your own vehicle (expenditure)
You associate each expenditure item with an expenditure type class, (such as Straight Time or Supplier Invoice). The expenditure type class tells Oracle Projects how to process the expenditure item.

Example: You pay $100 as rent for the project room.
Expenditure  item : Rent $10
Expenditure  Type class: Invoice
Expenditure Category : BUILDING
Revenue Category : OTHERS
 
Expenditure Classifications
Expenditure types (such as Administrative, Hotel, or Overtime) classify the type of cost incurred. You can categorize costs and revenues by grouping the expenditure types into expenditure categories such as Materials and Labor. You define all expenditure types, expenditure categories, and revenue categories during implementation.

Expenditure Amounts

During processing, the system associates each expenditure item with a unit quantity and two cost amounts, raw and burden cost, when processed. The raw cost is the actual cost of the work performed; the burden cost is the indirect cost of the work performed. For example, the raw cost could be the hours multiplied by the hourly cost rate, and the burden could be the cost of the office space or benefits. The total burdened cost is the raw cost plus the burden cost.

Expenditure Entry Methods
You can create expenditure items in Oracle Projects to record actual work performed or costs incurred against a project in one of the following ways:
  • Enter pre-approved expenditure batches.
  • Upload pre-approved expenditure batches from Microsoft Excel.
  • Enter expenditures in other Oracle Applications, such as Oracle Payables and Oracle Inventory, and import them into Oracle Projects.
  • Import transactions from external sources.
Expenditure Item Validation
When you enter expenditure items, you are charging hours, expenses, or non-labor resources to a project and a task. Oracle Projects validates expenditure items against predefined criteria and any transaction controls and transaction control client extensions that you set up during the implementation.

The standard validation process performs the following checks:
Project
  • Expenditure item falls within project dates
  • Project status allows transactions
  • Transaction controls and transaction control extensions allow charges of this type
  • Project allows cross-charges from the user’s operating unit in a multi-organization environment
Task
  • Expenditure item falls within task dates
  • Task is a lowest task and chargeable
  • Transaction controls and transaction control extensions allow charges of this type
Expenditure type
  • Expenditure type is active
  • Is valid for multiple currencies
Employee
  • Employee is active
Existing expenditure item (for adjustments only)
  • Matching expenditure item exists (unless you enter an unmatched, negative transaction)
Note: Oracle Projects validates pre-approved expenditure batches as you enter expenditure item details. Expenditures created using external cost collection systems are validated during the Submit and Transaction Import processes, but before Oracle Projects creates an expenditure.

Funds Checks for Transactions
When a transaction is charged to a project, funds check processes are activated in both General Ledger and Oracle Projects. Funds checks are activated for new transactions and for adjusted transactions.
You can review Oracle Projects funds check results online. The system displays results for transactions that pass a funds check and transactions that fail a funds check.
Note: You must baseline the budget before transactions can be funds checked by the funds check processes.

Entering Expenditures

You enter expenditures using the Expenditures window.
1. Employee and Organization. In the Expenditures window, enter the employee or organization that incurred the cost.
  • For time, enter an employee.
  • For asset usages, miscellaneous, and burden transactions, enter an employee or organization.
  • For all other expenditures, enter an organization.
Note: When you enter an employee name, the Organization field is populated by default with the organization to which the employee
belongs. You can only update the Organization value if you have the function security required to do so. If you do not have the
required function security, you must enter an expenditure belonging to the default organization.

2. Control Total. Optionally enter the total units of measure in the Control Total field.
(Some companies record the total units of measure on the paper expenditure report. Record that total in the Control Total field.)
When you have entered all the expenditure items, you can compare the Control Total with the Running Total, to verify your entries.

3. Expenditure Items. Enter the expenditure items In the Expenditure Items region.

4. Optionally rework the expenditure to add or revise transactions, and save your changes.

5. When you have completed the expenditure batch, submit the batch for review.
Uploading Expenditure Batches from Microsoft Excel
You can enter and upload pre-approved expenditure batches using Microsoft Excel spreadsheets. You can validate records during entry by connecting to the database or you can create the spreadsheet offline and allow validation to occur during the
transaction upload.
Note: If you choose to create the spreadsheet offline, only mandatory fields associated with a list of values are validated during transaction upload. The transaction upload calls the Transaction Import process where additional transaction validations take place.

Copying an Expenditure Batch
If you frequently enter similar groups of expenditures, you can reduce manual data entry by copying data from one week to the next. The Copy function copies all expenditures and, optionally, all expenditure items from a specified source batch. Then you need to revise only the items that are different in the new batch. There are two approaches to copying expenditure data:
  • Create, then copy a batch template.
  • Copy expenditures from any previously created batch.
  •  
Submitting an Expenditure Batch
After entering a batch of expenditures and verifying data entry, you submit the batch for review. Your supervisor typically reviews the batch and either releases it for cost distribution or returns it to you to rework. When you rework a batch, the status changes
from Submitted to Working.
Note: You can choose Unreleased from the Status poplist in the Find Expenditure Batches window to retrieve both Working and Submitted expenditure batches

Correcting Expenditure Batches
After you submit a batch, you can add, delete, and revise expenditures and expenditure items. You also must correct a batch if your supervisor rejects and returns a submitted batch to you.
If the batch has a status of Submitted, locate the batch, return its status to Working, and change the expenditure or expenditure item before resubmitting the batch. If the batch has a status of Released, correct the individual expenditure items by reversing the full amount of the original item and then entering the correct information.
For example, if you entered six hours on a timecard expenditure item when the correct number of hours is four, create a reversing item equal to a negative six hours, then add a new expenditure item of four hours. To enter the corrected items, create a new batch
and then follow the normal steps for submitting and releasing expenditures.

Reviewing and Releasing Expenditure Batches
Once submitted, batches of pre-approved expenditures are reviewed and released for cost distribution or returned to the user who entered the batch for reworking. You release a batch of expenditures by changing its status from Submitted to Released.
Releasing a batch automatically releases all the expenditures and expenditure items in the batch

Reversing an Expenditure Batch
The Reverse button is enabled only if the current batch is released. In addition, an expenditure batch can be reversed only if the transaction source of the batch allows adjustments.
When you reverse an expenditure batch, all the expenditure items are reversed except the following:
  • Related items
  • Expenditure items that have already been reversed
  • Reversing items (net zero adjusted items)
  • Expenditure items that were created as a result of a transfer adjustment

Controlling Expenditures

This section describes how to use transaction controls to control the expenditures that can be charged to a project.
Oracle Projects provides you with many levels of charge controls:

  • Project Status You can use the project status to control whether any charges are allowed for the project.
  • Task Chargeable Status You can specify a lowest task as chargeable or non-chargeable, to control whether any charges are allowed for the task.
  • Start and Completion Dates You can specify the start and completion dates of a lowest task, to record the date range for which charges are allowed for the task. The start and completion dates of the project also limit when transactions can be charged.
  • Transaction Controls You can define transaction controls to specify the types of transactions that are chargeable or non-chargeable for the project and tasks.
Use transaction controls to configure your projects and tasks to allow only charges that you expect or plan. You can also define which items are billable and non-billable on your contract projects. For capital projects, you can define which items are capitalizable and non-capitalizable.
You enter transaction controls in the Project Options and Task Options windows.
You can configure transaction controls by the following:
  • Expenditure Category
  • Expenditure Type
  • Employee (includes contingent workers)
  • Non-Labor Resource
You can create any combination of transaction controls that you want; for example, you can create a transaction control for a specific person and expenditure type, or you can create a combination for a person, expenditure type, and non-labor resource. You also specify the date range to which each transaction control applies. If you do not enter transaction controls, you can charge expenditure items from any person, expenditure category, expenditure type, and non-labor resource to all lowest tasks on the project.

Inclusive and Exclusive Transaction Controls
You specify whether the transaction controls you enter are inclusive or exclusive.
  1. Inclusive transaction controls limit charges to only the transaction controls entered; Oracle Projects then rejects any charges that are not listed as chargeable in the transaction controls. You make your transaction controls inclusive by checking the Limit to Transaction Controls box on the Transaction Controls window.
  2. Exclusive transaction controls allow all charges except those that are specified as non-chargeable in the transaction controls. Oracle Projects defaults to exclusive transaction controls.
For either method of transaction controls, you can enter the following information:
  • Expenditure category, Expenditure type, Non-labor resource & Employee (or contingent worker)
Note: You can enter bill rate and discount overrides for terminated employees.
The profile option PA: Display Terminated Employees: Number of Days determines how many days after their termination employees can have bill rate and discount overrides entered.
  • Scheduled Expenditure Only, Workplan Resources Only & Person Type
  • Chargeable,  Billable (contract projects) & Capitalizable (capital projects)
  • Effective from & Effective to
You must specify a person (employee or contingent worker) or expenditure category for each record. You can specify a non-labor resource for usage expenditure types.

Determining if an Item is Chargeable

Oracle Projects checks all levels of chargeability control when you try to charge a transaction to a project. The check is performed when you save the record. Oracle Projects checks the control when you:

  • enter an online or pre-approved expenditure item
  • copy a pre-approved timecard item
  • transfer items to a new project or task
  • enter a project-related requisition or purchase order distribution in Oracle Purchasing
  • enter a project-related invoice distribution in Oracle Payables
  •  
Chargeability Controls
The transaction validation checks are performed using the following tests (chargeability controls):
Project status allows new transactions
  • Task is chargeable
  • Expenditure item date is between the start and end dates for the project and task
  • Expenditure item passes validation based on applicable project or task transaction controls
If the expenditure item passes the first three chargeability controls, then Oracle Projects checks the transaction controls.
The system first looks for an applicable task level transaction control. If it does not find applicable task level controls, it looks for project level controls. If the item matches an applicable transaction control at the task level, project level controls are not checked.
The task level controls override the project level controls.
 
Applicable transaction controls are all of the transaction control records that apply to an expenditure item based on the person, expenditure category, expenditure type, non-labor resource, and dates.
Determining the Chargeable Status of an Expenditure Item The following illustration shows the steps Oracle Projects uses to determine the chargeable status of an expenditure item. The steps, which are explained in the paragraphs that follow, are first followed when checking transaction controls at the task level, then are repeated at the project level, if required.
  • If the Limit to Transaction Controls check box is selected and applicable transaction controls do not exist, then the transaction is not chargeable. If applicable controls do exist, then the system checks whether the controls allow charges. If the Chargeable check box is selected for an applicable control, then the transaction is chargeable. If the Chargeable check box is not selected, then the transaction is not chargeable.
  • If the Limit to Transaction Controls check box is not selected and there are no applicable controls, then the transaction is chargeable. If applicable controls do exist, then the system checks whether the controls allow charges. If the Chargeable check box is selected for an applicable control, then the transaction is chargeable. If the Chargeable check box is not selected, then the transaction is not chargeable.

Determining if an Item is Billable or Capitalizable

Determining if an Item is Billable or Capitalizable
You specify whether an item is billable for contract projects. Oracle Projects provides you with two levels of billability control.

Task Billable Status:  You can specify a lowest level task as billable or non-billable. This billable status defaults to all expenditure items charged to that task.
Transaction Controls :  You can define transaction controls to specify what transactions are non-billable.
Note: You can override the billable status of an expenditure item in the Expenditure Items and Invoice Line Details window.

You control the capitalizability of transactions for capital projects just as you control the billability of transactions for contract projects.

Billable Controls
If a transaction is chargeable, Oracle Projects next determines if it is billable using the following transaction validation checks:
A transaction must meet ALL of the following criteria to be billable:

  • Transaction is chargeable
  • Task is billable
  • Billable field must be set to Task Level in all applicable rows in Transaction Controls You can specify what is non-billable using transaction controls.
For an item to be billable, the task must be billable. You can make an item non-billable by setting theBillable field to No for a transaction control record. You cannot mark a task as non-billable, and then mark expenditure items as billable through transaction
controls.

Burdening

Burdening (also known as cost plus processing) is a method of calculating burden costs by applying one or more burden cost components to the raw cost amount of each individual transaction. You can then review the raw cost and total burdened cost (the sum of raw cost and burden cost) of each transaction.

Oracle Projects displays the raw cost and burdened cost in expenditure inquiry windows, and shows the cost of each detail transaction in reports. You can choose to account for the individual burden cost components to either track the overhead absorption or to account for the total burdened costs. You can write custom reports using standard views to report all burden cost components for each detail transaction. Using burdening, you can perform internal costing, revenue accrual, and billing for any type of burdened costs that your company applies to raw costs. Oracle Projects calculates costs using the following formulas. (The formulas for cost also apply to revenue and billing amounts.) Oracle Projects calculates burden cost by multiplying raw cost by a burden multiplier.
This calculation is represented in the following formula
                      Burden Cost = Raw Cost x Burden Multiplier
Oracle Projects calculates total burdened cost by adding burden cost to the raw cost
amount. This calculation is represented in the following formula:
                     Total Burdened Cost = Raw Cost + Burden Cost
You use the burden multiplier to derive the total amount of the burden cost.

The following illustration shows the burden calculation process.


Burden Set up
To implement Burdening in Oracle Projects, you must complete the following setup steps using the Projects Implementation Super User responsibility:
  • Define cost base and cost base types at the Site level.
  • Define burden cost codes at the Site level.
  • Define burden structures at the Site level.
  • Define burden schedules at the Site level
You must also complete the following procedures using the System Administrator responsibility:
  • Set the profile option PA: Create Incremental Transactions for Cost Adjustments Resulting from a Burden Schedule Recompilation at the Operating Unit level.
  • Set the Profile Option PA: Report Separate Burden Transactions with Source Resources at the Operating Unit level.

Burden Structures

You define the cost buildup using a burden structure. A burden structure determines how cost bases are grouped and establishes the method of applying burden costs to raw costs. Expenditure types classify raw costs, and burden cost codes classify burden costs. The relationship between expenditure types and burden cost codes within cost bases determines what burden costs are applied to specific raw costs, and the order in which they are applied.

Notes:
To account for burden cost codes separately, you also define unique expenditure types to link to burden cost codes


Notes :
1. One expenditure type can be associated with only one cost base in a burden schedule
2. When you make an expense, system checks if the project allows burdening. The burden schedule/structure is picked from the project/type. System checks the expenditure type in the structure and finds out the corresponding cost base. The cost base defines the burden charges applied to the expenditure type.
3. The burden schedule determines the multiplier for each burden cost code in an organization.

To define a burden structure:
Navigate to the Burden Structures window.
1. Enter the Header Information
Enter a unique name and description for the burden structure.
Select Additive if you want to apply each burden cost code assigned to a cost base using the same precedence when calculating burden costs. Additive schedules automatically provide a default value of 1 to each burden cost code in the structure. Select Precedence if you want to specify the order in which each burden cost code in a cost base should be applied to raw costs.

Select Allowed if users can use this burden structure when defining a burden schedule override for a project or task. Select Default if you want this burden structure to appear as the default structure for burden schedule overrides for projects and tasks. You can only select one default structure for burden schedule overrides.

2. Cost Base Assignment
Enter the names of the cost bases included in this burden structure.
If you need to define additional cost bases, choose the Cost Bases button.
Suggestion: After you enter a cost base, we recommend that you enter all of the associated expenditure types and burden cost codes for the cost base before you enter the next cost base.

3. Burden Cost Codes
Enter the burden cost codes associated with a particular cost base. If you are using a precedence based structure, enter the precedence in which you want to apply each burden cost code to raw costs within the cost base.
If you need to define a new burden cost code, choose the New Burden Cost Codes button.

4. Expenditure Types
Enter the expenditure types associated with a particular cost base. Expenditure types represent the types of raw costs within a cost base.
  • Each expenditure type can belong to only one cost base having a type of Burden Cost within each burden structure so that transactions of that expenditure type are not burdened more than once.
  • If you do not assign an expenditure type to a cost base, transactions using that expenditure type are not burdened. The burdened cost for these transactions equals the raw cost of the transaction.
Components of a burden structure
Your company may have several different burden structures for unique business requirements. For example, you may use a different structure for internal costing than you use for government billing.
 
The illustration Components of a Burden Structure shows a burden structure with the following cost bases:
• The Labor cost base: includes the expenditure types Professional, Clerical, and Administrative.is assigned the burden cost codes Fringe, Overhead, and General and Administrative (G&A).

• The Material cost base: includes the expenditure types Supplies and Construction Materials. is assigned the burden cost codes Material Handling and General and Administrative (G&A).

• The Expense cost base: includes the expenditure types Travel and Meals. is assigned the burden cost code General and Administrative (G&A).

Burden Structure Components

An expenditure type classifies each detailed transaction according to the type of raw cost incurred.

A burden cost code represents the type of burden costs you want to apply to raw costs. For each burden cost code in the burden structure, you specify what cost base it is applied to, the expenditure type or types it is linked to, and the order in which it is applied to raw costs within the cost base.

A cost base is a grouping of raw costs to which you apply burden costs. A cost base assignment consists of expenditure types. You specify the types of transactions that constitute the cost base when you assign expenditure types to the cost base. These expenditure types assignments represent the raw costs to which you apply the burden costs of the cost base. If you exclude an expenditure type from all cost bases in a structure, the expenditure items that use that expenditure type will not be burdened (burden cost equals zero, thus burdened cost equals raw cost).

In summary, cost bases are comprised of expenditure types and burden cost codes. Expenditure types represent the raw costs, and burden cost codes represent the burden costs that support the raw costs. Cost bases may be different within the context of different burden structures. For example, you may use a different definition of a labor cost base in a billing schedule than you would use in an internal costing schedule.

A burden structure can be additive or precedence based. If you have multiple burden cost codes, an additive burden structure applies each burden cost code to the raw costs in the appropriate cost base. A precedence burden structure is cumulative and applies each cost code to the running total of the raw costs, burdened with all previous cost codes. The examples in the following two tables illustrate how different burden structures using the same cost codes can result in different total burdened costs.

The following table shows the calculation of total burdened cost using the additive burden structure.

Note: The order of the burden cost codes has no effect on the total burdened cost with either additive or precedence burden structures.

Using Burden Schedules

Burden schedules establish the multipliers used to calculate the burdened cost, revenue, or bill amount of each expenditure item charged to a project. You can define different burden schedules for use in internal costing, revenue accrual, and invoicing. When you define burden schedules, you specify the burden structure on which the schedule is based.

You can use both burden schedules and bill rate schedules within a project to accrue revenue and invoice. You can also use a bill rate schedule for non-labor expenditure items, and use a burden schedule for labor expenditure items. You specify default burden schedules for each project type. You can use different schedules for different types of projects. You can override the default burden schedules for each project by using a schedule of multipliers negotiated for the project or task.

Types of Burden Schedules
There are two types of schedules you can use in Oracle Projects: firm and provisional. Use firm schedules if you do not expect your multipliers to change. Generally, firm schedules are used for internal costing or commercial billing schedules. Because burden multipliers may not always be known at the time that you are calculating total burdened costs, you use interim, or  provisionalmultipliers. Provisional multipliers are generally estimates based on a company's forecast budget for the year based on the previous year's results. When you determine the actualmultipliers that apply to costs (after the multipliers are audited), then you replace the provisional multipliers with the actual multipliers. Oracle Projects processes the adjustments from provisional to actual changes for costing, revenue, and billing.

Defining Burden Schedule Versions
You define schedule versions for a burden schedule to record the date range within which multipliers are effective. You can have an unlimited number of versions for each burden schedule, but use one active version at a given point in time. However, after you apply actuals, you can have one active provisional version and one active actual version existing at the same time within a schedule.
In addition, you may have a number of versions for each quarter of the fiscal year in which your company does business, especially for government billing projects. At the end of the year, when the government audits your burden multipliers, you create a new version that reflects the actual billing rates. The following illustrations shows and example of the use of schedule versions

In the illustration Burden Schedule Versions, a company defines provisional burden schedules on a quarterly basis, based on a forecast of budgeted costs. Each quarter, the company creates a new version of the burden schedule to reflect updates in the budget. At the end of the fiscal year, when the company is audited, actual multipliers are applied which reflect the true burdened cost of affected items.

Assigning Burden Multipliers

When you create burden schedules, you assign a multiplier to an organization and burden cost code. The multiplier specifies the amount by which to multiply the raw cost to obtain the burden cost amount.
When you compile a burden schedule version, Oracle Projects calculates and stores the multipliers for each organization and burden cost code in a schedule version. Additional information stored includes compiled multipliers, which allow Oracle Projects to quickly determine burden cost amounts based on the burden multipliers used for a particular organization as of a particular date.
Instead of performing a buildup of costs each time you calculate burden amounts, Oracle Projects uses the compiled multipliers to multiply the compiled multiplier by the raw cost to determine each burden cost component.

Suggestion for Organizations that Have No Burden
You may need to set up special procedures for organizations that have no burden. For example, your company may use contractors that do not have a particular type of burden cost (such as fringe) applied to their raw cost. To implement this scenario, you can first set up a new organization for contractors. Then, create a zero burden cost amount by assigning that organization to the burden schedule and using a multiplier of zero for the burden cost of Fringe. Each time that burden cost for Fringe is calculated for the contractor's organization, Oracle Projects will multiply the contractor's raw cost
multiplier by zero, resulting in a burden cost amount of zero, which reflects the true representation of the raw cost and burden multipliers.

Burden Multiplier Hierarchy

Effective multipliers cascade down the Project Burdening Hierarchy, starting with the parent organization. If Oracle Projects finds a level in the hierarchy that does not have a multiplier defined, it uses the multipliers entered for the parent organization. Therefore, an organization multiplier schedule hierarchy is really a hierarchy of exceptions; you define only the multipliers for an organization if they override the multipliers of its parent organization.
The following illustration shows an example of how multipliers are assigned for a multi-level organization.

In the illustration Assigning Multipliers to Organizations, the parent organization, Headquarters (HQ), has two defined multipliers: Overhead (OH) with a multiplier of 2.0, and General and Administrative (G & A) with a multiplier of 3.0.
  • When Oracle Projects processes transactions for the East organization, no multipliers are found. Therefore, the system assigns the multipliers from the parent organization, Headquarters. However, when Oracle Projects looks for multipliers for the Boston and New York (NYC) organizations, a multiplier of 3.1 for General and Administrative is found for each organization. Therefore, the system uses the General and Administrative multiplier of 3.1 from these organizations.
  • When Oracle Projects processes transactions for the West organization, the multiplier of 2.3 for Overhead from the West  organization overrides the multiplier of 2.0 from its parent organization, Headquarters. Since no multiplier is found for General and Administrative, the system assigns the multiplier of 3.0 from the Headquarters organization. No multipliers are found for the San Francisco (SF) and Los  Angeles (LA) organizations. Therefore, Oracle Projects, assigns the multipliers from their parent organization, West.
Suggestion for Burdening a Borrowed or Lent Resource
When lending a resource to another organization for a specific project, you may want to burden the resource using the borrowing organization's multipliers. For example, the Los Angeles organization lends a resource to the New York City organization, and it is agreed that the borrowed resource is to be burdened using the New York City multipliers. For burdening, Oracle Projects uses the destination organization of an organization distribution override, in place of the expenditure organization, if an organization distribution override exists. If you want the project to have theNew York City burden multipliers use burdened costs of the borrowed
resource from Los Angeles, then enter an organization distribution override with a source organization of Los Angeles and a destination organization of New York City.

More on Burden Schedules

Assigning Burden Schedules
You can assign burden schedules to project types, projects, and tasks. When you assign schedules to a project type, the schedules are the default schedules for projects and tasks that use the project type. Assigning burden schedules to project types allows you
to implement company policies; for example, you can implement a policy that requires all projects of a particular project type to maintain the same multipliers for internal costing purposes.

You can change the default schedule for a project or task. You can also override default schedules at the project and task level by using burden schedule overrides. Burden schedule overrides generally reflect multipliers that have been negotiated specifically
for a particular project or task.

Defining Burden Schedules for Project Types
You define default standard burden schedules for each project type. These schedules default to each project defined with that project type. You can override the default schedules at the project and task level.

Assigning Burden Schedules at the Project and Task Level
When you assign a project type to a new project, Oracle Projects automatically provides default burden schedules from the project type. These schedules are also the default schedules for each top task added to the project, and schedules for a top task are the
default schedules for lower level tasks.
The schedules used for burdening and billing are those assigned to the lowest task. Note: When you change the burden schedule assignment for a project that already has tasks set up, the schedules assigned to tasks that already exist do not automatically change. You may need to review schedules for the existing WBS to make sure they are correct.

Assigning Fixed Dates for Burden Schedules
You can assign fixed dates for each of your burden schedules, just as you can for bill rate schedules. You can assign fixed dates only to firm schedules. You cannot use fixed dates with provisional schedules.
The fixed date specifies the date for determining the schedule revision to use in calculations, regardless of the expenditure item date.
You enter a fixed date for a cost burden schedule only if the project type definition allows you to override the cost burden schedule.
You can enter schedule fixed dates for standard burden schedulesonly. Schedule fixed dates are not used for burden schedule overrides.

Distributing Labor Costs

This section illustrates the costing process using Labor Costing as an example.

Oracle Projects allows you to enter detail labor transactions charged to your projects so that you can monitor labor work performed. Oracle Projects costs the items to compute the labor costs for your project, and determines the GL accounts to charge.
The following illustration shows the steps in the PRC: Distribute Labor Costs process:


The PRC: Distribute Labor Costs process handles labor items in the following order:
  • Selects eligible expenditure items, based on the parameters you entered for project, employee, and week ending date.
  • Costs the straight time items.
  • Calls the Overtime Calculation program, if it is enabled.
  • Costs overtime items, including overtime items created by the Overtime Calculation program.
  •  
Note: If your transactions are not costing properly, you can view rejection reasons in the Expenditure Items window. From the Folder menu, choose the Show Field option to display all cost distribution rejections.

Viewing Expenditure Items

Use the Expenditure Items window to review a project’s expenditure items. You can see the amount and type of expenditure items charged to a project, the date an expenditure item occurred, accrued revenue, and other information. You can also drill down to Oracle Payables to view the Invoice Overview form, or to Oracle General Ledger to view T–accounts.

To view expenditure items (perform an expenditure inquiry):

1. Navigate to the Find Project Expenditure Items or Find Expenditure Items window.
Your ability to navigate to either window (by selecting Project or All) depends on your user responsibility. If you select Project, you can view expenditure items for a single project. If your system uses project security, you can select only projects that you are allowed to see. If you select All, you can view expenditure items across projects, and can structure your query to retrieve information across projects. No project security is enforced.

2. In the Find Expenditure Items window, enter your search criteria.

3. Choose Find if you want to execute the search, or choose Mass Adjust if you want to process mass adjustment of expenditures.

4. From the Expenditure Items window, choose:
  •  Run Request to create Project Streamline Requests to process adjustments. You can select multiple processes to run for your project. The requests will run in the correct order.
  • Totals to view the totals for the expenditure items returned based on your search criteria.
Note: This window does not display events. If your project uses event–based or cost–to–cost revenue accrual or invoice generation, use the Events window to view the total project revenue and bill amounts.
  • Item Details to select a window for reviewing the details of this expenditure item. The Inquiry Options window will be displayed, from which you can choose one of the following options:
– Choose Cost Distribution Lines to view individual transactions and the debit and credit GL accounts charged for raw and burdened costs for each expenditure item. You can also view other information about the cost lines, such as PA and GL period and interface status and the rejection reason if transactions could not be interfaced.
– Choose Revenue Distribution Lines to view the revenue transactions generated for a specific expenditure item. The GL account credited for the revenue is displayed. You can also see the GL and PA posting period for the revenue and the interface status. The rejection reason will be displayed for any transactions that are rejected during the interface to GL.
– Choose AP Invoice to drill down to the Invoice Overview form in Oracle Payables. (This option is only enabled for expenditure items whose expenditure type class is either Supplier Invoices or Expense Reports.)
Note: You can also view rejection reasons for transactions rejected during the costing or revenue generation processes from the Expenditure Items window. From the Folder menu, choose Show Field and select either Cost Distr. Rejection or Revenue Distr. Rejection.

Viewing Accounting Lines

You can see how a transaction will affect the account balances in your general ledger by viewing the detail accounting lines for the transaction as balanced accounting entries (debits equal credits) or T–accounts.

To view accounting lines:

1. Query the expenditure transaction you want to view.

2. From the Expenditure Items window, choose View Accounting from the Tools menu.
You see the View Expenditure Accounting window.
Note: The View Expenditure Accounting window is a folder form that you can customize to display additional columns.

3. (Optional) To view the accounting detail for the selected line as T–accounts, choose T–Accounts. In the Options window that opens, select from the Default Window poplist, and then choose from the window buttons to drill down in General Ledger.
 

Drilling Down to Oracle Projects from Oracle General Ledger
From General Ledger, you can drill down to subledger details from the Account Inquiry, Enter Journals, or View Journals windows for journals that have specific journal sources assigned to them. For example, if a journal source is Projects, you can drill down to the transaction details in Oracle Projects.

Depending on the nature of the originating Projects transaction, drilling down from General Ledger will open the Project Expenditure Accounting or Project Revenue Accounting window.
From the Project Expenditure Accounting or Project Revenue Accounting window, you can drill down even further to view detail transactions or you can choose to view the underlying transaction accounting.

To drill down to detail transactions or to view transaction accounting:
1. From the Project Expenditure Accounting or Project Revenue Accounting window, select a detail accounting line.
2. Choose the Show Transaction button to view detail transactions.
3. Choose the Show Transaction Accounting button to view the transaction accounting.

Adjusting Expenditures


Oracle Projects provides powerful features that allow you to:
  • Adjust expenditure items on your projects
  • Interface the adjustments to other Oracle applications
  • Report the audit trail of the adjustments
You can make adjustments to expenditure items after the items have been costed, revenue distributed, and invoiced. Oracle Projects automatically processes the adjusted items and interfaces the adjusting accounting transactions to other Oracle Applications.
The project status of a project can restrict your ability to enter adjustments to project transactions.

Audit Reporting for Expenditure Adjustments
Oracle Projects provides an audit trail of all adjustments performed on an expenditure item. The audit trail records the following information about the adjustment:
  • The name of the user who performed the adjustment
  • The type of adjustment action performed
  • The date and time that the adjustment was performed
  • The window from which the adjustment action was performed Oracle Projects also records the audit trail to the original item for transfers, splits, and corrections to approved items. With this audit trail, you can identify where an item was transferred or where an item was transferred from.
You can review the expenditure adjustment audit information for a project in the AUD:Project Expenditure Adjustment Activity report. You can review the transfer activity for a project using the MGT: Transfer Activity report.

Types of Expenditure Item Adjustments

This section describes the types of adjustments you can make to expenditure items. Whether you can adjust expenditure items depends on:

  • The project status of the project charged.
  • The transaction source (if the expenditure item was imported via Transaction Import).
  • Except where noted, you can also adjust project invoice lines.
Correct Approved Expenditure Items
You can correct the following attributes of an approved expenditure item using the Pre–Approved Expenditure Entry windows.
• date
• expenditure type
• project
• task
• amount
  • You make the corrections by reversing the original item and then creating a new item using the correct information. You cannot correct these items using the Expenditure Items window.
  •  
  • You can also change the project and task assignment of an expenditure item by selecting the Transfer adjustment action.
  •  
  • You cannot correct the amount, date, expenditure type, or supplier of supplier invoice items in Oracle Projects. You must correct these attributes of supplier invoice item in Oracle Payables.
  •  
  • You must correct expenditure items imported from Oracle Inventory or Oracle Manufacturing in their respective systems. You cannot reverse or correct expenditure items from these applications in Oracle Projects.
Change Billable Status
Use the adjustment actions Billable to Non–Billable and Non–Billable to Billable to change the billable status of an expenditure item.
  • A billable item accrues work–based revenue and can be invoiced.
  •  A non–billable item does not accrue work–based revenue and is not invoiced.
You may want to check the setup of the billable status of your project to reduce the number of items you need to adjust for billable classification.
You can define tasks as billable or non–billable. You can further specify which items are non–billable using transaction controls.

Change Capitalizable Status
Use the adjustment actions Capitalizable to Non–Capitalizable and Non–Capitalizable to Capitalizable to change the capitalizable status of an expenditure item.
• A capitalizable item can be grouped into an asset line you send to Oracle Assets.
• A non–capitalizable item cannot become an asset cost in Oracle Assets.
You can define tasks as capitalizable or non–capitalizable; you can further specify which items are non–capitalizable using transaction controls.

Set and Release Billing Hold
You can place an expenditure item on billing hold. An item on billing hold is not included on an invoice until you release the billing hold on the item.
One–Time Hold
You can place an expenditure item on one–time billing hold. An item on one–time billing hold is not billed on the current invoice but is eligible for billing on the next invoice. The one–time billing hold is released when you release the current invoice.
Release Hold
If you have placed an expenditure item on billing hold, you use the release hold to take it off hold so the item can be billed.

Recalculate Burden Cost
You can recalculate the burden cost of an expenditure item if you find that the burdened cost amount is incorrect. To produce correct recalculation results, you must correct the source of the problem before
redistributing the items.

Recalculate Raw Cost
You can recalculate the raw cost of an expenditure item if you find that the raw cost amount is incorrect. To produce correct recalculation results, you must correct the source of the problem before redistributing the item.

Recalculate Revenue
You can recalculate revenue if you find that:
  • The revenue or bill amount is incorrect due to incorrect bill rate or markup
  • AutoAccounting is incorrect :You must correct the source of the problem before redistributing the items.
  •  
Recalculate Cost and Revenue
You can recalculate cost and revenue if you find that:
  • The raw cost rate is incorrect
  • The burden cost multiplier is incorrect
  • AutoAccounting is incorrect
You must correct the source of the problem before redistributing the items.

If you recalculate cost, the revenue is automatically adjusted to ensure that revenue that is based on the cost (with markup or labor multipliers) is correct.

Change Work Type
You can change the work type of an item. You can use this adjustment to reclassify an item for reporting and billing purposes.

Change Comment
You can edit the expenditure comment of an item. You can use this adjustment to make the expenditure comment clearer if you are including the comment on an invoice backup report.

Split Item
You can split an item into two items so that you can process the two resulting split items differently. The resulting split items are charged to the same project and task as the original item.
For example, you may have an item for 10 hours, of which you want 6 hours to be billable and 4 hours to be non–billable. You would split the item of 10 hours into two items of 6 hours and 4 hours, marking the 6 hours as billable and 4 hours as non–billable.

Transfer Item
You can transfer an item from one project and task to another project and task.
Oracle Projects provides security as to which employees can transfer items between projects. Cross–project users can transfer to all projects.
Key members can transfer to projects to which they are assigned.
Oracle Projects performs a standard validation on all transferred items.
For a description of the standard validation process and resulting rejection reasons,  Oracle Projects also ensures that you only transfer items which pass the charge controls of the project and task to which you are transferring. If the items you are transferring do not pass the new project and task’s charge controls, then you cannot transfer the item.

Change Currency Attributes
You can change the functional or project currency attributes of multi–currency transactions. When you select Change Functional Currency Attributes or Change Project Currency Attributes from the Reports menu, a window is displayed where you can enter changes in the following fields:
  • Rate Type
  • Rate Date
  • Exchange Rate
The windows display the project or functional currency, depending on which currency you have selected, as well as the transaction currency. The same conditions apply to changes in currency attributes that apply during transaction entry.
You can also change currency attributes for an expenditure using the Mass Adjustments feature. When you select Change Functional Currency Attributes or Change Project Currency Attributes under Mass Adjustments, most of the validations are performed by the costing program.
Note: If the project currency and the functional currency for an expenditure item are the same, only the Function Currency Attributes option is displayed on the Reports menu. Any changes you make to the functional currency attribute are copied to the project currency attributes.

Assigning Burden Schedules

You can assign burden schedules to project types, projects, and tasks. When you assign schedules to a project type, the schedules are the default schedules for projects and tasks that use the project type. Assigning burden schedules to project types allows you to implement company policies; for example, you can implement a policy that requires all projects of a particular project type to maintain the same multipliers for internal costing purposes.

You can change the default schedule for a project or task. You can also override default schedules at the project and task level by using burden schedule overrides. Burden schedule overrides generally reflect multipliers that have been negotiated specifically for a particular project or task.

Defining Burden Schedules for Project Types

You define default standard burden schedules for each project type.
These schedules default to each project defined with that project type.
You can override the default schedules at the project and task level.

Assigning Burden Schedules at the Project and Task Level
When you assign a project type to a new project, Oracle Projects automatically provides default burden schedules from the project type.
These schedules are also the default schedules for each top task added to the project, and schedules for a top task are the default schedules for lower level tasks. The schedules used for burdening and billing are those assigned to the lowest task.
Note: When you change the burden schedule assignment for a project that already has tasks set up, the schedules assigned to tasks that already exist do not automatically change. You may need to review schedules for the existing WBS to make sure they are correct.

Changing Default Burden Schedules
You can change the default burden schedules for a project or task.
If you change the burden schedule for a lowest level task that has items processed, then the items are not automatically marked for reprocessing. Only new items charged to the task will use the new burden schedule. You can mark the items for recalculation in the Expenditure Inquiry window. This will cause the items to be reprocessed using the new burden schedule assigned to the task.

Changing Cost Burden Schedule
You can override the cost burden schedule if the project type definition allows you to override the cost burden schedule, and the project is burdened.

Changing Revenue or Invoice Burden Schedule
You can change the revenue or invoice burden schedule within a schedule type at any time.

Changing the Type of Revenue or Invoice Burden Schedule Used
You can change the burden schedule type of any task or project at any time. You may change a task from a burden schedule type of Bill Rate to Burden, even after you have defined bill rate overrides. These bill rate overrides will not be used in processing. You can also define burden schedule overrides and then change your task to use a bill rate schedule. The burden schedule overrides will not be used.

Overriding Burden Schedules
You can define burden schedules at the project level to override the default burden schedules from the project type. You can also define burden schedules at the task level to override the default schedules
from the project and project type.

Defining Burden Schedule Overrides
You can define a schedule of negotiated burden multipliers for your projects and tasks which overrides the schedule that you assigned to the project and tasks. When you define burden schedule overrides, you cannot override just one multiplier for the standard schedule; you need to define an entire schedule for the project or task that overrides the standard burden schedule.
Defining burden schedule overrides is similar to defining burden schedules. You specify the revisions and the associated multipliers. The revisions are created as firm revisions. You cannot apply actuals to provisional multipliers with burden schedule overrides. You can select only burden structures that
are allowed for use in burden schedule overrides.

The burden schedule overrides that you define are created as burden schedules in Oracle Projects. You must compile schedule revisions as you do with standard burden schedules.
Attention: You do not define override multipliers by organization. The multipliers that you define are used for all items, regardless of the organization.

Assigning Burden Schedule Overrides
You can enter override burden schedules for a project or task in the Project, Templates window or the Tasks window. The burden schedule override option is available only if the project is burdened and the project type allows override of the cost schedule. You can also choose this option if the schedule
type for labor or non–labor is Burden, if you want to allow overrides of revenue and invoice schedules.

Adjusting Burden Schedule Overrides
You can correct, adjust, and create new revisions for your burden schedule override as you do for standard burden schedules.

Determining Which Burden Schedule to Use
The costing and revenue programs in Oracle Projects determine the effective burden schedule to use for burden cost calculations in the following order:
  • Task–level burden schedule override
  • Project–level burden schedule override
  • Task standard burden schedule
Oracle Projects uses the first schedule it finds to process all items charged to that task.

Distribute Costs and Interface Supplier Invoices from Payables The Distribute Costs programs and the Interface Supplier Invoices from Payables program use the overrides and schedules to burden transactions charged to projects that are defined to be burdened for internal costing based on the project type definition. These programs calculate the burdened cost for all transactions on these projects.

Non-Labour Costing

Raw cost is equal to quantity (if quantity is in currency, for example, a currency amount), or alternatively, raw cost is the result of multiplying quantity by a rate (if quantity is not in currency).

You can define cost rates for usage and miscellaneous costs as follows:

  • Cost rates by expenditure type.
  • Cost rates by non-labor resource and owning organization for usages (optional); overrides expenditure type cost rate.
 
To implement non-labor costing in Oracle Projects, you must:
  1. Define non-labor resources at the site level.
  2. Define non-labor cost rates at the operating unit level.
  3. Define non-labor cost rate overrides at the operating unit level.
Define a non-labor resource
A non-labor resource may be a piece of equipment whose capacity is consumed, such as training room, or equipment whose physical output is consumed, such as a copier.

You specify a name and a description of an asset, or pool of assets, to define a non-labor resource. For example, you can define a non-labor resource with a name such as PC to represent multiple personal computers your business owns.

Define non-labor cost rate
An expenditure type cost rate is a currency amount that Oracle Projects multiplies by the expenditure type unit to calculate cost.

You define a cost rate in the Expenditure Types page by selecting an expenditure type and entering a cost rate for it. You cannot define a cost rate for a non-labor expenditure type that does not require a cost rate.

Define non-labor cost rate overrides
When you define non-labor resources, you assign each asset an expenditure type. The cost rates you define for each expenditure type consequently apply to all non-labor resources classified with that expenditure type.

You can define a usage cost rate override for any non-labor resource. Usage cost rate overrides are defined by the non-labor resource and organization. The cost rate override applies only to a specific non-labor resource owned by that organization.


Labor Costing

Employees are associated with a business group. You can charge an employee’s work to any of the operating units that are associated with the employee’s business group. If your business process allows an employee to work in a subset of these operating units, then set up labor rates for each of the operating units in which the employee works. You can set up different labor rates for the same employee in different operating units.

To implement Labor Costing in Oracle Projects, you must define labor costing rules and assign costing rule and rate schedule to each organization.

Define a labor cost multiplier

A labor cost multiplier is a value by which Oracle Projects multiplies an employee's labor cost rate to calculate the employee's overtime premium cost rates:

Labor Cost Rate * Labor Cost Multiplier = Overtime Premium Labor Cost Rate

Oracle Projects then multiplies this overtime premium labor cost rate by the number of overtime hours an employee works to calculate the overtime premium for that employee:

Overtime Premium Labor Cost Rate * OT Hours = Overtime Premium

You define a labor cost multiplier for each kind of overtime your business uses, such as double time.

Define a labor costing rule
A labor costing rule determines how an employee is paid. You define a labor costing rule for each pay type that your business uses.  When an employee charges time to a project, Oracle Projects processes the labor hours according to the employee's labor costing rule.

Organization Labour Costing rules
(Assigning Costing Rules and Rate Schedules)
To calculate labor costs, you must assign a costing rule to each organization. If a costing rule has a costing method of Rates, then you must also assign a cost rate schedule to each organization using the costing rule.

Overriding Labor Costing
In addition to defining an organization-wide rate schedule, you can also define a separate rate schedule for a project. To ensure that you calculate project costs for a timecard entered against this project, you can override the labor cost that is derived by default from the organization rate schedule.

For individual employees, you can enter the labor costing overrides. You can:
  • Override the assigned costing rule.
  • Override the assigned cost rate schedule.
  • Enter an overriding cost rate.


 

Allocations

Allocations in Oracle Projects is the allocation of cost amounts from one project to another. You can distribute cost amounts between and within projects and tasks, or to projects in other organizations if cross-charge is enabled. For example, a project manager can distribute salaries, and administrative overhead and equipment charges across several projects and tasks.

Before you can allocate costs, you must define an allocation rule for an operating unit, expenditure organization, and expenditure type. An allocation rule comprises of the following:

  • Costs or amounts that you want to allocate from specified source projects and tasks or source GL accounts.
  • Target projects and tasks to which you want to allocate amounts.
  • The proration method and basis on which to allocate source amounts.
  • The allocation method or frequency of allocation in an allocation run period.
  • The offset method and attributes for creating the offset or reversing transaction for the allocated amount on the source project or some other project created to incur offset transactions.
Create an allocation rule and define its attributes
You create an allocation rule for an operating unit. An allocation rule has the following attributes:
  • The unique name and description of the rule.
  • The operating unit to which this rule applies.
  • The validity of the rule determined by the effective dates.
  • The expenditure organization, expenditure type class, and expenditure type on which the allocation transaction is created.
  • The basis of allocation, allocation method, and allocation period.
  • The target allocation location such as the current operating unit of the allocation rule, the current legal entity, the current business group, or all organizations in the project hierarchy.

Auto Allocation

AutoAllocations is an Oracle General Ledger and Oracle Projects feature. In General Ledger, the allocation definition is called a batch. In Projects, the allocation definition is called a rule.
  • Step-down allocations use the results of each step in subsequent steps of the AutoAllocation set. Oracle Workflow controls the flow of the AutoAllocations set.
  • Parallel allocations carry out the specified rules all at once and do not depend on previous allocation runs.
To generate allocations more efficiently, you can group allocations rules and then run them in a specified sequence (step-down allocations) or at the same time (parallel allocations). To implement AutoAllocation in Oracle Projects, you must define an AutoAllocation set and implement workflow for the AutoAllocation.


Cost Base and cost base type

Cost bases refer to the bases of raw costs used for applying burden costs. You assign cost bases to burden structures, and then specify the types of raw costs that are included in the cost base along with the types of burden costs that are applied to the cost base.

You can also use cost bases as groupings of expenditure types for use in billing extension calculations. These cost bases are not used for burdening, and are defined with a cost base type other than Burden Cost. When you assign these cost bases with a type other than Burden Cost to a burden structure, you can specify expenditure types for the cost base, but you cannot specify burden cost codes for the cost base since the cost base is not used for burdening.

Cost base types refer to the use of cost bases. Oracle Projects predefines the cost base types Burden Cost and Other. Cost bases with the type Burden Cost are used in burden calculations. Cost bases with the a type other than Burden Cost are not included in burden calculations; these cost bases are used for grouping expenditure types for different purposes, such as for billing extension calculations.

You define a cost base for a group of expenditure types or raw costs and assign it a cost base type that determines how the cost base is used. For example, if you assign a cost base type of burden to a cost base for labor costs, Oracle Projects burdens each labor raw cost with the additional specified cost to calculate the total burdened cost of the labor cost transaction. A cost base type of Other uses the cost base to group expenditure types for billing extension calculations.


Examples of cost base are Department Cost
Labor, Labor - Faculty, Labor - Staff, Labour Costing, Total Costs, Material, Expenses, Project Manufacturing, Work Orders etc

Burden Cost Code

You use a burden cost code to define the expenditure type that you will use to burden the raw cost expenditure type when calculating total operating cost. For example, you can burden labor raw costs with overheads or material raw costs with handling charges. You can use burden cost codes for internal costing, revenue generation, billing, and burden cost recovery.


We can have two different burden cost codes attached to a single Expenditure type ex. Two different burden cost codes: Fringe - Faculty & Fringe – Staff can be associated with a single Expenditure type of Fringe Benefits.
But the reverse is not true i.e we cant have a single burden code associated with two different Expenditure types.

To define a burden cost code:

1. In the Burden Cost Codes window, enter the Burden Cost Code and a Description.

2. Optionally assign an expenditure type to the burden cost code for creating separate burden transactions.
The expenditure type you enter must have the Burden Transactions expenditure type class assigned to it. (Only expenditure types with the Burden Transactions expenditure type class assigned to them are displayed in the list of values for this field).

3. Save your work

Cross Charge - Borrowed and Lent

Implementing cross charge for the organizations within an entity enables you to use the resource of a provider organization and charge the receiver organization for the cost incurred on the rendered service. If you use borrowed and lent accounting, then you can pass costs based on transfer price rules and share revenue between the provider and receiver organizations without generating physical, internal invoices.

Defining Transfer Price Rules
Define transfer price rules at the business group level to determine how Oracle Projects calculates the transfer price for cross charged transactions.
Each rule consists of attributes that you can define:

  • Rule name, type, description, and effective dates
  • Basis and calculation method
  • Rate (percentage) at which to apply the rule
Changes to transfer price rules affect only future transactions. To change a previously processed transaction, adjust the transaction manually from the Expenditure Items window.

Before you define a transfer price rule, you must define the bill rate or burden schedule that you want to use in the rule (if applicable).

To define a transfer price rule:

Navigate to the Transfer Price Rules window.
1. Enter a unique name for the rule, select a type (Labor or Non-Labor), and specify a description and the effective dates.
Note: Transfer price rule names must be unique within a business group if you are using Single Business Group Access. For Cross Business Group Access, transfer price rule names must be unique across the system.

2. For the [ ] field (descriptive flexfield), enter the information specified by your system administrator.

3. For Basis, select Raw Cost, Burdened Cost, or Revenue.

4. Select one of the calculation methods described in the following table to use to determine the transfer price:
    
5. For Apply, enter a percentage (zero or any positive number).
The percentage is the amount of a markup or discount to the transfer price amount calculated by the rule. Numbers less than 100 indicate a discount, and numbers greater than 100 indicate a markup. For example, to give a 20% discount on a bill rate, enter 80.

Expenditure setups

For a project, you must collect costs that you can charge to recover expenses and generate revenue. To do this, you must define and categorize expenditures such that costs for the project can be calculated during the cost distribution process. You use expenditure categories and expenditure types to group expenditures for costing and billing. For expenditures that you import, you must define the transaction source.

  • Expenditure categories
  • Revenue categories
  • Expenditure types
  • Non- Labour Resources
  • Transaction sources
  • Notes Non-labor costs are calculated either by expenditure type or by non labor resources.
    You can enter the cost rate either in expenditure type or in non labor resource.  If you enter cost rate in an expenditure type then system would consider the same rate for all the operating units but if you want to put different cost values in different operating unit then create a non-labor resource and attach it to the expenditure type. You can attach different cost rates in different OUs to the same non-labor resource.
             

Expenditure Category
You define an expenditure category to group the types of costs incurred by your organization. For example, an expenditure An expenditure category describes the source of your organization's costs. For example, an expenditure category with a name such as Labor refers to the cost of labor. An expenditure category with a name such as Supplier refers to the cost incurred on supplier invoices.

You use expenditure categories when you define organization overrides, for budgeting, and for transaction controls. In addition, you can use expenditure categories in your AutoAccounting rules and in your reporting. Expenditure categories are used for grouping expenditure types for costing.

Example:
Expenditure Category Name - Description
Labor - Labor costs
Travel -  Travel expenditures
In-House Recoverables - Use of corporate assets
Outside Services - Outside services
Material - Materials
Other Expenses - Expenses, excluding travel

Revenue Category

You define a revenue category to group types of revenue generated for your organization. For example, a revenue category of Labor refers to the revenue earned as a result of the work done by people resources.

Example:

Revenue Category Name - Description
Fee - Fee Earned
Labor - Labor Revenue
Other - Non-Labor Revenue
Payment - Payment

Units
A unit of measure records quantities or amounts of an expenditure item. You assign a unit to each expenditure type. For example, you can specify the unit of measure Miles when you define an expenditure type for personal car use. You enter the quantity of personal car use in miles, and Oracle Projects calculates the cost of using a personal car
by mileage.
If you want to calculate the cost of computer services by the amount of time a user uses a computer, you can define an expenditure type for computer services and assign it the unit Hours.
Oracle Projects predefines the units Currency and Hours.

To define a unit of measure:
1. Navigate to the Unit Lookups window.
2. Enter the following information for the unit.
• Code
• Meaning
• Description
• Tag Value (optional -- tag value is not used by Oracle Projects)
• Effective dates
3. Save your work

Expenditure Types

An expenditure type is a classification of cost that you assign to each expenditure item you enter in Oracle Projects and is made up of the following elements:

  1. An expenditure category (used to group expenditure types for costing)
  2. A revenue category (used to group expenditure types for revenue and billing)
  3. A unit of measure
  4. One or more expenditure type classes
  5. You also specify whether an expenditure type requires a cost rate: For supplier invoice expenditure types, if you specify that a rate is required, Oracle Projects requires you to enter a quantity in Oracle Payables for invoice distributions using that expenditure type. When you interface the invoice distribution to Oracle Projects, Oracle Projects copies the quantity and amount to the expenditure item and calculates the rate. If you define a supplier invoice expenditure type with the Rate Required option disabled, then the quantity of the expenditure item is set to the amount you enter in Oracle Payables.
Multiple Expenditure Type Classes Per Expenditure Type
You can assign multiple expenditure type classes to an expenditure type. For example, an expenditure with the expenditure type Materials can have the expenditure type class Supplier Invoice if it originated in Oracle Payables, and the expenditure type class Inventory if it originated in Oracle Inventory.
This feature allows you to use a single expenditure type to classify as many different costs as you require. You can use the same expenditure type for expenditures that have different origins (and therefore different accounting), but which should otherwise be grouped together for costing, budgeting, or summarization purposes.

To define expenditure types:
Navigate to the Expenditure Types window.
1. Name: Enter a unique name for the expenditure type.

2. Expenditure Category and Revenue Category: Enter the expenditure category and revenue category you want to associate with this expenditure type.
  
3. Unit of Measure: Enter the unit of measure you want Oracle Projects to use when calculating the cost for this expenditure type. You must enter Hours for labor expenditure types.
  
4. Rate Required: If this expenditure type requires a cost rate, check the Rate Required check box, then choose Cost Rate to navigate to the Expenditure Cost Rates window and enter a cost rate and its effective date(s). The rates can be defined by operating unit.
If this expenditure type does not require a cost rate, do not check the Rate Required check box.

Note: If you create a non-labor expenditure type without checking the Rate Required check box, you cannot subsequently require and enter a cost rate for that expenditure type. Instead, you must disable the expenditure type and create a new one that requires a cost rate and has a unique name. If you check the Rate Required check box when you create a non-labor expenditure type, you can change the cost rate at any time.

Non-labor costs are calculated either by expenditure type or by non labor resources.

You can enter the cost rate either in expenditure type or in non labor resource.  If you enter cost rate in an expenditure type then system would consider the same rate for all the operating units but if you want to put different cost values in different operating unit then create a non-labor resource and attach it to the expenditure type. You can attach different cost rates in different OUs to the same non-labor resource.
         

5. Tax Classification Code: Optionally, click Tax Classification Code and select the tax classification code for customer invoice lines for this expenditure type and operating unit. Oracle Projects uses this code as the default tax classification code based on the Application Tax Options hierarchy that you define in Oracle E-Business Tax for Oracle Projects and the specified operating unit. For more information on setting up taxes and the hierarchy of tax options for an application and operating unit, see the Oracle E-Business Tax User Guide.

6. Description and Dates: In the Description, Dates region, enter a description for the expenditure type. You can optionally enter effective dates for the expenditure type.

7. Expenditure Type Classes: In the Expenditure Type Class region, enter the expenditure type class or classes you want Oracle Projects to associate with this expenditure type, to determine how to process the expenditure item.

Notes: If you create and save an expenditure type, you cannot subsequently update the following attributes for the expenditure type:
  • Name
  • Expenditure Category
  • Revenue Category
  • Unit of Measure
  • Rate Required check box
Instead, you must enter an end date for the expenditure type and create a new one that has a unique name. When you enter an end date for an expenditure type, the end date has no effect on existing transactions. Oracle Projects uses the old expenditure type to report on and process existing transactions. You cannot use the old expenditure type for new transactions that have an expenditure item date after the end date.


Example: 
Company ABC Corp is doing an oracle apps R12 implementation project for a mobile manufacturing company Mobile India
1. Expenditure Categories – Bill, Salary, Transport, Facility
2. Revenue Categories – Client, Others
3. Expenditure Types:             
                                                                               Expenditure Categories                     Revenue Categories 

Electric bill 

Bill

Client

Expenditure type class : Usage/Miscellaneous

Telephone bill 

Bill

Client

Expenditure type class : Usage/Miscellaneous

Team B’ day celebration 

Facility

Client

Expenditure type class : Usage/Miscellaneous

Contingent workers 

Salary

Client

Expenditure type class :  Supplier Invoices


Expenditure type class: Usage, Miscellaneous, Expense Report, Supplier Invoices, Burdened Transaction, Straight time, over time, Inventory and Work in Process.  

Non-Labor Resources

You specify a name and a description of an asset, or pool of assets, to define a non-labor resource. For example, you can define a non-labor resource with a name such as Earth Mover to represent one earth mover your business owns. You can also define a non-labor resource with a name such as PC to represent multiple personal computers your business owns.

  • Every usage item you charge to a project must specify the non-labor resource utilized and the non-labor resource organization that owns the resource.
  • When defining your non-labor resources, you can choose only expenditure types with the Usage expenditure type class.
  • You can use the non-labor resource organization in your AutoAccounting rules for usage cost and revenue.
To define non-labor resources:
1.In the Non-Labor Resources window enter a name, description, effective date(s), and a usage expenditure type for each non-labor resource your organization owns.
 
2. For each non-labor resource you define, enter the organization(s) to which the resource is assigned in the Organizations region. Enter the effective dates during which the resource is owned by each organization.
The organizations you enter can include any organization from your organization hierarchy, regardless of whether the organization has the Expenditure Organization classification, and regardless of the start and end dates for the organization.

3. If you want to override the cost rate of the expenditure type by the resource and organization combination, choose Cost Rates and enter the cost rate for the operating unit in question , and the effective date(s) in the Cost Rates Overrides window.
Attention: A non-labor resource may be a piece of equipment whose capacity is consumed, such as a training room, or equipment whose physical output is consumed, such as a copier. You can plan and report for non-labor resources as equipment whose capacity is consumed by enabling the equipment resource class.

Transaction Sources

Transaction sources identify the source of external transactions that you import into Oracle Projects. The transaction source determines how Oracle Projects imports the transactions.

Oracle Projects provides a set of predefined transaction sources that you use to import transactions from other Oracle Applications. For example, the following processes in Oracle Projects use predefined transaction sources to import expenditures:
  • PRC: Interface Supplier Costs: Uses the predefined transaction sources for supplier costs to import transactions from Oracle Purchasing and Oracle Payables.
  • PRC: Interface Expense Reports from Payables: Uses the predefined transaction source Oracle Payables Expense Reports to import expense reports from Oracle Payables.
  • PRC: Transaction Import: Uses predefined transaction sources to import transactions from other Oracle Applications such as Oracle Inventory, Oracle Project Manufacturing, Oracle Time and Labor, and Oracle Labor Distribution.
In addition, Oracle Projects uses predefined transaction sources to import project allocations and capitalized interest transactions that it generates internally.

You can define additional transaction sources to import transactions from non-Oracle applications. For example, you can define the transaction source Payroll to identify expenditure items imported from an external payroll system. You control the Transaction Import processing by the options that you select for each transaction source.

Labour Costing


To calculate labor costs, you must assign a costing rule to each expenditure organization. If a costing rule has a costing method of Rates, you must also assign a cost rate schedule to each organization using the costing rule.
Use the Organization Labor Costing Rules window to:
• Assign costing rules and rate schedules, if appropriate, to operating units, parent organizations, or specific expenditure organizations. The costing rule and rate schedules assigned to an organization apply to all employees in the organization.
• Specify currency rate attributes to be used during calculation of labor costs if the currency of the cost rate schedule is different from the currency of the operating unit in which the timecard is entered.
• Define default overtime projects and tasks for organizations using the overtime calculation extension to generate overtime transactions.

When you assign a costing rule and a rate schedule to an organization, Oracle Project applies the following rules in the order presented to determine the costing rule for each transaction:
• If an assignment exists for the transaction expenditure organization, then the corresponding costing rule and rate schedule are used to calculate labor costs.
• If an assignment does not exist for the expenditure organization, Oracle Projects uses the Expenditure Organization Hierarchy and searches for an assignment for the parent organization owning the expenditure organization. If an organization has multiple parents and a rule is assigned to each, the rule assigned to the lowest level parent organization is applied.
• If an assignment does not exist for a parent organization, Oracle Projects searches for an assignment for the expenditure operating unit.

Prerequisites
❑ Define Rate Schedules
❑ Define Labor Costing Rule

To assign costing rules and rate schedules:
1. In the Organization Labor Costing Rules window, select an Operating Unit, Organization or both.
2. Select a labor costing rule. If the labor costing rule has a costing method of Rates, select the cost rate schedule that defines the hourly cost rates for employees in the selected organization.
3. Enter a default job rate schedule to be used when forecasting costs for unstaffed positions.
4. Enter the Effective Dates during which the assignment of the costing rule and rate schedule are valid for the organization.
5. If you use the overtime calculation extension, optionally enter a default project and task for system generated transactions.
6. If your cost rate schedule currency is different from your operating unit currency, enter the currency conversion attributes in the Currency Conversion Attributes region. If you do not specify currency attributes, the rate attributes defined in the Implementation Options window are applied.



Rate Schedules



Rate schedules are defined for both billing and costing. A bill rate schedule maintains the rates and percentage  markups over cost that you charge clients for your labor and non–labor expenditures. A cost rate schedule maintains hourly cost rates for employees or jobs. In addition, Oracle Project Resource Management uses bill rate schedules and cost rate schedules to perform forecasting based on staffing plan.

You can define or copy rate schedules for your entire organization. You can also define or copy separate rate schedules for individual business units.
Note: There is no system attribute to distinguish between a bill rate schedule and a cost rate schedule. It is recommended that you use naming conventions when you create rate schedules that distinguish bill rates from cost rates.
You specify one of the following schedule types for each rate schedule you define:
• Employee – Use this type of rate schedule to define standard hourly rates or percentage markups for billing by employee.
• Job – Use this type of rate schedule to define standard hourly rates by job title.
When you enter a job–based rate schedule, you enter a job group to indicate which jobs are used to determine rates.
When a project uses a job–based bill rate schedule , the job group on the schedule must match the project’s billing job group.
• Non–Labor – Use this type to define standard bill rates or percentage markups by non–labor expenditure type or non–labor resource. All expenditure types that you want to bill must be enabled. If you want to bill at cost, you must enter a 0% markup.
Note: In a multi–organization environment, you can share rate schedules across different operating units, or have different rates for the same resource in different operating units.

To define a rate schedule:
1. In the Rate Schedules window enter a schedule name and a description of the schedule.
2. Specify the organization that maintains the schedule.
The organization you enter can be any organization from your organization hierarchy, regardless of whether the organization has the Expenditure Organization classification, and regardless of the start and end dates for the organization.
3. Specify a currency for the schedule.
Note: You can specify a different currency for your Bill Rate Schedule if the Enable Multi Currency Billing option is enabled for the operating unit.
4. Check the Share Across Operating Units check box to allow other operating units to use this schedule.
Note: To share bill rate schedules, you must also enable the Share Bill Rate Schedules Across Operating Units options in the Billing tab of the Implementation Options window.
5. Select a schedule type.
6. Depending on the schedule type, specify rates or markups for employees, job titles, or non–labor expenditure types.
Note: When a project uses a job–based bill rate schedule, the job group on the schedule must match the project’s billing job group. If you need to change to a different schedule, only those schedules that match the project’s billing job group are allowed.
7. Save your work.

Labor Costing Rules


A labor costing rule determines how an employee is paid. You define a labor costing rule for each pay type your business uses. For example, you can define a labor costing rule for pay types such as exempt, non–exempt, uncompensated, compensated, or hourly.

When an employee charges time to a project, Oracle Projects processes the labor hours according to the employee’s labor costing rule. For example, if an employee’s labor costing rule is Hourly, the employee is eligible for overtime pay; if the employee’s labor costing rule is Exempt, the employee is not eligible for overtime pay.


To define a labor costing rule:
1. In the Labor Costing Rules window, enter a unique rule name and select a costing method.
Costing methods determine how labor costs are calculated. The available options are:
Rates: When you select Rates, Oracle Projects calculates the labor costs for entered hours using hourly cost rates.
Extension: When you select Extension, labor costs are calculated by the labor costing extension. When using this option you are not required to maintain hourly cost rates in Oracle Projects.

2. If overtime hours are created by the overtime calculation extension, you can use the Defaults for Overtime Entry region to specify a default project and task for system generated expenditure items.

3. Enter the Effective Dates during which the labor costing rule is valid.

4. If your employees enter overtime hours manually, use the Overtime Cost Multipliers region to assign cost multipliers to overtime expenditure types. When a costing method of Rates is selected and a transaction is charged to an expenditure type that has an assigned multiplier, the multiplier is applied as labor costs are calculated.
Note: If the transaction is charged to an overtime task and a cost multiplier is assigned to the task, the task multiplier takes precedence over the expenditure type multiplier.
If overtime hours are derived using the overtime calculation extension, you can use the Overtime Cost Multipliers region to default expenditure types for system generated expenditure items.

5. Save your work.

Resources and Resource Lists

Resources are the labor, services, materials, equipment, and other items needed to track, complete, and account for project work. You use resources in Oracle Projects to categorize amounts for budgeting and forecasting, and to summarize actuals and commitments for project status tracking.

Note: You must set up resource lists for each business group. Resource lists are shared among operating units associated with the same business group. You can define a resource list by copying it from an existing resource list in the same business group.

Resources
You use resources as flexible groupings by which you can:
• Categorize budget and forecast amounts
• Summarize actual amounts

You can define resources as employees, organizations, jobs, suppliers, expenditure categories, revenue categories, expenditure types, or event types.

Resource Lists

Your company has a unique way that it uses and tracks similar types of resources for similar kinds of project work. You can define resource lists to create sets of similar resources that you typically use on specific kinds of projects. You can define a simple list of resources or a two–level hierarchy of resource groups and resources.

You can group resources by expenditure categories, revenue categories, or organizations.

You can define resource lists that classify budgets, forecasts, and actuals in different ways. Resource lists provide multiple roll up structures for summarizing actuals and commitments for cross–project reporting. For example, you can define one resource list by employee and another by
job for reviewing actuals using different roll ups.

You can set up your project budgets and forecasts to enter amounts at either a resource group or resource level. Oracle Projects summarizes actuals and commitments using the lowest level in the resource list then rolls up the amounts to the resource group. These capabilities enable you to review budgets, forecasts, and actual amounts at a summary level then drill down to the resource–level details.

You can define different types of resources within a resource group. For example, you can create resources of employees and jobs for the Labor expenditure category, resources of suppliers under Outside Services, and use expenditure types for all other expenditure categories. This flexibility enables you to define different resource groups as required for budgeting and forecasting, and to best track the actuals for each resource group.

You can specify a job group when you define a resource list. When the resource type is Job, the job group controls which jobs can be selected for the resource.

When you define a resource list, you specify the following values:



Resource List
Name Enter a unique name that identifies the resource list. Job Group If the resource type is Job, then the job group controls which jobs can be selected for the resource. In Single Business Group Access mode, only the job group from the current business group can be used.

In Cross Business Group Access mode, any job group can be used. Master job groups cannot be used for resource list assignment. Group Resources By You can group resources by expenditure category,
revenue category, or organization, or select None if you don’t want to  group resources for the resource list.

If you choose to group resources, then you must enter the resource groups. If you choose to not group resources, then you skip the resource groups region and directly enter your resources.

Resource Groups
Group Select expenditure categories, revenue categories, or organizations as your resource groups. You should include all expenditure categories, revenue categories, or organizations in your
resource list.

Alias Enter an alias name for the resource group for display when you are budgeting, forecasting, and viewing project status. Control Levels Optionally, specify default control level values for the
resource group.

Order Specify the order in which you want to view the resource groups in Project Status Inquiry. This enables you to order the categories with the highest visibility first. For example, if Labor is your primary cost, then you can choose to display the Labor expenditure category as the first resource group, followed by Travel and Outside Services expenditure categories.

Enabled You can disable the resource group so that Oracle Projects does not allow entry of budgets or forecasts using the resource group, nor use it when summarizing actuals by resources for that resource group.

Resources
Type Select the type of resource that you want to enter. You can choose from the following resources: Employee, Job, Organization, Supplier, Expenditure Type, Event Type, Expenditure Category
Revenue Category

Resource Choose a resource from the list of values for the resource type.

Alias Enter an alias name for the resource for display when you are budgeting, forecasting, and viewing project status Control Levels Optionally, specify default control level values for the
resource.

Order Specify the order in which you want to view the resources in Project Status Inquiry. This enables you to order the resources with the highest visibility first. For example, you may want to display senior–level jobs first so you order the resources of Job in the following order: Principal Consultant, Senior Consultant, Staff Consultant.

Enabled You can disable the resources so that Oracle Projects does not allow entry of budgets or forecasts using the resource, nor use it when summarizing actuals by resources.

Identifying Labor Resources
Oracle Projects automatically determines which resources and resource groups in a resource list are labor resources. Resources that are tracked as labor are as follows:
• Expenditure types with an expenditure type class of Straight Time or Overtime
• Expenditure categories and revenue categories that classify at least one expenditure type with an expenditure type class of Straight Time or Overtime
• All employees, jobs, and organizations defined below a resource group (expenditure category or revenue category) that is a labor resource group, or that are defined in a resource list without
groups
The unit of measure of a labor resource is set to hours. Oracle Projects summarizes the quantities of labor resources as labor hours at the project, task, and resource levels. You can see all other quantities other than labor hours at the resource level only; they are not summarized to the project and task levels.

Determining the UOM for Resources
As you enter the resources in a list, Oracle Projects automatically determines the unit of measure for the resources, as follows:
• Expenditure type resources use the unit of measure of the expenditure type.
• For employees, jobs, and organizations, the unit of measure is Hours.
• Resources that are tracked as labor use a unit of measure of Hours All other resources do not have a default unit of measure. You can only enter budget or forecast quantities for resources with a unit of measure.

Labor Cost Multipliers



A labor cost multiplier is a value by which Oracle Projects multiplies an employee’s labor cost rate to calculate the employee’s overtime premium cost rate:

Labor Cost Rate * Labor Cost Multiplier = Overtime Premium Labor Cost Rate

Oracle Projects then multiplies this overtime premium labor cost rate by  the number of overtime hours an employee works to calculate the overtime premium for that employee:

Overtime Premium Labor Cost Rate * OT Hours = Overtime Premium

You define a labor cost multiplier for each kind of overtime your business uses such as double time, or time and a half.
For example, if you pay an employee double time for all overtime hours, you define a labor cost multiplier of 1.0. You multiply the employee’s labor cost rate by 1.0 to calculate the employee’s overtime premium labor cost rate.
If you pay an employee time and a half for all overtime hours, you define a labor cost multiplier of 0.5 to calculate the employee’s overtime premium labor cost rate.

An employee’s total labor cost is the overtime premium plus the total number of hours that employee worked multiplied by the employee’s labor cost rate:
Overtime Premium +(Total Hours x Labor Cost Rate) = Total Labor Cost

Defining Transfer Price Schedules



A transfer price schedule is a list of transfer price rules. The schedule specifies which rules determine the transfer price amount for transactions charged from a provider organization to a receiver organization.

When defining transfer price schedule lines, you can use the amount type classification to assign different rules for revenue sharing and cost reimbursement agreements. As cross charge transactions are processed, the work type attribute classifies each transaction as cost or revenue, and therefore, determines the schedule line used when the transfer price is calculated. See Work Types, Oracle Projects Fundamentals.

You can define different schedules to use different rules for various projects and tasks between the same pairs of provider and receiver organizations. For example, you can define one schedule that contains all the rules for capital projects and another for contract projects.

Changes to a transfer price schedule affect only future transactions. To change a previously processed transaction, use the Expenditure Items window to adjust the transaction manually.

Before you define transfer price schedule, you must define:

  1. Organizations
  2. Transfer price rules

Line Num     Enter a number greater than zero to specify the display order for the lines.

Provider     Choose any organization, parent organization from organization hierarchy assigned to the operating unit in the Expenditures tab of the Implementation Options window, or business group.

(Optional) Receiver     Choose any organization, parent organization, operating unit, or business group. If you leave this field blank, this transfer price schedule applies to any receiver organization receiving transactions from the specified provider organization.

Labor Rule, Non Labor Rule     For Labor Rule, choose a valid transfer type rule with the type Labor for this provider and receiver organization pair.
For Non Labor Rule, choose a rule with the type Non Labor.
You must specify at least one transfer price rule (labor, non-labor, or both) for each schedule line.

Apply %     (One Apply % field applies to labor rules, the other to non-labor rules.) Enter a percentage (zero or any positive number). The percentage is a markup or discount to the transfer price amount calculated by the rule. Numbers less than 100 indicate a discount, and numbers greater than 100 indicate a markup. For example, to give a 20% discount on a bill rate, enter 80.
Transfer Price Amount Type     Select one of the following:

Cost Transfer: The schedule line is applied to transactions when the assigned work type has the amount type Cost

Revenue Transfer: The schedule line is applied to transactions when the assigned work type has the amount type Revenue.

Cost and Revenue: The schedule line applies to all cross charge transactions.

Effective Dates     Enter effective dates for this schedule line. The schedule line will be applied to transactions within the effective date range only.

Default     Choose one schedule line to be a default for this schedule. The rule associated with this line is used to derive the transfer price if none of the other lines match your transaction.

Note: The system does not require that a transfer price schedule line be identified as the default line. However, the system does issue an error message if it cannot determine a rule to apply to a transaction.
Descriptive flexfield     Enter the information specified by your system administrator.

Asset Capitalization



Using capital projects, you can define capital assets and capture construction–in–process (CIP) and expense costs for assets you are creating. When you are ready to place assets in service, you can generate asset lines from the CIP costs and send the lines to Oracle Assets for posting as fixed assets.

You can also define retirement adjustment assets and capture cost of removal and proceeds of sale amounts (collectively referred to as retirement costs, retirement work–in–process, or RWIP) for assets you are retiring that are part of a group asset in Oracle Assets. When your retirement activities are complete, you can generate asset lines for the RWIP amounts and send the lines to Oracle Assets for posting as adjustments to the accumulated depreciation accounts for the group asset that corresponds to each asset.

Capital Projects for Capital Assets
You define and build capital assets in capital projects using information specified in the project work breakdown structure (WBS). You define asset grouping levels and assign assets to the grouping levels to summarize the CIP costs for capitalization.
You can review and adjust capital project costs before and after capitalization. For example, you can allocate costs collected under common tasks to multiple CIP assets before you place them in service. You can also account for additional costs incurred after capitalization, since Oracle Projects allows you to place assets in service before
completion of a project.

When a CIP asset is ready to be placed in service, you send the capital project amounts to Oracle Assets as asset lines. Oracle Assets places the asset lines in a holding area where your fixed assets department can post the capital costs in Oracle Assets as fixed assets. You can review detail transactions associated with the asset lines in Oracle Projects and Oracle Assets. If necessary, you can reverse capitalize an asset in a capital project.

Capital Projects for Retirement Costs
You capture retirement costs in a capital project by recording cost of removal and proceeds of sale amounts to a task that is designated as a retirement cost task. To distinguish cost of removal and proceeds of sale amounts, you must enter proceeds of sale amounts using expenditure types that you define to specifically classify these amounts.
Oracle Projects automatically classifies amounts for all other expenditure types as cost of removal.

To associate retirement costs with a group asset in Oracle Assets, you create a retirement adjustment asset in the capital project and identify it with a specific group asset. As with capital assets, you define asset grouping levels and assign retirement adjustment assets to the grouping levels to summarize the retirement cost amounts for posting
to Oracle Assets.

When retirement activities are complete, you generate asset lines for the retirement cost amounts and send the lines to Oracle Assets for posting as adjustments to the accumulated depreciation accounts for the group assets. To communicate notice of an asset retirement to Oracle Assets, you can optionally initiate retirement requests in Oracle
Projects that are automatically passed to Oracle Assets.

Attention: To use Oracle Projects retirement cost processing windows and features, the value of the site–level profile option PA: Retirement Cost Processing Enabled must be set to Yes.

Non Labor Costing

Every usage item you charge to a project must specify the non–labor resource utilized and the non–labor resource organization that owns the resource. When defining your non–labor resources, you can choose only expenditure types with the Usage expenditure type class.

Defining Non-Labor Resources


Note : A single expenditure type (print) can many different resources (color printer & bw printer) but the reverse is not possible.

1. In the Non–Labor Resources window enter a name, description, effective date(s), and a usage expenditure type for each non–labor resource your organization owns.
2. For each non–labor resource you define, enter the organization(s) to which the resource is assigned in the Organizations region. Enter the effective dates during which the resource is owned by each organization. The organizations you enter can include any organization from your organization hierarchy, regardless of whether the organization has the Expenditure Organization classification, and regardless of the start and end dates for the organization.
3. If you want to override the cost rate of the expenditure type by the resource and organization combination, choose the Cost Rates button and enter the cost rate and its efective date(s) in the Cost Rates Overrides window.
4. Save your work.

Non-Labor Cost Rates


An expenditure type cost rate is a currency amount that Oracle Projects multiplies by the expenditure type unit to calculate cost. In the Expenditure Types window, select an expenditure type and choose the cost rates button to enter a cost rate for it. You cannot define a cost rate for a non–labor expenditure type that does not require a cost rate. Instead, you must disable the expenditure type and create a new one that requires a cost rate and has a unique name.

In a multi–organization environment, expenditure types are set up once and are shared across
all operating units. However, the cost rates for expenditure types are specific to each operating
unit. Each operating unit must have cost rates set up for expenditure types.

Non-Labor Cost Rate Overrides

You define usage cost rate overrides in the Non–Labor Resources window when you define non–labor resources. When you define non–labor resources, you assign each asset an expenditure type with the Usages expenditure type class. The cost rates you define for the expenditure type apply to all non–labor resources classified with that expenditure type.

You can define a usage cost rate override for any non–labor resource. Usage cost rate overrides
are defined by the non–labor resource and organization. The cost rate override applies only to a
specific non–labor resource owned by that organization; if there are multiple non–labor resources with that expenditure type or multiple owning organizations of the same resource, they retain the existing expenditure type cost rate you define.

In a multi–organization environment, non–labor resources are set up once and are shared across all operating units. For each of the non–labor resources that an operating unit may put in service, you must set up a cost rate for the associated expenditure type.

Revenue Process


When you generate revenue, Oracle Projects first selects projects, tasks, and their associated  events and expenditure items that are eligible for revenue generation. Oracle Projects next  alculates the potential revenue and then creates revenue events and expenditure items.
 


During the revenue generation process, revenue and billing amounts are calculated in the billing transaction currency. Revenue is processed using a common currency, called the revenue processing currency, which is always the project functional currency. Revenue amounts in
the billing transaction currency are converted to project functional currency, project currency, and funding currency during the revenue generation process.

Revenue recognition, funds checking, and unbilled receivables/unearned revenue (UBR/UER), are processed and posted to General Ledger in the revenue processing currency. For reporting purposes, funding balances are maintained in the project functional currency, the project currency, and the funding currency.

Revenue Calculation
Oracle Projects next calculates the total potential revenue that can be accrued for each project. Potential revenue is the full revenue amount that could be accrued if enough funding is available. Projects that use task level funding calculate the potential revenue for each task, while projects that are funded at the project level have a single potential revenue amount for the project.

Oracle Projects calculates the bill amounts for all expenditure items when calculating revenue, except for cost and event billing projects, which do not bill expenditure items.

Cost–to–Cost (Percent Spent)
For projects using cost–to–cost revenue accrual method, Oracle Projects uses the following formula to calculate revenue (in the project functional currency) to accrue for the revenue generation run



As–Work–Occurs (Time and Materials)
For projects that use as–work–occurs (or time and materials) revenue accrual, the total potential revenue is simply the sum of the revenue of all expenditure items plus events.

After all of the bill rates are assigned, Oracle Projects rejects those items for which no bill rate or markup is found, and creates distribution warnings.Oracle Projects also calculates the bill amounts for each item for projects which accrue cost–to–cost revenue based on percent complete but bill on
a time and material basis

Revenue Events
• You can process revenue for detail transactions using one of the revenue accrual methods.
• You can also process revenue and invoice amounts using events.
– Events are revenue and/or billing transactions assigned to a project or top task that are not
directly associated with detail transactions.
– Event types are defined by the user to categorize different kinds of standard and nonstandard event
transactions by revenue category

Percent Complete