PeopleSoft Staffing Front Office 9.1 PeopleBook

Appendix: Calculating Margin and Markup

This appendix presents an overview of margin and markup and discusses how to:

Set up margin indicators.
Configure margin.

Understanding Margin and Markup

This section discusses:

Margin statuses.
How margin and markup are calculated.
Determining related costs for margin markup calculations.

Margin Statuses

The following lists the available statuses for margins. These statuses are listed for temporary orders on the Order - Billing page and the Assignment page.

(Green = acceptable)

Acceptable margin achieved. The calculated margin is above the cautionary margin established for the specified job code. If you meet margin requirements, a green circle appears next to the field.

(Yellow = caution)

Margin below normal levels. The calculated margin is above the critical margin, but falls at or below the cautionary margin established for the specified job code. A yellow triangle appears next to the field to indicate that the ratio is not within margin requirements.

(Red = critical)

Unacceptable margin. If the calculated margin falls at or below the critical margin established for the specified job code, a red square appears next to this field.

Note. Margin and markup functionality are applicable to temporary orders only.

How Margin and Markup are Calculated

When bill and pay rates are entered on the order, the margin and markup calculations are dependent upon your prior margin configuration. This section discusses calculations for margin and markup.

Calculating Margin

The margin calculation on the Order - Billing page subtracts costs from the bill rate and then divides by the bill rate. The costs include the pay rate, overhead costs (fixed cost margin), and workers compensation premiums.

Margin = ((Bill Rate - Cost) / Bill Rate) * 100

Calculating Markup

The markup calculation on the Order - Billing page subtracts the pay rate from the bill rate and then divides by the pay rate.

Markup = ((Bill Rate - Pay Rate) / Pay Rate) * 100

Determining Related Costs for Margin Markup Calculations

This section discusses how to determine margin and markup calculations for:

Fixed cost.
Workers' compensation cost.
Cost.

Determining Fixed Cost

The fixed cost depends on the fixed cost margin and pay rate. Fixed cost is the additional cost (overhead) that is incurred for every hour of employee pay, excluding workers' compensation.

Fixed cost = Pay Rate * (Fixed Cost Margin / 100)

Determining Workers' Compensation Cost

The workers' compensation cost is calculated based on the rate type selected on the Workers' Comp Rates page.

If the workers' compensation rate type = percentage, then

Workers Compensation cost = Pay Rate * (Base Rate / 100) * Modifier

If the workers' compensation rate type = per hour, then

Workers Compensation cost = 1 hour * (Base Rate)

Determining Cost

You must calculate the cost prior to determining the markup or margin.

Cost = Pay Rate + Fixed Cost + Workers Compensation Cost

Setting Up Margin Indicators

This section discusses how to set up margin indicators.

Page Used to Establish Margin Indicators

Page Name	Definition Name	Navigation	Usage
Billing Calculation	FO_JOB_BILLING	Set Up Financials/Supply Chain, Common Definitions, Resources Data, Jobcodes, Billing Calculation	Enter margin indicators.

Entering Margin Indicators

Access the Billing Calculation page (Set Up Financials/Supply Chain, Common Definitions, Resources Data, Jobcodes, Billing Calculation).

Caution	Enter a margin percentage below which the system triggers a caution warning for an order. This indicates that the margin is below normal levels and changes the order to a Yellow status.
Critical	Enter a margin percentage below which the system triggers a critical warning for an order. This indicates that the margin is at an unacceptable level and changes the order to a Red status.

Configuring Margin

The margin calculation requires configuration prior to entering orders and calculating margins based on pay and bill rates. Your implementation team configures the values that the system uses in the margin calculation. Your organization bases these calculations on the costs associated with filling a position as well as the expected profit that is generated when you fill the assignment.

This section discusses how to configure margin.

Page Used to Configure Margin

Page Name	Definition Name	Navigation	Usage
Staffing Branch	FO_BRANCH_TBL	Setting Up Financials/Supply Chain, Product Related, Staffing, General, Branch/Business Unit Mapping	Configure margin.

Configuring Margin

Access the Staffing Branch page (Setting Up Financials/Supply Chain, Product Related, Staffing, General, Branch/Business Unit Mapping).

Fixed Cost Margin

Enter the margin for the system by branch.

The fixed cost margin is the percentage of cost that is incurred for every hour of employee pay. Enter the figure as a number (not percent) with a maximum of two decimal places. For example, if the burden rate is 12.98 percent, enter the margin estimator at 12.98.

Establish fixed costs by branch.
Establish workers' compensation policy and rates.

For PeopleSoft Staffing Front Office standalone (PeopleSoft Pay/Bill Management not installed), select Set Up Financials/Supply Chain, Product Related, Staffing, Payroll. Select either Workers' Comp Company Setup, Workers' Comp State Codes, Workers' Comp State Rates, or Workers' Comp by Job Code.

Note. If you have PeopleSoft Pay/Bill Management installed, you establish workers' compensation policy and rates in PeopleSoft HRMS. The information is then synchronized with Financials using application messaging.