Project Costing

• 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.
 

• 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’

• 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.

• 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

• 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

• 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.

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
  

• 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.

• 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:

•  Burden cost is the result of multiplying raw cost by a burden multiplier.
•  Burdened cost is the sum of raw cost and burden cost.

• 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.

Expenditures

Time Card, Expense Report, Usages, Inventory, Work in Process, Miscellaneous Transaction and Burden Transaction

• 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)

• 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 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

• 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 is active
• Is valid for multiple currencies

• Employee is active

• Matching expenditure item exists (unless you enter an unmatched, negative transaction)

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

• Create, then copy a batch template.
• Copy expenditures from any previously created batch.
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• 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.

• Expenditure Category
• Expenditure Type
• Employee (includes contingent workers)
• Non-Labor Resource

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.

• Expenditure category, Expenditure type, Non-labor resource & Employee (or contingent worker)

• Scheduled Expenditure Only, Workplan Resources Only & Person Type
• Chargeable,  Billable (contract projects) & Capitalizable (capital projects)
• Effective from & Effective to

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
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• 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 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.

Burdening

• 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

• 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

• 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.

 

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.

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.

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.

• 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.

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.

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:

• 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.
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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):

•  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.

• 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:

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:

 

Adjusting Expenditures

• Adjust expenditure items on your projects
• Interface the adjustments to other Oracle applications
• Report the audit trail of the adjustments

• 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.

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.

• 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.

• 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.

• 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.
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• The raw cost rate is incorrect
• The burden cost multiplier is incorrect
• AutoAccounting is incorrect

• Rate Type
• Rate Date
• Exchange Rate

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

• Task–level burden schedule override
• Project–level burden schedule override
• Task standard burden schedule

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.

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 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

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.

• 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

• 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.

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.

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.

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

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 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.

• Name
• Expenditure Category
• Revenue Category
• Unit of Measure
• Rate Required check box

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.

Transaction Sources

• 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.

Labour Costing

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

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