Terminology

This table describes terms that are relevant to the integration between PeopleSoft Project Costing and the Government Contracting feature:

Term	Description
Applied over/under asset account	A type of account that is associated with a specific cost pool and is used to store the difference between provisional (burden) expenses and actual indirect expenses. Cost rows that are generated from variance pricing typically reduce the balance of this account to zero.
Burden	Indirect costs that are created in PeopleSoft Project Costing by applying indirect rates, such as provisional rates and forward pricing rates.
Burden rate	A rate that is associated with each defined cost pool and is typically approved by government auditors. Burden rates are subject to change based on a periodic assessment of actual indirect expenses. Changes to burden rates require adjustments to burden costs by using variance pricing.
Cost-plus contract line	The term used in PeopleSoft Contracts and Project Costing to identify a rate-based contract line on a government contract with a fee type of fixed, award, incentive, or other. For cost-plus contract lines, direct costs are billed and revenue is booked at cost, with no mark up. Typically profit is based on a prenegotiated fee.
Direct costs	Direct costs are defined by the source systems, such as PeopleSoft Payables, Expenses, Time and Labor, and third-party applications. In cost-reimbursement pricing arrangements, such as a cost-plus contract, government contractors typically bill the government for the direct costs, and recognize revenue with no markup for these costs.
Fee	In cost-reimbursement pricing arrangements, fees are the profit that is negotiated and documented in the contract. Fees can be fixed at the outset of performance, as in cost-plus-fixed-fee arrangements, or may vary, as in a cost-plus-incentive fee arrangement. In Government Contracting, a contract can include one or more of these fee types: fixed, award, incentive, and other. Each contract line, however, can contain only one fee type.
Forward pricing rates	Rates that are used to calculate revenue recognition based on indirect costs. Forward pricing rates are determined by the government contractor, and can be different from provisional rates. Forward pricing rates represent the best estimate of the government contractor's overhead costs as a percentage of direct costs. They can also include a calculation against nonbillable costs. Forward pricing rates can be submitted by the contractor to the government for negotiation to bid on future or multiyear contracts. When the contractor and government reach an agreement, typically the rates are documented in a forward pricing rate agreement and are used to calculate indirect costs for revenue recognition.
Indirect costs	Additional costs that are applied as a percentage of direct costs. Examples of indirect costs are overhead costs, general and administrative expenses, fringe, and cost of money.
Provisional rates	Estimates of the cost of overhead as a percentage of direct costs, specified by the government. Government contractors calculate and bill the government for indirect costs based on provisional rates.
Variance pricing	Retroactive rate adjustments that are used periodically to book variances to billing and revenue rows. The system tracks the sum of a project's revenue and billing transactions. Upon final settlement or as required during the project, the government determines the required rate variance adjustment.