Cost Breakdown Planning

Overview of Cost Breakdown Planning

Oracle Projects helps you manage projects with complex cost structures by providing you the ability to enable a project for cost breakdown planning. It helps you plan, track and report project costs based on a hierarchical structure of user-defined cost codes. Using a standard set of cost codes enables you to plan and manage costs consistently across multiple projects to improve your organization's ability to control project costs effectively and improve resource utilization.

Categorization of costs for cost control purposes is often separated from categorization of costs for billing or reporting purposes. Cost breakdown structures help project and financial administrators and managers in planning costs for the project, tracking and reporting based on a cost breakdown structure that uses cost codes.

When you enable a project for cost breakdown planning, you associate a cost breakdown structure to the project and use the structure's cost codes when creating workplans, budgets and forecasts.

The cost breakdown structure standardizes costs into categories that represent manageable cost sources for an organization, such as disciplines of work, process phases, and logical locations and represent a standard cost classification system. A cost breakdown structure is typically defined in advance of the creation of the project so that the same cost codes can be used across multiple projects and this information is mostly used for planning and managing costs.

Cost codes are derived from the cost attributes you define for each level you setup in a cost breakdown structure. Each node in the cost breakdown structure is represented as a cost code and the segments of the code are a representation of the branch to which each node belongs. Each segment may be limited in the number of characters or type of characters used in order to form an actual code for quick and easy identification. For example, if the structure level is to track the dimension of Department or Discipline, the cost code may be ORCL-DEPT-MKTG, where ORCL represents the company, Oracle, DEPT represents the department in Oracle, and MKTG represents the marketing department.

A typical planning structure in an organization may appear as follows:

Since a single cost breakdown structure is associated with each project instead of an instance of the cost breakdown structure, any change made to it affects all projects. For example, if a cost code is disabled for one project, it is disabled for all projects, which use the same cost breakdown structure. However, changes you make to a cost breakdown structure do not affect existing project plans.

You can setup cost breakdown structures suitable for all types of projects in your organization, including provider or receiver projects in inter-project billing and projects enabled for cross charge intercompany billing. For more information, see Cost Breakdown Structures, Oracle Projects Implementation Guide.

For more information on enabling a project for cost breakdown planning, see Defining Cost Breakdown Structures, Oracle Projects Implementation Guide.

Note: For workplan baseline versioning-enabled projects, see Managing the Workplan Lifecycle Using Baseline Versioning.