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Example of Commitment Reporting

Study the following example to understand the flow of committed costs through Oracle Purchasing, Oracle Payables, and Oracle Projects.

Assume that you define committed costs as the total of these three buckets:

Committed Costs = (Open Requisitions + Open Purchase Orders + Pending Invoices)

You use requisitions, purchase orders, and receipt and delivery in Oracle Purchasing. You track the delivery of purchase orders to better manage your project progress and schedule.

The following table depicts the charges that are incurred as you record transactions. The table includes a detailed analysis of the impact of various actions, such as receiving an invoice for purchased goods, on committed costs and the total costs charged to a project. We describe each of the actions in the pages that follow.


Enter requisition

You enter and approve a requisition totalling $1000, with two lines of $800 and $200.

The requisition amount is included in the Open Requisitions and the Total Committed Costs amounts.

Create purchase order from requisition

You create a purchase order for the first line of the requisition, totalling $800. You approve the purchase order.

The Open Requisition amount decreases by $800 and the Ordered Purchase Order and Open Purchase Order amounts increase by $800. The total committed costs remain the same.

Receive delivery of purchased goods

The supplier delivers $500 of the $800 of goods that you ordered.

The Delivered Purchase Order amount increases by $500. The Open Requisition, Ordered Purchase Order, Open Purchase Order, and Total Committed Costs amounts do not change.

Receive invoice for delivered goods

You are invoiced for the $500 of goods that you received. The Payables department matches the invoice to the purchase order.

The Open Purchase Order amount decreases by $500, and the Pending Invoice amount increases by $500. The Total Committed Costs amount does not change. The Ordered Purchase Order amount does not change.

Enter supplier invoice not associated to purchase order

You receive another invoice for $100 that is not associated to a purchase order. The Payables department enters the invoice.

Both the Pending Invoice amount and the Total Committed Cost amounts increase by $100. The Total Project Cost also increases because the Total Committed Costs amount increases.

Interface invoices to Oracle Projects

The Payables department approves and posts all invoices to Oracle General Ledger, and then interfaces the supplier invoices to Oracle Projects. The invoice costs totalling $600 are now recorded against your project in Oracle Projects.

The Pending Invoice amount, along with the Total Committed Costs amount decreases by $600. The Actual Costs amount increases by $600. The Total Project Costs amount does not change.

Close purchase order

You close the purchase order that has $300 remaining, because you do not expect any more activity against that purchase order. The purchase order is no longer reported in your committed costs.

Closed purchased orders are not reported in the commitment reporting, so all of the Purchase Order amounts are reduced for the purchase order closed. The Total Committed Costs amount, and in turn, the Total Project Cost amount, decreases by $300, which was the Open Purchase Order amount for the purchase order closed.

Close requisition

You close the requisition for $200 because you no longer need the goods requested. The requisition is no longer reported in your committed costs.

Closed requisitions are not reported in the commitment reporting, so Open Requisition amount decreases by $200 for the requisition that you close. The Total Committed Costs amount, along with the Total Project Costs, also decreases by $200.

Charge labor costs to project

Employees working on your project record time to your project, which totals $5000.

The Actual Costs amount increases by $5000. The Total Project Costs amount also increases.

Enter release against blanket purchase agreement

You need to order supplies for your project. You create a $400 release against a blanket purchase agreement that your company has negotiated with a supplier.

The Ordered Purchase Order and Open Purchase Order amounts increase by $400. In turn, the Total Committed Costs and Total Project Costs also increase.

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