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:
When rates are required, Oracle Projects determines rates from a combination of rate schedules and rate overrides, from rates defined in Oracle HR or from an extension provided by you, 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. If you are not providing an extension to derive rate (where extensions are allowed) or defining rates for labor costing in Oracle HR, then you must setup and enter rates on rate schedules in Projects.
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. Cost rate schedules enable you to derive standard rates for use in calculating standard labor costs or to derive an estimated labor cost for accrual accounting. You can also derive rates from rate matrices maintained in the Rate by Criteria feature in Oracle HR, or by calling a custom extension supplied by you during implementation for calculating labor costs when you do not use payroll actual costs.
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 derive planning rates from rate matrices maintained in the Rate by Criteria feature in Oracle HR. 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 can use 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 based on the costing method and rate source specified in the applicable labor costing rule. When you setup your labor costing rules, you may be required to select a rate source if you are planning to use payroll actuals for your labor costs and select any of the following rule value combinations:
Standard method to calculate actual raw cost
Actual method with Accrual Enabled to calculate accrued raw cost
When you select a rate source, you can select a rate schedule maintained in Oracle Projects or rate schedules maintained in HR Rate by Criteria. You can also select the option to use a custom extension you provide to derive a rate. Oracle Projects uses burden schedules to determine the total burdened cost for expenditure items after raw costs have been calculated. If you are using payroll actuals, then you can also import burden costs at the same time you import raw costs by setting up the pay element associated to the burden costs with the appropriate classification. You can also use the same rates you use for actuals for your planned costs by enabling the labor costing rule and rate source for planning.
See: Distributing Labor Costs when Costing Method is Standard and Distributing Labor Costs when Costing Method is Actual, Oracle Projects Costing User Guide
Oracle Projects uses labor cost rates to calculate the raw cost for labor expenditure items when you use the Standard costing method or when you need to estimate labor costs for planning or labor cost accruals. Labor expenditure items using a system linkage function of ST Hours or OT Hours always have a unit of measure of Hours. If you are using the Standard costing method or Actual method with Accrual Enabled, then Oracle Projects determines a cost rate for each ST or OT labor expenditure item and calculates the accrued or raw cost during cost distribution processing. When you do not use Standard costing or if you do not enable labor cost accrual, you can import payroll cost actuals from Oracle Payroll or a third party payroll application and distribute it to the time card ST or OT expenditure items as project labor costs.
Oracle Projects first establishes whether a labor cost rate is required by finding the applicable organization labor costing rule and determining the costing method. To find the applicable rule, 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, then 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, then 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 find the labor costing rule to use, it determines if a cost rate is required. A cost rate is required if you selected any of the following rule value combinations:
Costing method is Standard.
Costing method is Actual and Enable Accrual is set to Yes.
If a cost rate is required, then the rate source you selected determines how the rate is derived. You can select an applicable rate source from the following options for the labor costing rule to determine the cost rate:
Projects – The application derives rates from rate schedules defined in Oracle Projects. Projects is the default rate source.
HR – The application derives rates from rate by criteria matrices (RBC) defined in Oracle HR.
Extension – The application derives rates by calling a custom extension supplied by you during implementation.
If you selected Project rates, then Oracle Projects determines if there are any rates you entered as labor costing overrides. When using Projects rates, a labor costing override can be either an overriding cost rate or an overriding rate schedule. If a labor costing override exists, then Oracle Projects uses it to derive the cost rate. Otherwise, the application uses the rate source to derive the rate on the expenditure item date.
The cost distribution process returns an exception if Oracle Projects requires a rate and 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
Non-Labor Costing Definitions, Oracle Projects Implementation Guide
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.
Enabled Resource Classes:
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.
Disabled Resource Classes:
When you associate a planning resource list that is not resource class enabled to a plan, rates for resource assigned cannot be derived based upon a resource class. Costs are calculated for each task assignment in a workplan based on the rate specified. The burden cost for the task is calculated based on the burden schedule. In a financial plan, the burden cost is calculated based on the specified cost or quantity. If the cost is specified, then burden cost is calculated on the burden schedule, and if the quantity is specified, then the cost is calculated based on the default rate, which is setup up in the financial plan.
You can choose to use either actual rates or planning rates to calculate amounts for workplan and financial planning.
Actual rates are the rates that Oracle Projects uses to calculate the actual costs, accrued costs and revenue for expenditure items. If you use actual rates, then Oracle Projects determines rates for planning resources using the same logic as used to calculate actual costs and revenue. During planning, the application derives the applicable rate just as it derives for labor actuals and multiplies it by the planned hours to derive planned cost or revenue.
Planning rates are rates that Oracle Projects uses to determine the cost and revenue amounts 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.
You specify your choice by selecting or deselecting the Use Planning Rates check box. If you select this check box, then the application derives cost rates for the labor resource from the project rate schedules attached to the employee or job depending upon the resource format. If you do not select the check box, then the application derives the rate for the labor resource based upon the rate source selected on the same labor costing rule associated to the resource at the employee, organization or operating unit level used for calculating actual labor rates. You have three rate source options in the labor costing rule:
Projects – the rate is derived for the labor resource from the project rate schedule attached to the employee or job. If a rate cannot be derived, then the rate schedule setup for the resource class in your plan type planning options is used.
HR – the rate is derived from the Rate by Criteria matrix setup in Oracle HR using the specific pay element on the labor costing rule and the rate determination values from the planned resource, such as work type , job and location.
Extension – the rate is derived using your customized rate derivation logic.
When deriving rates for planning, if the application cannot determine a rate, then it displays an error message for the plan line and you must manually enter a rate.
Note: If you selected the Actual labor costing method on the applicable labor costing rule and do not enable accruals, then you must enable the labor costing rule for planning to select a rate source.
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. You must manually refresh rates to apply any changes in a labor costing rule that affects the derived rate.
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 deriving an actual rate used in planning, attributes associated with the planning resource or task are used to derive the correct rate. If you are using a labor costing rule with HR Rates as the rate source, then the application derives rates from the Rate by Criteria matrix. In addition to the employee and dates, the following attributes can be used to derive a rate:
Work type: Work type is derived from the planned task associated to the planning resource.
Location: Location is derived from the HR assignment of the planning resource employee.
Job: Job is derived based on the resource format associated to the planning resource:
If job is part of the resource format, then the application uses the specified job.
If job is not part of the resource format, then the application derives job from the HR assignment of the planning resource employee.
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 the application cannot determine a rate, then it displays an error message and you must manually enter a rate for planning.
Note: If you enabled Total Time Costing on the applicable labor costing rule, then it is not applicable to planning. Total Time Costing is only applied when you use the actual costing method and process timecards to create actual expenditure items.
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
Defining Planned Quantity and Cost for Resource Assignments on Tasks, Oracle Project Planning and Control 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 Planning and Control User Guide
Spread Curves, Oracle Projects Implementation Guide
Cost Rate Schedules, Oracle Projects Implementation Guide