Understanding the Relationship Between PeopleSoft Contracts and PeopleSoft Project Costing
You can associate PeopleSoft Contracts contract lines with projects and activities in PeopleSoft Project Costing. To bill you select the product onto a contract line and then associate that contract line with one or more projects and activities in PeopleSoft Project Costing (you can associate fixed-amount and recurring products with a single project only). PeopleSoft Contracts complements PeopleSoft Project Costing—it does not duplicate it. From within PeopleSoft Contracts, you can create new projects and activities or link to existing ones. Regardless of whether you are creating a new project or activity, or whether you are linking to existing projects or activities, all project-related information is stored within PeopleSoft Project Costing. This includes all cost transactions.
PeopleSoft Contracts stores the contractual terms and conditions. You select a rate based product onto a contract line, associate that contract line with a PeopleSoft Project Costing business unit and rate plan, and then link project activities to that contract line. In PeopleSoft Contracts, you also establish billing plans and revenue plans. Billing and revenue plans enable you to manage when and how much you bill and recognize for amounts associated with one or more contract lines.
In PeopleSoft Project Costing, you track the work performed against a project. The costs associated with the project are fed into PeopleSoft Project Costing from source systems, such as PeopleSoft Expenses and PeopleSoft Accounts Payable.
This section discusses the steps to process activity for project-related contract lines:
Set up rates.
Set up tiered pricing (optional).
Set up rules and exceptions in PeopleSoft Project Costing for organizational sharing (optional).
Assign projects and activities to contracts.
Assign billing limits and revenue limits (optional).
Price and process limits for Projects.
Update project progress.
Bill for Projects.
Recognize revenue for Projects.
You charge customers a rate for the goods and services that you provide plus the related costs. By establishing rate sets and rate plans in PeopleSoft Project Costing and then associating activities to those rate sets or rate plans, you can efficiently manage pricing across multiple project activities using a limited number of rate plans. Rate sets and rate plans in PeopleSoft Project Costing are dynamic and subject to change in rate structure over time.
When you sell a service to a customer, you establish rates for that service. The service can be provided at your standard billing rates, which may be subject to change over time, or you might provide services at rates that are fixed for the duration of the contract obligation. When you set up your contract line details on the Related Projects page in PeopleSoft Contracts, you can specify standard rates or use contract rates for that contract line. Revenue rate sets can be established if the contract separates billing and revenue.
In addition, on the Related Projects page, you can indicate that a contract line is subject to tiered pricing. The system applies tiered pricing adjustments to the rate plan or contract rates.
Using the Rate Plan
If the services provided to the customer under the contract line are provided at your standard rates, you should link the contract line to either a standard rate set or a standard rate plan in PeopleSoft Project Costing. Any subsequent changes to the standard rate set or standard rate plan in PeopleSoft Project Costing are reflected in the subsequent billing and revenue recognition activity in PeopleSoft Contracts.
Using Contract Rates
If the services provided to the customer under the contract line are provided at contract-specific rates, you should select the Contract Rate Set or Contract Rate Plan option in the Rate Selection field. You define your contract rate sets on the same pages as the standard rate sets. Similarly, you define your contract rate plans on the same pages as the standard rate plans. The rates that you define are not templates—they are contract-specific. You can update these contract-specific rates at any point during the life cycle of the contract. Any subsequent changes that you make to these rates are reflected in the subsequent billing and revenue recognition activity in PeopleSoft Contracts.
Defining Rate Sets for Rate-Based Contract Lines
Rate-based contract lines are priced using PeopleSoft Project Costing rate sets and rate plans. Rate sets and rate plans can be defined for general use or for a specific contract. Once defined, you assign the standard or contract rate set or rate plan to the rate-based contract using the Related Projects page.
A single rate set or a single rate plan comprised of multiple rate sets can be assigned to a rate-based contract line. Rate sets enable you to define how specific contract line-related transactions are priced for costing, billing, and revenue recognition. Rate plans enable you to combine multiple rate sets together to perform more complex pricing scenarios.
When defining a rate set, you assign a rate definition type. This determines the type of pricing that is performed for the contract line transactions.
After you define the rate set, you assign the rate set to the contract line on the Related Projects page. After the contract is active and transactions are priced for this contract line, the system will create bill rows based on the criteria defined in the rate set. A separate set of revenue rows are created if the contract separates billing and revenue.
The billable rows are stored in PeopleSoft Project Costing, and passed to PeopleSoft Billing by PeopleSoft Contracts when the Billing/Contracts Interface (CA_BI_INTFC) process is run. Once finalized, the billed data is passed back to PeopleSoft Contracts and PeopleSoft Project Costing. If billing and revenue are not separated on the contract, then these same transaction rows are also used for revenue recognition when the As-Incurred revenue process is run. If the contract does separate billing and revenue, then the billing rows are only used for billing and the revenue rows are used for revenue recognition.
You cannot attach rate sets or plans to amount-based or recurring contract lines.
With tiered pricing, you can charge varying rates based on the accumulation of various quantities such as the amount of hours charged to an activity. You apply adjustments to rates defined in the rate set or rate plan to contract rates. These quantity-based adjustments allow you to create a schedule of adjustments that are applied based on accumulated quantities. You group Project ChartfFields—source type, source category, and source subcategory—into user-defined identifiers to use on a contract line.
You can define tiered pricing for a rate-based contract line and each contract line can have one or more defined tiers. Each tier will have an arbitration sequence that represents the priority of the tier in the event that a transaction matches more than one transaction identifier.
You can also define tier templates. Tier templates may contain one or more tiers that may be defined by one transaction identifier and one or more price breaks. The templates will be used when defining tiered pricing for a contract line to facilitate data entry.
You can process billable transactions using the tiered pricing defined for a contract line. The transactions will be matched up with the appropriate tier and the adjustment percentage for the price break will be applied to the rate determined from the PC_PRICING process and the rate set or rate plan.
When using tiered pricing, you define adjustments on the Tiered Pricing Template or Tiered Pricing Definition page. The system generates billable transaction rows based on the rate set or rate plan. Then, the system applies the adjustment percentage to the billable transaction row's amount. If you do not define a rate set or rate plan, the system will not generate a billable transaction, and therefore, it cannot apply the tiered pricing adjustment to the billable transaction.
Follow these steps when using tiered pricing:
Set up transaction identifiers in PeopleSoft Project Costing.
(Optional) Create tier templates on the Tiered Pricing Template page to facilitate data entry.
Specify tiered pricing structures for contract lines on the Tiered Pricing Definition page.
Run the Pricing Engine to price or reprice lines with tiered pricing structures.
Note: Tiered Pricing functionality is available for customers who have both PeopleSoft Contracts and PeopleSoft Project Costing installed.
Note: Tiered pricing applies adjustments to quantity related transactions based on quantities incurred against a transaction identifier. Therefore, tiered pricing adjustments are applied to transactions generated based on the quantity related rate options offered on the rate set or rate plan and contract specific rates. These options are AMT, EBI, ECO, JBI, JCO, RBI, and RCO. Transactions generated by rate options of FIX, MUP, or NON will not receive a tiered pricing adjustment, but any quantity on the source transaction will be counted towards the Inception to Date quantity.
If you have attached a rate plan to your contract line, the system applies tiered pricing to the output of the first rate set in the rate plan only. Additionally, since tiered pricing is applicable for transactions that generate billable rows only (rows in the analysis group, PSWKS), the first rate set in the plan must be a billing rate set.
From the Related Projects page, link to an existing project/activity combination, or create a new project/activity combination. When you click the Create Project or Create Activity buttons, you transfer to PeopleSoft Project Costing to set up the new project or activity. All projects and activities are stored in PeopleSoft Project Costing, regardless of where the setup originates.
You can link a rate-based contract line to multiple project/activity combinations. However, a specific project/activity combination can only be linked to one rate-based contract line. You are permitted to link a rate-based contract line to multiple projects as long as those projects are within the same PeopleSoft Project Costing business unit. However, you should use caution when doing this as it could impact your reporting of contract line limits by project. Assigning multiple activities to the same contract line, all with the same project is expected and would not impact your reporting of contract line limits by project.
You can link an amount-based or recurring contract line to only one project/activity combination. Different from rate-based lines, the same project/activity combination may be assigned to multiple contract lines.
The Pricing process (PC_PRICING) creates billing and revenue rows from the costs that are brought into PeopleSoft Project Costing. The costs are matched up with contract lines and rate sets or plans to determine what billing rows (BIL) and revenue rows(REV) are created. Revenue rows are created only if the contract separates billing and revenue.
When using tiered pricing, if you defined a rate set or plan, the system generates BIL rows based on the rate set or plan. Then, the system applies the tiered pricing adjustment percentage to the BIL row's amount.
If you turned on sharing at the installation options level (Contracts Installation Options page), defined sharing options, and defined rates, the Pricing process also creates sharing rows based on your established rates and exceptions.
PeopleSoft Contracts integrates with PeopleSoft Project Costing to eliminate duplicate data entry for billing and revenue recognition that is tied to project progress or milestones. You can automatically populate the percent complete (for both revenue and billing plans) in PeopleSoft Contracts with a value generated in PeopleSoft Project Costing. This value comes from the project or project/activity combination in PeopleSoft Project Costing. You determine which auto populate method to use on the Billing Plan - Events page or Revenue Plan page. After choosing an auto populate option, setup a run control (RUN_CA_PCT_UPD) that will allow the processing of one or more plans at a time.
Once you select Run on the Process Project Progress run control page, the system calls the CA_PCT_UPD Application Engine. For each revenue or billing plan selected, this Application Engine retrieves the Percent Source option from the revenue or billing plan:
If the Percent Source is Specify Percent, you enter the percentage manually on the events page and select the Build Event button. The Project Process Application Engine does not update the event.
If the Percent Source is Project, CA_PCT_UPD retrieves the percent complete based on the project.
If the Percent Source is Project/Activity, CA_PCT_UPD retrieves the percent complete based on the project/activity combination.
The CA_PCT_UPD Application Engine process performs the following actions:
Creates or updates an event based on the percent retrieved from PeopleSoft Project Costing.
Rebuilds the billing or revenue schedule to reflect the new or updated event.
The CA_PCT_UPD process writes a message to the log that indicates how many plans were updated by the batch process.
You bill for a project by associating the project with a contract line and then associating the contract line with a billing plan. In billing for rate-based contract lines, the flow of data is controlled by PeopleSoft Contracts, but the data source is PeopleSoft Project Costing. As work is performed and costs are accumulated, PeopleSoft Project Costing stores the information in rows in the PROJ_RESOURCE table. Billing activity for rate-based contract lines associated with PeopleSoft Project Costing is driven by applying the rates that you established in PeopleSoft Contracts against the unbilled PROJ_RESOURCE rows, where the analysis types are defined to the PSWKS analysis group. When the particular billing plan or event for the contract line with which this project activity is associated is ready, the resource rows associated with the designated project activities are selected for billing as part of the Contracts Billing Interface process (CA_BI_INTFC).
You recognize revenue for a project by associating the project with a contract line and then associating the contract line with a revenue plan. In recognizing revenue for rate-based contract lines, the flow of data is controlled by PeopleSoft Contracts, but the data source is PeopleSoft Project Costing. Accounting distributions are defined on the Accounting Rules page. These rules are defined by analysis type, PeopleSoft Project Costing business unit (PCBU), and PeopleSoft General Ledger business unit (GLBU).
As work is performed and costs are accumulated, PeopleSoft Project Costing stores the information in rows in the PROJ_RESOURCE table. When the particular revenue plan or event for the contract line with which this project activity is associated is ready, the resource rows associated with the designated project activities are selected and revenue is booked as part of the rate-based revenue process (the Accounting Rules Engine process [PSA_ACCTGGL]). This process also assigns the accounting distribution based on your accounting rules definitions.
You can associate projects and activities with amount-based contract lines. After running the Amount-based Revenue process (CA_LOADGL1), run the PC_CA_TO_PC PeopleSoft Application Engine process to pull revenue information from PeopleSoft Contracts to PeopleSoft Project Costing.