The Pricing Process

The Pricing Application Engine process (PC_PRICING) calculates transaction costs, overhead, and billing amounts from source rows, which are transactions that are brought into PeopleSoft Project Costing. On some projects, billing transactions will also be used for revenue. However, you can create revenue rows separate from billing rows using rate sets with a rate definition type of revenue. This enables you to run the Pricing process independently for direct and indirect costs, billing, and revenue. Source rows can be directly entered into PeopleSoft Project Costing by using the Add Transactions component, or entered into a feeder system, such as PeopleSoft Expenses, and integrated into Project Costing.

Application Engine processes that bring cost transactions into PeopleSoft Project Costing automatically trigger the Pricing process. Adding transactions on the Add Transactions page also triggers the Pricing process. The process matches the costs with rate sets that specify what target rows to create in the Project Transaction table (PROJ_RESOURCE). Target rows are transactions that are created as a result of pricing the source transaction row. The process uses the rate plan to determine which rate sets to run and in what sequence to run them.

If you use tiered pricing, the system generates billing rows based on the specified rate set or rate plan, and applies the tiered pricing adjustment percentage to the amount on the target row. If you use organizational sharing and define sharing options and rates, the Pricing process creates sharing rows based on the established rates and exceptions.

Transactions are eligible to price for billing and revenue when the project and activity are linked to a rate set or rate plan through PeopleSoft Contracts at the contract line level. For example, assume that a voucher is entered in PeopleSoft Payables for 100 USD. When the Payables to Project Costing Application Engine process (PC_AP_TO_PC) runs, it selects the cost row from the Payables Accounting Entries table (VCHR_ACCTG_LINE) and calls the Pricing process, which creates a billing row from the cost row. When the process completes, two rows appear in the Project Transaction table, a row with an analysis type of ACT (actual cost) and a row with an analysis type of BIL (billable amount), as shown in this table:

Description Source Analysis Type Amount

Materials

Payables

ACT

100 USD

Markup 25 percent

Pricing process

BIL

125 USD

In this example, analysis type BIL is used for both billing and revenue. If billing and revenue were separated on the related contract, then an additional row with analysis type REV would be created using the markup defined for revenue rather than the markup used for billing.

You can also use the Pricing process to cost project transactions that will not be billed. This is made possible by associating a rate set with an activity on the Activity Definitions - Rates page in PeopleSoft Project Costing. As project-related costs are incurred and sent to PeopleSoft Project Costing, the system can determine transaction costs that are associated with the activity based on the rates in the rate set or rate plan. Instead of linking the project and activity to a contract line and rate set in PeopleSoft Contracts for billing purposes, you can link the project and activity to a rate set in PeopleSoft Project Costing for costing purposes.

Additionally, you can use the Pricing process to price unpriced transaction rows or reprice transaction rows that are in the Project Transaction table. You cannot, however, reprice transactions that are in the process of being billed or sent to the general ledger (GL), or that were generated from the same source transaction as another billable row that is in the process of being billed or sent to GL.

Creating Cost, Billing, and Revenue Transactions Using the Pricing Process

The high-level steps that you follow to create cost, billing, and revenue transactions by using the Pricing process are:

  1. Determine the elements that contribute to pricing calculations based on your business processes.

    For example, do you use rates by employee, project role, or job code? Do you mark up source transaction amounts to create billing rows, or do you use fixed amounts? Do you associate rate sets with project types, projects, activities, or specific contract lines?

  2. Set up installation and business unit options.

  3. (Optional) Set up tiered pricing.

  4. (Optional) Set up rules and exceptions for organizational sharing.

  5. (Optional) Define and populate custom rates.

  6. Create rate sets.

  7. Create rate plans.

  8. Associate projects and activities with rate sets or rate plans and contracts.

  9. Price the transactions to create cost, billing, and revenue rows by using feeder systems to automatically trigger the Pricing process.

  10. Review the transactions, make changes to rates, and manually run the Pricing process to reprice rows as necessary.

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