Trees and Activity-Based Management Processing

Activity-Based Management requires PeopleSoft trees to roll up or summarize the values calculated for your Activity-Based Management objects or models. PeopleSoft delivers Activity-Based Management tree structures with the application to help get you started.

Your Activity-Based Management objects, resources, activities, and cost objects have their values calculated by the Activity-Based Management engine. In many cases, you want to summarize lower-level information for inquiry purposes as well as to meet certain reporting needs. The Activity-Based Management engine references these trees to perform this summarization.

PeopleSoft trees enable model roll-up. If you have multiple models for a single business unit, you can set up these models so that they roll up to higher-level models to ensure complete, comprehensive costing for the entire business unit.

Using PeopleSoft trees, Activity-Based Management assesses costs for each model and assigns costs for each resource, activity, and cost object based on where each resides in the tree and whether each is a target or a source. Sources are the resources, activities, and cost objects that are being assigned to the next level. To be a meaningful part of a tree, every branch must contain at least one source or one parent branch that contains a source. Sources must balance for every resource, activity, and cost object; otherwise, the Activity-Based Management engine generates error messages. Every resource, activity, or cost object that you add to a tree beneath a source is informational only and cannot be used for reporting and costing.

In addition to having sources, trees also have targets. A resource, activity, or cost object can be a target and can receive money. The sum of all targets must balance for every resource, activity, and cost object.

To use trees for model roll-up, create a tree that displays how smaller models should be added together into a bigger model. Thus, all you need to create are the smaller models at the end of the trees. PeopleSoft Tree Manager and Activity-Based Management calculate all of the other models.

For example, suppose that your business unit has two production sites and you decide to independently model these production sites. Create a model for Site A and a model for Site B, and then calculate costs for both sites. You then find that you are also interested in creating a model for the entire business unit. Rather than creating a new model, use model roll-up to combine the two existing models into a larger model. By using trees, Activity-Based Management lets you roll up multiple levels. For example, you can roll up Site A and Site B into a Production Center 1 model. You can then roll up Production Center 1 and 2 into the final business unit model.