This chapter describes how Oracle Projects determines rates. You can use rates to calculate amounts for costing, billing, and workplan and financial planning.
This chapter covers the following topics:
Oracle Projects determines rates from a combination of rate schedules and rate overrides, and uses the rates to calculate cost, revenue, and bill amounts. How Oracle Projects determines rates depends upon whether the rate is for costing, billing, or workplan and financial planning purposes.
You can define four types of rate schedules. The following table lists the four types of rate schedules and indicates how you can use each rate schedule type in Oracle Projects.
| Rate Schedule Types | Use to Determine... |
|---|---|
| Employee | Cost Rates - Labor Bill Rates - Labor Planning Rates - Labor |
| Job | Cost Rates - Labor Bill Rates - Labor Planning Rates - Labor |
| Non-Labor | Bill Rates - Non-Labor Planning Rates - Non-Labor |
| Resource Class | Planning Rates - Labor Planning Rates - Non-Labor |
Use the Rate Schedules window to define rate schedules.
Note: When you navigate between rate schedules using the Rates Schedule window, you can disable the Toggle Query Coordination check box if you do not want Oracle Projects to automatically retrieve and display the corresponding rates. When you disable the Toggle Query Coordination check box, you can navigate to the Rates block and run a query, with or without query criteria, to retrieve the rates.
You can use rate schedules for the following purposes:
Costing: Use rate schedules to define cost rates for labor expenditure items. You can maintain hourly cost rates by job or by employee.
Note: You do not use rate schedules to define cost rates for non-labor expenditure items. Instead, you can assign cost rates directly to non-labor expenditure types.
Billing: You can use rate schedules to determine revenue and bill amounts for billable expenditure items for contract projects when the revenue accrual method or the invoice method is Work (As-Work-Occurs). You can use employee, job, and non-labor bill rate schedules for this purpose.
You can also associate bill rate schedules with transfer price rules to determine the transfer price amount of cross charged expenditure items during Borrowed and Lent or Intercompany Billing cross charge processing. For information on transfer price rules, see: Defining Transfer Price Rules, Oracle Projects Implementation Guide.
Planning: Use rate schedules to provide rates for workplan and financial planning. You can use the same rate schedules that are used to calculate actual costs and revenue, or you can use a set of planning rate schedules to define rates for planning.
You can specify a set of planning rate schedules when you enable planning rates for a workplan structure or when you define planning options for a financial structure, budget version, or forecast version. You can also specify employee, job, non-labor, and resource class rate schedules for this purpose.
Related Topics
Overview of Project Costing, Oracle Project Costing User Guide
Rate Schedule Definition, Oracle Projects Implementation Guide
You use cost rates to calculate the raw cost for expenditure items that have a quantity, but no raw cost amount. For example, you can import timecards with a quantity of hours, but no raw cost amount, into Oracle Projects from Oracle Time and Labor. During cost distribution processing, Oracle Projects determines the labor cost rate for each expenditure item and uses the cost rate to calculate the labor raw cost.
Oracle Projects uses burden schedules to determine the total burdened cost for expenditure items.
Oracle Projects uses labor cost rates to calculate the raw cost for labor expenditure items. Labor expenditure items always have a unit of measure of Hours. Oracle Projects determines a cost rate for each labor expenditure item and calculates the raw cost during cost distribution processing, unless you import the raw cost for labor expenditure items.
The following table shows the order of precedence for how Oracle Projects determines the cost rate for labor expenditure items.
| Precedence | Type of Override or Rate Source |
|---|---|
| 1 | Labor Costing Override |
| 2 | Organization Labor Costing Rule |
Oracle Projects first establishes whether any labor costing overrides are present for the employee who is associated with the expenditure item. It uses the effective dates for the labor costing overrides to determine whether an override is active on the expenditure item date. A labor costing override can have either an overriding cost rate or an overriding rate schedule. If a labor costing override applies, then Oracle Projects uses it to determine the cost rate.
If no override is present, Oracle Projects uses an organization labor costing rule to determine the cost rate. Oracle Projects first looks to see if an organization labor costing rule is assigned to the expenditure organization for the expenditure item. If it does not find a rule for the expenditure organization, it searches for a rule that is assigned to the expenditure organization's parent organization. It continues up the Expenditure/Event Organization Hierarchy until it finds a labor costing rule to use. You specify this organization hierarchy for the operating unit during implementation. At each level, Oracle Projects searches for a rule with an effective date range that is active on the expenditure item date. If an organization has multiple parents and a rule is assigned to more than one parent, Oracle Projects uses the rule assigned to the lowest level parent organization.
Oracle Projects uses the organization costing rule assigned to the expenditure operating unit if no rule exists for the expenditure organization or any of its parent organizations.
Once Oracle Projects finds a labor costing rule to use, it applies the rule to determine the cost rate for the expenditure item. You can associate either a rate schedule or a labor costing extension with an organization labor costing rule to determine the cost rate. The cost rate schedule can be either an employee or a job rate schedule.
The cost distribution process returns an exception if Oracle Projects cannot determine a labor cost rate for an expenditure item.
Oracle Projects uses cost rates to calculate the raw cost for non-labor expenditure items that require a cost rate. You specify whether a rate is required for each expenditure type when you define non-labor expenditure types during implementation. Oracle Projects determines a cost rate for each non-labor expenditure item and uses the rate to calculate the raw cost during cost distribution processing, unless you import the raw cost for these expenditure items.
The following table shows the order of precedence for how Oracle Projects determines the cost rate for non-labor expenditure items.
| Precedence | Type of Override or Rate Source |
|---|---|
| 1 | Non-Labor Cost Rate Override (Usages Only) |
| 2 | Non-Labor Expenditure Cost Rate |
For expenditure items associated with an expenditure type class of Usage, Oracle Projects first establishes whether a non-labor cost rate override applies to the combination of non-labor resource and non-labor resource owning organization for the expenditure item. Each usage cost rate override applies only to a specific non-labor resource owned by a specific non-labor resource owning organization. If an override is present, then Oracle Projects uses the effective dates for the override to determine whether the override is active on the expenditure item date.
For all other non-labor expenditure items that require a cost rate, and for Usage expenditure items not associated with a non-labor cost rate override, Oracle Projects uses the non-labor expenditure cost rate associated with the expenditure type. It searches for a non-labor expenditure cost rate with an effective date range that is active on the expenditure item date.
The cost distribution process returns an exception if Oracle Projects cannot determine a non-labor cost rate for an expenditure item.
Related Topics
Burdening, Oracle Project Costing User Guide
Expenditure Definition, Oracle Projects Implementation Guide
Labor Costing Definitions, Oracle Projects Implementation Guide
Labor Costing Extensions, Oracle Projects APIs, Client Extensions, and Open Interfaces Reference
Non-Labor Costing Definitions, Oracle Projects Implementation Guide
Oracle Projects Open Interfaces, Oracle Projects APIs, Client Extensions, and Open Interfaces Reference
For contract projects with a revenue accrual method of Work (as-work-occurs), Oracle Projects uses a bill rate or markup to calculate the revenue for each expenditure item. It uses the same logic to calculate the bill amount for contract projects that have an invoice method of Work. Oracle Projects determines the revenue and bill amounts for billable expenditure items when you generate revenue for a project.
Oracle Projects determines bill rates for calculating revenue and bill amounts for a contract project separately from cost rates. You can use a completely different set of rate schedules for costing and billing purposes.
Oracle Projects determines the bill rate, discount, or markup for each labor expenditure item using an order of precedence. It also determines the job associated with a labor expenditure item for billing purposes when you generate revenue for a project.
The following table shows the order of precedence for how Oracle Project determines the job to apply to an expenditure item.
| Precedence | Source for the Job |
|---|---|
| 1 | Task Job Assignment Override |
| 2 | Project Job Assignment Override |
| 3 | Employee's Primary Job Assignment |
The following table shows the order of precedence that Oracle Projects uses to match an expenditure item and rate source when determining bill rate, discount, or markup for labor expenditure items with bill rate schedules. As soon as an expenditure item satisfies a rate source in the hierarchy, Oracle Projects abandons the search.
| Precedence | Type of Override or Rate Source |
|---|---|
| 1 | Assignment overrides (if assignment precedes task) |
| 2 | Employee bill rate overrides at task level |
| 3 | Assignment overrides (if assignment does not precede task) |
| 4 | Employee bill rate overrides at project level |
| 5 | Task job bill rate overrides with task job assignment overrides |
| 6 | Project job bill rate overrides with task job assignment overrides |
| 7 | Task job bill rate or discount overrides with project assignments |
| 8 | Project job bill rate overrides with project job assignment overrides |
| 9 | Task job bill rate overrides with primary job assignments |
| 10 | Project job bill rate overrides with primary job assignment |
| 11 | Labor multipliers |
| 12 | Standard labor bill rate schedule |
| 13 | Task job bill rate schedule with task job assignment overrides |
| 14 | Task job bill rate schedule with project job assignment overrides |
| 15 | Standard job bill rate schedule |
Oracle Projects searches for an override, discount, or markup with an effective date range that is active on the expenditure item date.
If both assignment and task overrides exist, Oracle Projects determines the precedence depending upon whether the Assignment Precedes Task For Actuals check box is enabled at the project level.
If none of the billing terms listed in the preceding table exist, then the labor schedule associated with the task determines whether Oracle Projects performs the calculation using a bill rate schedule or burden schedule.
You specify whether a billing schedule is based on employee or job criteria when you define a schedule. You can specify an employee-based bill rate schedule, or a job-based bill rate schedule, or both when you set up a contract project. Oracle Projects first looks for an employee-based rate when it determines bill rates. If no employee-based rate schedule is specified, or if none is available for the employee, Oracle Projects uses a job-based bill rate.
The revenue generation process returns an exception if Oracle Projects cannot determine a labor bill rate for an expenditure item.
Oracle Projects determines the bill rate, discount, or markup for each non-labor expenditure item using a precedence of rates.
The following table shows the order of precedence for how Oracle Projects determines the bill rate, discount, or markup for non-labor expenditure items.
| Precedence | Type of Override or Rate Source |
|---|---|
| 1 | Task Non-Labor Bill Rate and Discount Override: Non-Labor Resource |
| 2 | Project Non-Labor Bill Rate and Discount Override: Non-Labor Resource |
| 3 | Task Non-Labor Bill Rate Schedule: Non-Labor Resource Bill Rate |
| 4 | Task Expenditure Type Bill Rate and Discount Override: Expenditure Type |
| 5 | Project Expenditure Type Bill Rate and Discount Override: Expenditure Type |
| 6 | Task Non-Labor Bill Rate Schedule: Expenditure Type Bill Rate |
Oracle Projects searches for an override, discount, or markup with an effective date range that is active on the expenditure item date.
If an expenditure type has an expenditure type class of Usage, you can specify a rate, discount, or markup for either the expenditure type by itself or for the combination of an expenditure type and a non-labor resource, when you define a non-labor bill rate schedule or a non-labor bill rate and discount override. The expenditure type and non-labor resource combination takes precedence over the expenditure type if you define information for both.
The revenue generation process returns an exception if Oracle Projects cannot determine a non-labor bill rate for an expenditure item.
When you create a project assignment, Oracle Projects always attempts to determine a bill rate for the team role using bill rate schedules and overrides. It follows the same logic that it uses to determine bill rates for actual expenditure items. Typically, you set up bill rate schedules and overrides only for projects with a revenue accrual method of Work.
You can set up bill rate schedules and overrides for projects with a revenue accrual method of Cost or Event. Oracle Projects uses this information to determine bill rates to display on the team roles.
Note: For projects with a revenue accrual method of Cost or Event, any budget or forecast generated based on team roles does not use the displayed bill rate because Oracle Projects generates actual revenue based on actual costs accrued or billing events.
Related Topics
Job Bill Rate and Discount Overrides
Employee Bill Rate and Discount Overrides
Non-Labor Bill Rate and Discount Overrides
Revenue Accrual, Oracle Project Billing User Guide
Invoicing, Oracle Project Billing User Guide
You can use rates to calculate the amount of planned cost or revenue for each planning resource during workplan and financial planning. A planning resource is a specific resource that you can use in the context of workplan and financial planning.
You enter a quantity for each rate-based planning resource that you assign to a workplan or to a financial budget or forecast. Oracle Projects spreads the entered quantity over the periods for which you are planning based on the associated dates and spread curve. Oracle Projects considers a planning resource to be rate-based if it has a unit of measure other than Currency. If you do not enable the workplan to allow actual effort and cost collection, then Oracle Projects considers all planning resources to be non-rate-based.
Next, Oracle Projects determines a rate for each period and multiplies the rate by the quantity for the period. It adds all period amounts together to provide a total amount. Finally, it divides the total amount by the entered quantity to calculate the displayed rate. The displayed rate is also known as the average rate.
Note: You can enter an amount for a rate-based resource rather than the quantity. However, the resource remains rate-based for future entries.
You can choose to use either actual rates or planning rates to determine rates for workplan and financial planning.
Actual rates are the rates that Oracle Projects uses to calculate the actual costs and revenue for expenditure items. Oracle Projects determines rates for planning resources using the same logic as used to calculate actual costs and revenue when you use actual rates for workplan and financial planning.
Planning rates are the rates Oracle Projects uses to determine the rates for planning resources when you enable the planning rates option for a workplan structure or for the planning options for a financial structure, budget version, or forecast version. You can assign a set of rate schedules to use specifically for planning purposes if you enable planning rates.
You may choose to use planning rates, rather than actual rates, for various reasons. For example:
You want to plan far into the future when actual rates are not yet known. Planning rates enable you to plan for cost and revenue for future periods by making assumptions about potential rate increases or decreases.
You want to plan at a more summary level than when using actual rates. For example, you can use job-based rate schedules to plan, but actually track labor costs using cost rates defined at the employee level.
The table below summarizes the precedence order for determining rates using either the actual rates or the planning rates approach.
| Rate Source | Precedence: Actual Rates | Precedence: Planning Rates |
|---|---|---|
| Rate Override | 1 | 1 |
| Actuals Rate Logic | 2 | Not Applicable |
| Planning Rate Schedules | Not Applicable | 2 |
| Resource Class Rate Schedule | 3 | 3 |
| Budget Calculation Extensions | 4 | 4 |
You can determine a cost rate, a burden rate, and a bill rate for a planning resource. Oracle Projects determines cost and bill rates only for rate-based planning resources, and burden rates for all planning resources. For planning resources assigned to contract projects, it determines bill rates for projects with a revenue accrual method of either Work or Cost, but not for projects with a revenue accrual method of Event.
Oracle Projects can use the expenditure type to find a rate if a planning resource is associated with a rate-based expenditure type. Otherwise, it skips the expenditure type for rate processing. Oracle Projects does not use an expenditure type to determine a cost rate for planning resources that have a resource type of People.
Oracle Projects can use information from Oracle Inventory to find a cost rate for planning resources that have a resource type of Inventory.
Oracle Projects can use information from Oracle Bill of Materials (BOM) to attempt to find a cost rate for planning resources that have a resource type of BOM Labor or BOM Equipment. Otherwise, it uses the expenditure type associated the planning resource to determine the rate.
Oracle Projects determines rates whenever you assign a planning resource to a task and redetermines the rates whenever you change an attribute for the task assignment, including changes to the planning resource, transaction dates, or manufacturing cost type. In addition, you can manually choose to refresh the rates for a workplan or for a budget or forecast version.
If you use the actual rates approach for determining rates for planning, Oracle Projects follows the same logic that it uses to calculate costs and revenue for actual expenditures.
When you assign a planning resource to a task, if the task or the project is associated with a rate override, then Oracle Projects uses the override value. Because you always charge actual expenditures to a lowest level task, and you can assign planning resources to any work breakdown structure level, Oracle Projects uses whatever options are available at that work breakdown structure level.
Note: Oracle Projects only uses task overrides when the project has shared workplan and financial structures.
The logic for determining rates for actual expenditures assumes that all attributes for an actual expenditure are present. When Oracle Projects attempts to determine a rate for a planning resource, it does not always have all attributes that would exist for an actual expenditure because you can plan at an aggregate level.
Oracle Projects uses the Resource Class Raw Cost rate schedule that you specify for the workplan structure or for the budget or forecast version if it is unable to determine a cost rate. It uses the Resource Class Bill Rate rate schedule that you specify for the budget or forecast version if it is unable to determine a bill rate for a planning resource for a financial budget or forecast.
Oracle Projects also calls the Budget Calculation client extensions, passing any values determined during prior steps to the extensions. You can program the client extensions to modify these values.
If you use the planning rates approach for determining rates for planning, Oracle Projects first determines if the planning resource assigned to a task is associated with a rate override. If it is, then Oracle Projects uses the override value. Next, it attempts to determine planning rates using the planning schedules that you specify for a workplan structure or for a financial budget or forecast version.
Oracle Projects determines cost rates using the employee, job, and non-labor planning rate schedules. An employee rate schedule has precedence over a job rate schedule for planning resources with a resource type of Labor. If Oracle Projects cannot find a cost rate using the job, employee, or non-labor rate schedules, then it uses the resource class planning rate schedule that you specify for costs.
Oracle Projects determines planning resource bill rates for financial budgets or forecasts using the employee, job, and non-labor planning revenue rate schedules that you specify in the planning options. An employee bill rate has precedence over a job bill rate for labor bill rates. Oracle Projects uses bill rates defined for the non-labor planning rate schedule for non-labor bill rates. Oracle Projects uses the resource class planning rate schedule for revenue if it cannot find a bill rate using the job, employee, or non-labor rate schedules.
In addition to rate schedules, you also specify a burden schedule when you define planning rate schedules. Oracle Projects uses this burden schedule to calculate the burdened cost for planning resources. If an expenditure type is not associated with the planning resource, then Oracle Projects uses the expenditure type defined at the resource class level to determine the burden rate. If an organization is present for the planning resource, Oracle Projects attempts to find a rate using the planning rates burden schedule. If an organization is not associated with the planning resource, or if the burden schedule does not return a rate, then Oracle Projects sets the burdened cost to be equal the raw cost.
Oracle Projects also calls the Budget Calculation client extensions, passing any values determined during prior steps to the extensions. You can program the client extensions to modify these values.
Related Topics
Budget Calculation Extensions, Oracle Projects APIs, Client Extensions, and Open Interfaces Reference
Defining Planned Quantity and Cost for Resource Assignments on Tasks, Oracle Project Management User Guide
Integrating Workplan and Financial Structures
Planning Resources and Resource Lists, Oracle Projects Implementation Guide
Selecting Progress Options for a Workplan Structure, Oracle Project Management User Guide
Spread Curves, Oracle Projects Implementation Guide