Overview of Project Costing

This chapter gives you an overview of project costing in Oracle Projects.

This chapter covers the following topics:

Overview of Costing

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

Related Topics

Costing in Oracle Projects

Costing Processes

Calculating Costs

Distributing Labor Costs

Costing in Oracle Projects

The following illustration shows how costing is performed and accounted in Oracle Projects.

Costing in Oracle Projects

the picture is described in the document text

As shown in the illustration, Costing in Oracle Projects, costing includes the following major steps:

  1. Enter and approve expenditures through the Oracle Projects user interface, or import transactions (for example, through Transaction Import).

    Note: You can use Transaction Import to import unaccounted and accounted transactions. If you import unaccounted transaction, then you must run the costing processes for the transactions. If you import accounted transactions, then no additional processing is needed. For additional information, see: Transaction Sources, Oracle Projects Implementation Guide. For payroll amounts, the PRC: Process Payroll Actuals process interfaces the amounts to Projects and distributes them. See: Process Payroll Actuals Process, Oracle Projects Fundamentals.

  2. Distribute costs and derive default accounting. See: Costing Processes

  3. Generate cost accounting events.

    The generate cost accounting events process performs the following tasks:

    • Collects cost distribution lines in Oracle Projects and uses AutoAccounting to determine the default liability accounts for raw and burden costs

    • Generates cost accounting events for Oracle Subledger Accounting

  4. Create accounting in Oracle Subledger Accounting and transfer the accounting entries to Oracle General Ledger. Depending on the parameter values you select, the create accounting process performs the following tasks:

    • Creates subledger accounting entries for unaccounted accounting events.

      Note: If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Projects derives using AutoAccounting.

    • Transfers accounting entries to the Oracle General Ledger interface tables.

    • Initiates the journal import process in Oracle General Ledger. The journal import process uses the summary interface information stored in the Oracle General Ledger interface tables and automatically creates journal entries for posting in Oracle General Ledger.

    • Initiates posting of journal entries in Oracle General Ledger.

    Note: You can optionally run the Subledger Period Close Exceptions Report to view information about unprocessed accounting events, accounting events in error, and transactions that are successfully accounted in final mode in Oracle Subledger Accounting, but not posted in Oracle General Ledger. This report provides you with the ability to separately tie back and determine whether accounting entries are posted in Oracle General Ledger.

Related Topics

Distribution Processes, Oracle Projects Fundamentals

Generate Cost Accounting Events, Oracle Projects Fundamentals

Create Accounting, Oracle Projects Fundamentals

Examples of Accounting Entries, Oracle Projects Costing User Guide

Costing Processes

The following illustration shows the flow of costing processes in Oracle Projects.

Costing Processes

the picture is described in the document text

As shown in the illustration Costing Processes, create and distribution processes perform the following tasks:

Generating Costs

This section briefly describes how Oracle Projects generates costs for expenditures. For more detailed information about the costing process for labor expenses, refer to the labor costing example in this chapter. See: Distributing Labor Costs.

Each transaction can have two cost amounts when processed, raw and burdened. Oracle Projects generates these amounts for each detail transaction when you distribute costs using any of the following processes:

The raw cost is the actual cost of the work performed, and the burden cost is the indirect cost of work performed. The burden costs are created to apply overhead costs to projects to provide an accurate total cost figure. The burdened cost is the total cost of the expenditure, or the sum of raw cost and burden cost. Oracle Projects calculates the burden cost using the raw cost and a burden multiplier.

Note: During actual costing, the PRC: Process Payroll Actuals process generates burden cost lines directly if the cost type for the associated pay element is burden.

Generating Labor Cost

You can generate labor costs using a standard costing method by applying standard rates to project time cards or use the integration of Oracle Projects with Oracle Payroll or import payroll actuals from a third party source to generate and distribute actual payroll amounts as project labor costs.

With the standard costing method, Oracle Projects generates cost for labor transactions using quantity and rates:

With the actual costing method, Oracle Projects generates labor costs by distributing payroll actuals from Oracle Payroll or a third party source to time card transactions. Payroll amounts are distributed based on hours, amounts or by using costing information contained in your costed payroll run based on how you setup your pay element definition rules. Amounts that are not distributed directly to time card transactions can be used to generate related miscellaneous or burden transactions. If you are using the Actual method, then you can also generate labor cost accruals from estimated labor costs by applying a standard rate to the hours on timecard transactions.

Related Topics

Distributing Labor Costs

Overview of Expenditures

Overview of Burdening

Calculating Cost for Usages and Miscellaneous Transactions

Oracle Projects calculates the cost for usages and miscellaneous transactions as follows:

Note: For calculation of usages and miscellaneous transaction costs during actual costing, see Allocating Actual Payroll Amounts.

Related Topics

Overview of Expenditures

Overview of Burdening

Using Rates for Costing, Oracle Projects Fundamentals

Calculating Burden Cost and Total Burdened Cost

Oracle Projects calculates burden cost by multiplying raw cost by a burden multiplier. This calculation is represented in the following formula:

Burden Cost = Raw Cost x Burden Multiplier

Oracle Projects calculates total burdened cost by adding burden cost to the raw cost amount. This calculation is represented in the following formula:

Total Burdened Cost = Raw Cost + Burden Cost

You use the burden multiplier to derive the total amount of the burden cost.

You can also identify payroll costs as burden costs if you use the actual labor costing method and distribute payroll actual costs as labor cost transactions by defining a payroll pay element as a burden cost type in your pay element definition rules. See: Process Payroll Actuals Process, Oracle Projects Fundamentals guide.

Related Topics

Overview of Burdening

Determining Supplier Costs

Oracle Projects determines costs for receipt accruals from Oracle Purchasing and supplier costs from Oracle Payables using the following logic:

Oracle Projects determines costs for supplier invoice transactions during the following processes:

Related Topics

Overview of Burdening

Integrating with Oracle Purchasing and Oracle Payables

Determining Expense Report Costs

Oracle Projects determines costs for expense reports that you interface from Oracle Payables to Oracle Projects using the following logic:

Oracle Projects determines costs for expense reports during the following processes:

Related Topics

Overview of Burdening

Integrating Expense Reports from Oracle Payables and Oracle Internet Expenses.

Distributing Labor Costs

Oracle Projects allows you to generate or enter detail labor transactions charged to your projects. This enables you to monitor the labor work that is performed and recognize project labor costs in your financial plans and workplans. Oracle Projects costs the items by computing the labor costs for your project and determining the GL accounts to charge.

This section discusses the costing process using labor costing as an example and covers the following:

How labor costs are generated or distributed depends on the costing method that you defined in the labor costing rule associated to the operating unit of the expenditure organization, expenditure organization, or employee. Depending on the method, you can calculate labor costs when timecards are reported or after you import costed payroll amounts. To distribute labor costs based on hours, you must import or interface timecards or generate a pre-approved timecard batch to generate expenditure items that include hours.

Note: You can only import and process timecards for an employee's primary HR assignment. If you are using the Actual costing method, then only payroll actuals associated with the primary assignment are distributed.

The labor cost calculation process requires the following:

Distributing Labor Costs when Costing Method is Standard

If you have set the labor costing rule for the employee or the employee's organization to use the Standard costing method, then you must run the PRC: Distribute Labor Costs program to generate labor costs. This program selects any uncosted expenditure items created when you imported/interfaced timecards for the specified operating unit within the specified date ranges and calculates labor cost amounts. Since an expenditure item is for a specific project/task combination for a single transaction date, the program calculates the labor cost by multiplying the hours from each time card line by the effective labor cost rate for the employee on that day.

Using Rate Source

When you run PRC: Distribute Labor Costs, the program uses the rate source that you have selected for the applicable labor costing rule to determine how to derive an applicable labor cost rate. The rate source can be Projects, HR, or Extension. If the rate source is:

Using Total Time Costing

The labor cost distribution process takes into account whether you have enabled the Total Time Costing option for an employee, organization or operating unit in the applicable labor costing rule. If the option for Total Time Costing is set to No, then this program uses the derived labor cost rate for calculating the labor cost. If the option is set to Yes, then a cost rate multiplier is calculated to discount the applicable labor cost rate by the ratio of total hours worked in the week to the base hours defined in the applicable labor cost rule as follows:

Effective Cost Rate = [Derived Rate for the Employee] * [Cost Rate Multiplier]
Where, the Cost Rate Multiplier =
If Total Hours </= Base Hours = “1”
If Total Hours > Base Hours = Base Hours / [Total ST Hours – Excluded Hours]

The labor cost distribution process evaluates each timecard transaction date for its applicable rule and applies the base hours defined in that rule version to the total hours in the expenditure week in which the timecard line occurs.

If you have defined two labor costing rules with Total Time Costing enabled with base hours as noted below:

Base Hours = 40, Effective from 1-January to 15-January

Base Hours = 45, Effective from 16-January to 31-January

You have a timecard for the expenditure week ending 17-January with the following timecard lines and reported hours:

13-January 8 hours

14-January 8 hours

15-January 10 hours

16-January 10 hours

17-January 10 hours

In this situation, the application calculates the cost mutlipliers as follows:

Date Base Hours Total Hours Multiplier
13-January 40 46 40 / 46 = 0.87
14-January 40 46 40 / 46 = 0.87
15-January 40 46 40 / 46 = 0.87
16-January 45 46 45 / 46 = 0.98
17-January 45 46 45 / 46 = 0.98

Business Rules applicable with Total Time Costing

The labor cost distribution process applies the following business rules for calculating effective cost rate using the Total Time Costing option:

Using Different Currency

If you have defined the rate in a currency different from the project's functional currency, then the labor cost distribution process derives conversion attributes either from the Labor Costing Overrides or Organization Labor Costing Rule windows depending on the level at which you have attached labor costing rule. If no conversion attributes are available, then timecard for the employee is not processed and displayed as an exception in the Cost Distribution report.

Business Rules applicable with Standard Costing Method

The Distribute Labor Costs program does not process timecards for employees and displays the applicable timecards in the Cost Distribution Report as exception with an appropriate rejection reason when:

Steps in the PRC: Distribute Labor Costs Process

The following illustration shows the Distribute Labor Costs process:

the picture is described in the document text

The PRC: Distribute Labor Costs process handles labor items in the following order:

Selecting Expenditure Items for Costing

Prior to calculating any labor cost amounts, the Distribute Labor Costs program first selects all expenditure items that are eligible for costing. To be eligible for costing, an expenditure item must meet the following criteria

Expenditure items selected are processed in sets according to the Expenditures Per Set profile option For more information, see: Profile Options in Oracle Projects, Oracle Projects Implementation Guide.

Processing Straight Time

Distribute Labor Costs performs three steps to process straight time:

Important: Throughout this document, the term resource applies equally to employees and non-employees (contingent workers) when used in discussions about features that support capturing, processing, and reporting time and costs that pertain to people. Similarly, the term employee is also meant to apply to contingent workers. For more information about contingent workers, see: Support for Contingent Workers, Oracle Projects Fundamentals.

Calculating Costs

Oracle Projects calculates straight time cost (raw cost) for expenditure items by multiplying hours worked by an employee's labor cost rate. This calculation is represented in the following formula:

Straight Time Cost = (Hours Worked x Employee's Labor Cost Rate)

Distribute labor costs process uses the labor cost rate that is in effect for an employee as of the week ending date for each selected expenditure item if the rate source for the labor costing rule is Projects. If the rate source of the labor costing rule is HR, then the distribute labor costs process uses the rate definition criteria associated to the applicable pay element in the HR rate by criteria matrix. This amount can be overridden by the Labor Costing Extension to handle unique labor costing rules. The rate is subject to a cost multiplier if Total Time Costing is enabled in the labor costing rule for the employee or employee organization. See: Using Total Time Costing section in Distributing Labor Costs when Costing Method is Standard.

Note: If a timecard for a contingent worker is associated with a purchase order, then the labor cost rates for the contingent worker are defined on the purchase order.

If an employee's labor cost is burdened, Oracle Projects calculates the burdened cost by multiplying straight time cost times a factor equal to one plus the burden multiplier. This calculation is represented in the following formula:

Burdened Cost = (Straight Time Cost x (1 + Burden Multiplier))

To determine if a labor cost is burdened, Oracle Projects checks the project type of the project to which an expenditure item is charged. The burden multiplier is determined from the burden schedule (or burden schedule override) assigned to the project or task. In addition, Oracle Projects compares the expenditure item date to the effective dates of the burden schedule to determine the burden multiplier to use.

Running AutoAccounting

After the process calculates cost for each selected expenditure item, it runs AutoAccounting to determine default account codes for each cost distribution line that it will create.

If an organization distribution override exists, the destination organization of the override supersedes the actual expenditure organization of affected items.

When you run the cost distribution programs for labor, expense report adjustments, or usages and miscellaneous transactions, Oracle Projects redirects the Expenditure Organization to the Override To Organization if you have specified any of the following organization distribution overrides for the organization:

If you do not specify any of these overrides, Oracle Projects uses the Incurred by Organization or the Expenditure Organization.

Creating Cost Distribution Lines

After the Distribute Labor Costs process runs AutoAccounting, it creates cost distribution lines. Each item originally has one distribution line for raw cost. If an item is re-costed and the cost rate or account coding changes, Distribute Labor Costs creates a reversing cost distribution line and a new line for the updated cost or account coding.

Related Topics

Overview of Burdening

Accounting Transactions for Cost, Oracle Projects Fundamentals

Using Rates for Costing, Oracle Projects Fundamentals

Creating Overtime

You can use Oracle Projects to track the cost of overtime and other premium compensation, allowing you to determine the true cost of labor.

When an employee works overtime, in addition to charging the total hours an employee worked to the project(s) on which the employee worked, you calculate and charge the overtime hours and costs. Therefore, the employee's pay includes two components:

Note: If a timecard for a contingent worker is associated with a purchase order, then the overtime price differential multipliers for the contingent worker can be defined on the purchase order.

Tracking Overtime

When you enter timecards in Oracle Projects, you charge the total hours an employee worked to the project(s) on which the employee worked.

You can track overtime premium costs in Oracle Projects in three primary ways:

Oracle Projects creates overtime when you enter it manually or when the Overtime Calculation program creates it automatically. If you enter overtime manually, the Distribute Labor Costs program does not create overtime, and instead proceeds directly to calculating overtime cost. If you enable the Overtime Calculation program, then the Distribute Labor Costs process calls the program to create overtime automatically.

Note: The costing method is Standard Costing and the rate source is Projects.

Related Topics

Distribute Labor Costs, Oracle Projects Fundamentals

Implementing Overtime Processing, Oracle Projects Implementation Guide

Processing Overtime

Distribute Labor Costs performs three steps to process overtime:

  1. Calculate costs

  2. Run AutoAccounting

  3. Create cost distribution lines

Calculating Overtime Cost

Oracle Projects calculates premium overtime cost (raw cost) for overtime items by multiplying an employee's labor cost rate by a labor cost multiplier that corresponds to the type of overtime worked. This calculation is represented in the following formula:

Premium Overtime Cost = (Hours Worked x Employee's Labor Cost Rate) x Labor Cost Multiplier

Overtime may or may not be burdened, depending on your burdening setup.

Running AutoAccounting

After the process calculates cost for each selected expenditure item, it runs AutoAccounting to determine default account codes for each cost distribution line that the process creates.

If an organization distribution override exists, then the destination organization of the override supersedes the actual expenditure organization of affected items.

Creating Cost Distribution Lines

After the process runs AutoAccounting, it creates cost distribution lines. Each item originally has one distribution line for raw cost. If an item is re-costed and the cost rate or account coding changes, Distribute Labor Cost creates a reversing cost distribution line and a new line for the updated cost or account coding.

Distributing Labor Costs when Costing Method is Actual

If you have set the labor costing rule for the employee to use the Actual costing method, then you must run the PRC: Process Payroll Actuals program to process payroll actuals and distribute them as project labor costs. This program groups the payroll actuals into costed payroll sets and processes the sets based on the applicable labor costing rule and the pay element definition rules associated to the pay elements in the costed payroll set. A costed payroll set is defined by the payroll name, payroll period (start and end dates), and payroll source (Oracle Payroll or an external payroll application). The program processes each set separately and generates separate reconciliation and exception processing reports. Within a costed payroll set, payroll amounts must be associated to a pay element to be processed. You define rules for each pay element to determine the type of cost and how to distribute the amounts.

Note: If you are using Oracle Payroll, all pay elements with the type of Earnings and Informational pay elements defined with currency based amounts and a valid pay element definition rule are included in the set. Informational pay elements for definitions other than a currency amount are not included in the set. Ensure that the payroll period start date falls into the specified date range to be included in a costed payroll set. If there is more than one payroll run for the same payroll period and payroll (because they were costed in a different payroll action), then this program processes sets in the order they were created based on the time/date stamped on the Costed Payroll Action ID. Additionally, this program processes all amounts in a set together for the same employee.

If you are using a third party payroll source, then you must define each payroll name and assign a priority. Payrolls for the same pay period are processed based on the priority assigned to the payroll name. You must also provide a set identifier for each payroll and payroll period combination that you plan to process.

See: Running the Payroll Actuals Program, Oracle Projects Fundamentals guide

Business Rules Applicable with the Actual Costing Method

When you distribute labor costs with the labor costing rule set to the Actual costing method, the following business rules apply:

Steps in PRC: Process Payroll Actuals program

The following illustration depicts the steps in the Process Payroll Actuals program:

the picture is described in the document text

The Process Payroll Actuals program performs the following steps:

The program processes current, adjustment, and retroactive adjustment amounts based on the parameters selected when running the program.

You can run the Process Payroll Actuals program as a streamlined process. If you have enabled the applicable parameter, then the program automatically spawns any additional programs required to create cost distribution lines, generate accounting distributions and dates, and process burden and miscellaneous transactions.

Supporting Supplementary Payroll Runs

The Supplementary Payroll runs process items outside of the regular payroll runs. Companies use supplementary payroll runs for expenses, bonus payments, overtime, retroactive wage increases for processing late payments.

The Supplementary Payroll run supports:

Occasionally, you need to allocate payroll costs from regular and supplementary payroll runs from a pay period, on project timecards, that have expenditure item date that fall in the same period.

Process Payroll Flow

Following steps are performed during processing payroll with regular and supplementary payroll runs:

  1. Generate Regular and Supplementary Payroll in Oracle Human Resource Management System (HRMS)

  2. Process Payrolls and Complete Costing Process - Payroll costs (Regular and Supplementary Payroll runs) are processed and costed in the Payroll system

  3. Costed payrolls are interfaced to Oracle Projects (for Regular and Supplementary Payrolls)

  4. Process Payroll Actuals for overall costs - Payroll actuals for both Supplementary and Regular payrolls are processed to determine actual cost

  5. Distribute Labor costs - Individual expenditures are costed as per the actuals using Distribute Labor Cost process

Payroll Cost Allocation on Project Timecards

The pay element costs of an employee for a pay period are distributed on the project timecards entered in the same period. These are done based on the Pay Element Distribution Rules setup in Oracle Projects. If the pay element distribution rule set up is exactly same for all the pay elements, then the total amount from all the pay elements are distributed on all the eligible timecards.

The PRC: Process Payroll Actuals concurrent program is run for multiple periods. The PRC: Process Payroll Actuals concurrent program is enhanced to support the following:

Derivation of Payroll Costed set ID is dependent on Payroll Run ID generated during the payroll runs.

If there are multiple payroll batches coming into Projects for the same pay period, then an entry is created for each payroll batch.

Project tracks the payroll actuals in the pay elements from different payroll batches, and the actual payroll costs are reconciled against the payroll batch for a pay period.

Processing Retroactive Pay

  1. The pay element amounts from the retroactive pay run are distributed on project timecards based on the source pay period stamped. There are no source pay period for the regular and supplementary runs that belong to current pay period.

  2. If there are supplementary runs in the past pay periods, then the regular and supplementary runs on the past pay period are grouped based on the source pay period stamped on them.

Deleting Payroll Runs

You cannot delete the regular and supplementary runs until the Reverse Costed Labor transactions is run for the payroll costed set ID that processed both regular and supplementary elements.

Using Third Party Payroll Actuals

You can import payroll actuals from third party (external) sources by populating data in the interface table using your methods. The Process Payroll Actuals program uses the information from these interface tables to process the labor costs.

Note: You must define the pay elements you want to process and associate the pay elements with your payroll amounts. You must also set up and assign a payroll name for each third party payroll. See: Setting up External Payroll Names and Defining Third Party Pay Elements, Oracle Projects Implementation Guide.

When you run PRC: Process Payroll Actuals, the same program parameters apply and the process executes the same steps described for processing actuals from Oracle Payroll with the following exceptions:

Using Enable Accrual option when Costing Method is Actual

If the applicable labor costing rule uses the Actual costing method with the Enable Accrual selected, then you can run the Generate Labor Cost Accruals program to generate accrual transactions when approved or pre-approved time card transactions are available but payroll actuals are not yet available for the same period. This program calculates estimated labor cost by multiplying the hours from time card lines by the applicable labor cost rate. The program creates accrual expenditure transactions and generates the following output reports:

When you run the Generate Labor Cost Accruals program, the application performs the same steps as the Distribute Labor Costs program including options for using rate sources, different currencies and total time costing and applies the same business rules. Transactions created for accrual have the accrual flag set to Yes in the expenditure item and can use the accrual flag attribute as a source when generating accounting.

When your payroll actuals are available and you run the Process Payroll Actuals program, it creates reversal accrual transactions for the accrued labor transactions associated to the applicable time card lines based on the following rules:

This program assigns reversal transactions the same values as the original accrual, but with reversing entries and the following attributes:

Note: If the accruals were processed with the labor costing rule using the Actual costing method and you later update the rule to use Standard costing method before processing actuals from payroll, then the Process Payroll Actuals program does not process the amounts for the employee and reports it as an exception. You must ensure not to update the rule to Standard costing method after generating the accruals unless you reverse the entire costed payroll set that was accrued. See Reverse Costed Labor Transactions, Oracle Projects Fundamentals guide.

Allocating Actual Payroll Amounts

After identifying the costed payroll sets, the Process Payroll Actuals program calculates the actual project labor costs for projects/tasks based on the payroll costing distributions, time card lines, the amounts by currency in the payroll set, the applicable labor costing rule, and the applicable pay element distribution rule. Any amounts that cannot be allocated are reported as exceptions on the exception report with an applicable rejection code.

The applicable pay element distribution rule determines if payroll amounts are to be classified as Raw or Burdened (ie, the cost type) and how they are distributed. See: Setting up Pay Element Distribution Rule, Oracle Projects Implementation Guide. Each pay element amount is distributed to expenditure transactions based on the distribution basis in the applicable pay element distribution rule. Amounts that cannot be distributed are reported in the exception report.Pay elements are processed based on the following distribution basis precedence:

  1. None – Use this distribution basis to allocate the entire amount of a pay element to a particular project or task. If you have selected this basis for a pay element, then the payroll records must have project and task information in the identified payroll cost flex-field segments or the identified interface columns. All of the amount is distributed in the same manner in which it was costed for payroll purposes.

  2. ST Hours - Amounts with this method are distributed to each project and task combination on a time card line based on the total ST hours accumulated for all timecards in the same pay period.

  3. OT Hours - Amounts with this method are distributed to each project and task combination based on total OT hours accumulated for all timecards in the same pay period.

  4. All Hours - Amounts with this method are distributed to each project and task combination based on total hours accumulated for all timecards in the same pay period.

  5. ST Amount - Amounts with this method are distributed to project and task combinations based on amounts accumulated for any time card lines with ST hours on all timecards in the same pay period.

  6. OT Amount - Amounts with this method are distributed to project and task combinations based on amounts accumulated for any time card lines with OT hours on all timecards in the same pay period.

  7. ST+OT Amount - Amounts with this method are distributed to project and task combinations based on total amounts accumulated for any timecard lines with either ST and OT hours on all timecards in the same pay period.

  8. Total Raw Cost - This basis enables you to accumulate the amounts of all the pay elements identified as raw costs and use that amount for distribution. This basis is available for selection only if you have selected the Burden cost type.

The program uses the following attributes defined on the applicable pay element definition rule to process pay elements:

Business Rules applicable for Allocating Actual Payroll Amounts

The Process Payroll Actuals program applies the following business rules while allocating actual payroll amounts:

Exceptions

During the distribution of pay element amounts, if one or more pay elements have an error then no amounts are processed for the employee and any distributed amounts already calculated are rolled back. If an amount for an employee cannot be distributed, then the application identifies the amounts as exceptions and reports them in the Process Payroll Actuals Exception report. This report displays exceptions by employee and pay element.

There are rejection codes used in the report and each is tied to one or more validation rules. The process reports the following amounts as an exception in the output report and lists the employee as an exception in the Process Payroll Actuals Exception report with the appropriate rejection reason:

As changes in amounts can affect the distribution of other pay elements, you must follow these steps to correct any reported exceptions:

Example: Actual Payroll Amount Allocation Based on Distribution Basis

The Process Payroll Actuals program identifies a payroll set and calculates the actual project labor costs for projects/tasks based on the payroll costing distributions, timecard lines, and the amounts by currency in the payroll set, the applicable Labor Costing Rule, and the applicable Pay Element Distribution Rule.

Distribution Basis: ST Hours, OT Hours, Total Hours

The program processes valid amounts that are distributed based on any hours in order based on the pay element distribution rule values for time card element, cost segment definitions, and the costed payroll currency. In the following example, actuals with no defined costing segments or with no value in the applicable segment are represented as 'N'. The program denominates transaction amounts in the costed payroll currency. It processes any additional currency conversions after the cost is distributed to the expenditure item transaction.

Order No. Time Card Element** Organization Cost Segment Project Cost Segment Task Cost Segment* Timecard Expenditure Type Pay Currency = Functional Currency
1 Y Y Y Y Y Y
2 Y Y Y Y Y N
3 Y Y Y Y N Y
4 Y Y Y Y N N
5 Y N Y Y Y Y
6 Y N Y Y Y N
7 Y N Y Y N Y
8 Y N Y Y N N
9 Y Y Y N Y Y
10 Y Y Y N Y N
11 Y Y Y N N Y
12 Y Y Y N N N
13 Y N Y N Y Y
14 Y N Y N Y N
15 Y N Y N N Y
16 Y N Y N N N
17 Y Y N N Y Y
18 Y Y N N Y N
19 Y Y N N N Y
20 Y Y N N N N
21 Y N N N Y Y
22 Y N N N Y N
23 Y N N N N Y
24 Y N N N N N

Distribution of pay elements based on hours

Consider following timecards (Weekly period ending on 14-Nov-10).

Project Task Expend Type SLF* Date Hrs
A 1.0 Professional ST 8-Nov-10 8
B 2.0 Professional ST 9-Nov-10 8
C 3.0 Clerical ST 10-Nov-10 8
C 3.0 Overtime OT 10-Nov-10 4
D 4.0 Clerical ST 11-Nov-10 8
E 5.0 Administrative ST 12-Nov-10 8
E 5.0 Overtime OT 12-Nov-10 4

Total straight time hours = 8+8+8+8+8 = 40

Total overtime hours = 4+4= 8

Payroll actuals received with no payroll cost segments:

Pay Element Amount Distribution Basis Time Card Element Cost Segment
Regular Pay 1000 ST Hours Y N
Overtime Pay 600 OT Hours Y N

The program calculates amounts as follows:

Project Task Expend Type SLF* Date Hours Amount
A 1.0 Professional ST 8-Nov-10 8 8 / 40 * 1000 = 200
B 2.0 Professional ST 9-Nov-10 8 8 / 40 * 1000 = 200
C 3.0 Clerical ST 10-Nov-10 8 8 / 40 * 1000 = 200
C 3.0 Overtime OT 10-Nov-10 4 4 / 8 * 600 = 300
D 4.0 Clerical ST 11-Nov-10 8 8 / 40 * 1000 = 200
E 5.0 Administrative ST 12-Nov-10 8 8 / 40 * 1000 = 200
E 5.0 Overtime OT 12-Nov-10 4 4 / 8 * 600 = 300

Payroll actuals received with payroll cost segments

Payroll actuals received for the following:

Pay Element Amount Distribution Basis Time Card Element Project Task
Regular Pay 200 ST Hours Y A 1.0
Regular Pay 200 ST Hours Y B 2.0
Regular Pay 200 ST Hours Y C 3.0
Overtime Pay 300 OT Hours Y C 3.0
Regular Pay 200 ST Hours Y D 4.0
Regular Pay 200 ST Hours Y E 5.0
Overtime Pay 300 OT Hours Y E 5.0

The program calculates the amounts as follows:

Project Task Expend Type SLF* Date Hrs Amount
A 1.0 Professional ST 8-Nov-10 8 200
B 2.0 Professional ST 9-Nov-10 8 200
C 3.0 Clerical ST 10-Nov-10 8 200
C 3.0 Overtime OT 10-Nov-10 4 300
D 4.0 Clerical ST 11-Nov-10 8 200
E 5.0 Administrative ST 12-Nov-10 8 200
E 5.0 Overtime OT 12-Nov-10 4 300

Distribution of pay elements based on amounts

Consider following timecards.

Project Task Expend Type SLF* Date Hrs Amount
A 1.0 Professional ST 8-Nov-10 8 200
B 2.0 Professional ST 9-Nov-10 8 200
C 3.0 Clerical ST 10-Nov-10 8 200
C 3.0 Overtime OT 10-Nov-10 4 300
D 4.0 Clerical ST 11-Nov-10 8 200
E 5.0 Administrative ST 12-Nov-10 8 200
E 5.0 Overtime OT 12-Nov-10 4 300

Total ST Amounts = 200 + 200 + 200 + 200 + 200 = 1,000

Total OT Amounts = 300 + 300 = 600

Payroll Actuals received with no payroll cost segments

Consider the example for payroll actuals received for the following with no cost segments defined:

(Pay Period Ending Date: 30 Nov 2010)

Pay Element Amount Distribution Basis Expenditure Type Cost Segment
Health Insurance 320 ST Amount Insurance N
Retirement Benefit 160 ST + OT Amount Benefits N

The program calculates the amounts as follows:

Health Insurance Rate = 320 / 1,000 = 0.32

Retirement Benefit = 160 / 1,600 = 0.10

The program distributes health insurance as follows:

Project Task Expend Type SLF* Date Hrs Amount
A 1.0 Insurance Misc 30-Nov-10 0 200 * 0.32 = 64
B 2.0 Insurance Misc 30-Nov-10 0 200 * 0.32 = 64
C 3.0 Insurance Misc 30-Nov-10 0 200 * 0.32 = 64
D 4.0 Insurance Misc 30-Nov-10 0 200 * 0.32 = 64
E 5.0 Insurance Misc 30-Nov-10 0 200 * 0.32 = 64

The program distributes retirement benefits as follows:

Project Task Expend Type SLF* Date Hours Amount
A 1.0 Benefits Misc 30-Nov-10 0 200 * 0.10 = 20
B 2.0 Benefits Misc 30-Nov-10 0 200 * 0.10 = 20
C 3.0 Benefits Misc 30-Nov-10 0 (200+300) * 0.10 = 50
D 4.0 Benefits Misc 30-Nov-10 0 200 * 0.10 = 20
E 5.0 Benefits Misc 30-Nov-10 0 (200+300) * 0.10 = 50

Payroll actuals received with payroll cost segments

Payroll actuals received for the following:

(Pay Period Ending Date: 30 Nov 2010)

Pay Element Amount Distribution Basis Project Task
Health Insurance 100 ST Amount A 1.0
Health Insurance 160 ST Amount B 2.0
Health Insurance 320 ST Amount C 3.0
Retirement Benefit 300 ST + OT Amount C 3.0
Health Insurance 200 ST Amount D 4.0
Health Insurance 200 ST Amount E 5.0
Retirement Benefit 1000 ST + OT Amount E 5.0

If cost segments were applied, then the program applies amounts for each pay element only to the transactions with matching project and task or organization attributes before any amounts without a cost segment value as seen in the following example:

Project Task Expend Type SLF* Date Hours Amount
A 1.0 Insurance Misc 30-Nov-10 0 100
B 2.0 Insurance Misc 30-Nov-10 0 160
C 3.0 Insurance Misc 30-Nov-10 0 320
D 4.0 Insurance Misc 30-Nov-10 0 200
E 5.0 Insurance Misc 30-Nov-10 0 200
C 3.0 Insurance Misc 30-Nov-10 0 =300*200/500 =120
C 3.0 Insurance Misc 30-Nov-10 0 =300*300/500 =180
E 5.0 Benefits Misc 30-Nov-10 0 =1000*200/500 =400
E 5.0 Benefits Misc 30-Nov-10 0 =1000*300/500 =600

Creating Transactions

The Process Payroll Actuals program updates time card transactions or creates new miscellaneous or burden transactions after calculating the distributed amounts for each project / task combination and cost type. This program generates the expenditure items for the labor cost actuals, calculates costs, runs the Auto-Accounting process, and creates cost distribution lines.

Generating Labor Cost Output Reports

The Distribute Labor Costs, Process Payroll Actuals, and Generate Labor Cost Accruals programs generate output reports that list detail items that were processed and exception items.

Related Topics

Distribute Labor Costs Process, Oracle Projects Fundamentals

Process Payroll Actuals Process, Oracle Projects Fundamentals

Generate Labor Cost Accruals Process, Oracle Projects Fundamentals

Calculating and Reporting Utilization

The utilization functionality of Oracle Project Costing and Oracle Project Resource Management enables you to generate and report on your resource's actual and scheduled utilization. Using Oracle Project Costing, you can report on your resource's actual resource utilization based on actual hours from timecards. For more information, see: Utilization, Oracle Projects Fundamentals.

Examples of Accounting Entries

When you use auto-accounting for labor cost transactions, the process generates account codes and distribution lines for each labor cost expenditure item. You can setup your accounting rules to generate the accounts that meet your requirements. The typical accounting setup would include the following:

Using Standard Costing

The application performs this accounting when expenditures are created for costed timecards. Typically accounts included in the distributions would include:

Using Actual Costing with Accrual

The application performs this accounting when you cost timecards using payroll or project labor rates and actual payroll is not yet available. When a timecard is costed for accrual from Oracle Time and Labor or a third party application, the typical account distributions would include:

When actual payroll is available and distributed to projects, the process reverses accrual transactions. The typical account distributions would include:

When distributing payroll actuals, the typical accounting distributions would include:

To offset the recognition of expenses to a project, your typical payroll accounting would create the following entries to clear payroll expenses:

Using Actual Costing (no accrual)

When you recognize actual payroll as labor costs, but do not accrue estimated expenses, there is no accrual transaction and the accounting is for the actual payroll amounts only. The typical accounting distributions would include:

To offset the recognition of expenses to a project, your typical payroll accounting would create the following entries to clear payroll expenses: