Understanding Limit Processing

This chapter provides an overview of limit processing and an example of limit processing for invoicing.

Limit Processing

Limit processing is a feature within the JD Edwards EnterpriseOne Project and Government Contract Accounting (PGCA) system that enforces the limit amounts that you set up for project and government contract accounting (PGCA) contracts so that you do not invoice or recognize revenue over the limit amounts.

When you enter contracts in the Create/Edit Project and Government Contracts program (P52G01M), you enter these two sets of amounts:

• Funded amounts

• Awarded amounts

Both funded and awarded amounts are divided into these three amounts:

• Cost

  The amount that you bill for the cost of the work completed for the contract. The system calculates cost amounts using time and material (T&M), cost plus, lump sum, unit price, milestone, progress, applied burden, component, and labor burden billing lines.

• Fee

  The amount that you bill for fees that you calculate in addition to the cost. The system calculates fee amounts using fee billing lines.

• Award fee

  The amount that you bill for earning an award if certain incentives are met, for example, if work is completed ahead of schedule. The system calculates award fee amounts using award fee billing lines.

In addition to setting up amounts for a contract, you also specify the level at which the system applies the limits during invoice processing and revenue recognition. Using the Billing Limit and Revenue Limit fields on the contract, you can specify one of the following methods for applying limits:

• Awarded By Line

• Awarded By Total

• Funded By Line

• Funded By Total

• No Limit

For the Awarded By Line and Awarded By Total methods, the system uses the awarded amounts from the contract when applying limits. For the Funded By Line and Funded By Total methods, the system uses the funded amounts from the contract when applying limits.

If you select the Awarded By Line or Funded By Line method, the Journal Generation (R48132) and the Invoice Generation (R52121) programs apply the cost, fee, and award fee limits separately to the corresponding transactions in the Billing Detail Workfile table (F4812). If you select the Awarded By Total or Funded By Total method, the R48132 and the R52121 programs apply the total of the cost, fee, and award fee limit amounts for a contract to the total of all cost, fee, and award fee transactions for the funding level in the F4812 table.

For example, if you set up a funding level with funded limit amounts of 100,000.00 USD for cost, 10,000.00 USD for fees, and 5,000.00 USD for award fees, the system applies the limits as follows:

• Funded By Line method

  You can bill and recognize revenue for the funding level for only 100,000.00 USD in cost amounts, 10,000.00 USD in fee amounts, and 5,000.00 USD in award fee amounts.

• Funded By Total method

  You can bill and recognize revenue for the funding level for a total of 115,000.00 USD.

At some point during the life of the contract, you might exceed one or more limit amounts for a contract. If the R48132 or R52121 program calculates a limit excess, the system does not allow you to invoice or recognize revenue for the excess amount. The system creates a record in the Billing Detail Workfile table (F4812) for the excess amount and populates the Transaction Class field (TCLS) on the record with the value that corresponds to the type of amount that was exceeded. The values for limit excess records are:

• I: Cost limit excess

• J: Fee limit excess

• K: Award fee limit excess

• L: Total limit excess

The system also creates a billing line for the funding level contract with a billing line type (PRTP) of X, which is an excess billing line.

The system displays excess billing lines in these programs:

• Contract Billing Line Detail Revisions (P5202)

• Billing Line Inquiry (P5222)

Note. You can also view the excess billing lines in the Invoice Detail Revisions program (P4812) when you access the program using the Invoice Details row exit on the Contract Billing Line Inquiry form.

The system uses the Project and Government Contract Limit Summary table (F52G200) to keep track of the cumulative invoice and revenue amounts and the limit excess amounts. Using the revenue and billing limit methods, the Create A/R Entries (R48199) and the Create G/L Entries (R48198) programs create new or update existing records in the F52G200 table as follows:

• Awarded By Line or Funded By Line method

  The system creates up to four records for each funding level, depending on what type of amounts are included in the invoice or revenue batch. For example, if the invoice or revenue batch contains cost, fee, and award fee amounts, the system creates three records. These first three records store the cumulative invoice, cumulative revenue, and limit excess amounts separately for the cost, fee, and award fee amounts. The fourth record stores the total cumulative invoice and the total cumulative revenue amounts, but not the total limit excess amount.

• Awarded By Total or Funded By Total method

  The system creates only one record for each funding level and stores the total cumulative invoice, total cumulative revenue, and total limit excess amounts.

  Contract terms or user error might require you to change the billing or revenue limit methods from awarded by total or funded by total to awarded by line or funded by line. If you have already generated invoices or recognized revenue for the funding level, the system considers the amounts that are stored in the record in the F52G200 table to be cost amounts. The next time that you process invoices or recognize revenue for the funding level, the system populates the cost amount record in the F52G200 table with what were previously the total amounts.

Your customer might eventually provide you with additional awarded and funded amounts for a contract. After you change the contract to reflect the new limit amounts, the system includes all or part of the amount that was previously held as excess the next time that you generate invoices or recognize revenue.

Note. When you change the contract limit amounts in the P52G01M program, the system reviews the F4812 table for current revenue amounts for the contract. If it does not find any current amounts for the contract, the system adds records with no amounts to the F4812 table for the contract. When you run the R48132 program, these records are an indication for the system to review the contract for changes to revenue limit amounts, resulting in the system including the excess amounts for the contract.

You can use the Limit Summary Inquiry program (P52G200) to review the information that is stored in the F52G200 table for each funding-level contract.

Risk Amounts for Revenue Recognition

In addition to awarded and funded amounts, a contract can include risk amounts. You might set up risk amounts for a contract when the customer notifies you that additional funding will soon be available. If you want to be able to recognize revenue for these amounts before you receive the actual funding, you can add the amounts to the contract. When you run the R48132 program, the system includes the risk amounts when calculating the revenue amount.

Example: Limit Processing for Invoicing

In this example, you set up contract number 1000 in January of 2007, which includes invoice level 100. Invoice level 100 includes funding level 101. Prior to January of 2008, you have billed the customer for funding level 101 multiple times. When you process invoices for funding level 101 for February of 2008, you exceed the cost, fee, and award fee amounts. The system creates an excess billing line for the excess amounts. In March of 2008, you receive additional funded cost and fee amounts for funding level 101. You then process invoices for March of 2008 and you invoice your customer for part of the amount that was previously held as an excess amount.

Contract Setup

This table shows the billing limit method and the contract limit amounts that are set up for funding level 101 in the Create/Edit Project and Government Contracts program (P52G01M):

Cumulative Amounts Billed Through January of 2008

This table shows the cumulative amounts for which you have previously billed the customer for funding level 101:

Invoice Amounts for February of 2008

When you run the Invoice Generation program (R52121) for February of 2008, the system calculates these invoice amounts from the transactions in the F4812 table for funding level 101:

The system allows you to bill only up to the contract limits. This table shows the amounts that you bill, the excess amounts, and how the system calculates these amounts:

Because the current cost, fee, and award fee amounts exceed the contract limits, the R52121 program creates an excess billing line for funding level 101. When you run the Create A/R Entries program (R48199), the system creates records in the F52G200 table for the excess amounts. Because the billing limit is Funded By Line, the system creates separate records for each amount type that was exceeded. This table shows the records that the system creates in the F52G200 table:

Note. The system creates the record for pricing type group T so that if you change the billing limit to Funded By Total, the system has a record that contains the total amounts. If you continue using the Funded By Line billing limit, the system does not use this record.

Additional Funded Amounts Received

In March of 2008, you receive an additional 90,000.00 USD for the funded cost amount and an additional 15,000.00 USD for the funded fee amount for funding level 101. This table shows the changed limit amounts (award fee amount remains unchanged):

When you change the contract limit amounts in the P52G01M program, the system reviews the F4812 table for any current amounts for funding level 101. When it does not locate any current amounts for funding level 101, it creates placeholder records in the F4812 table. The R48132 program uses these records to process the excess amounts for funding level 101 that were created in the prior month.

After you change the funded amounts, you then begin the invoicing process for March. When you run the R52121 program, the system does not calculate any current cost or fee amounts for funding level 101. Therefore, the placeholder records that were created in the F4812 table are used as an indicator for the system to review the contract master for funding level 101 for the new amounts. The R52121 program compares the new limit amounts to the excess amounts in the F52G200 table and creates an invoice. This table shows the calculation that the system uses and the invoice amount:

When you run the R48199 program, the system updates the records for funding level 101 in the F52G200 table as shown in this table (the system does not update the award fee record):