Generating Asset Lines
This topic offers a high-level description of the tasks associated with asset line generation and illustrates the process using an example.
For an introduction to asset lines, see What are asset lines, and why do I need them?
Asset line generation involves two interconnected tasks:
- Project Costs Grouping: Enables you to group project costs.
- Asset Costs Allocation: Enables you to allocate grouped asset costs to project assets.
In simple terms, there can be thousands, if not millions, of project costs that need to be summarized to make them more manageable. Once these costs have been grouped together, we can allocate them to the designated project assets, which should share in the allocation of these costs.
Asset Line Generation: Example
For example, the boundary line tapes of a clay tennis court are made of vinyl and must be physically nailed into the clay. Typically, there are 1500 nails that are used to line one tennis court. Tennis court engineers obviously spend numerous hours to drive in all of these nails, and if a tennis club has 8 clay courts, they will require 12,000 nails to line all eight courts. So, let's say there is one person assigned per tennis court who lays out the tape, and there are two people per tennis court, who must drive the nails in. Completing the taping of each tennis court takes five hours.
Let's say these are the relevant costs associated with laying a boundary tape around one clay tennis court:
- Cost of the vinyl tape: $1,000 per court
- Cost of the tennis court nails: $500 per court
- Labor costs for Tape Layer: $100 per hour. Two hours required per court for a cost of $200 per court.
- Labor cost for Nail Gun Applicator: $50 per hour. Three hours required per court for a cost of $150 per court.
- Hourly rental cost for the nail gun: $50 per hour. Three hours are required for the nail gun rental for a cost of $150 per court.
Here are the costs associated with lining one tennis court:
| Item | Rate | Time | Cost per Court | Time Required for Eight Courts | Cost for Eight Courts |
|---|---|---|---|---|---|
| Vinyl Tape | $1,000 per court | NA | $1,000 | NA | $8,000 |
| Tennis Court Nails | $500 per court | NA | $500 | NA | $4,000 |
| Labor, Tape Layer | $100 per hour | 2 hours | $200 | 16 hours | $1,600 |
| Labor, Nail Gun Applicator | $50 per hour | 3 hours | $150 | 24 hour | $1,200 |
| Nail Gun Rental (1 per Court) | $50 per hour | 3 hours | $150 | 24 hours | $1,200 |
| Totals | $2,000 | $16,000 |
To generate asset lines for this project, we first need to first group project costs that belong together by one or more specific rules of our choosing. Let's say we choose to group material and labor costs separately. We now have two heads of project costs instead of five:
- Material Costs: The materials required to apply the lines to a clay tennis court is the vinyl tape, tennis court nails, and the use of the special nail gun. The average expected material cost is $1,650 per clay tennis court or $13,800 to lay out and install the tape in eight courts.
- Labor Costs: The labor required to install these lines can be organized into two parts: Two hours for the Tape Layer, and three hours for the Nail Gun Applicator. The average expected labor cost is $350 per clay tennis court, or $2,800 to lay out and install the tape in eight courts.
We now need to allocate these costs to project assets. Since we know that the costs of material and labor for laying out each clay court is the same, we use the Spread Evenly asset cost allocation method. This means that each project cost shall be allocated evenly to each clay court. To learn more about this asset cost allocation method, see Asset Cost Allocation Methods.
Upon reviewing the process for preparing these eight tennis courts, the process is identical in terms of materials and labor required. The costs can be charged directly to a designated task defined for the respective tennis court, or the costs could collectively be captured and then allocated evenly to each of the eight tennis courts. This allocation could also apply to incidental costs that are not directly associated with any one of the tennis courts, such the tennis court supervisor overseeing installation on all eight tennis courts. This could also include the cost of trucks and lifts, which are rented and used for the entire project.
Now, say the labor costs come to $2,800, the vinyl tape and tennis court nails come to $12,000, and the rental for the nail guns comes to $1,200. This gives us a total project cost of $16,000. Because we chose the Spread Evenly asset cost allocation method, the cost allocated to each clay court shall be $16,000 / 8 courts or $2,000 per court.
Here's a table listing out the final set of grouped and allocated costs, which constitutes your asset lines:
| Associated Project Asset | Asset Line Description | Asset Line Value |
|---|---|---|
| Clay Court 1 | Material costs for Clay Court 1 | $1650 |
| Clay Court 1 | Labor costs for Clay Court 1 | $350 |
| Clay Court 2 | Material costs for Clay Court 2 | $1650 |
| Clay Court 2 | Labor costs for Clay Court 2 | $350 |
| Clay Court 3 | Material costs for Clay Court 3 | $1650 |
| Clay Court 3 | Labor costs for Clay Court 3 | $350 |
| Clay Court 4 | Material costs for Clay Court 4 | $1650 |
| Clay Court 4 | Labor costs for Clay Court 4 | $350 |
| Clay Court 5 | Material costs for Clay Court 5 | $1650 |
| Clay Court 5 | Labor costs for Clay Court 5 | $350 |
| Clay Court 6 | Material costs for Clay Court 6 | $1650 |
| Clay Court 6 | Labor costs for Clay Court 6 | $350 |
| Clay Court 7 | Material costs for Clay Court 7 | $1650 |
| Clay Court 7 | Labor costs for Clay Court 7 | $350 |
| Clay Court 8 | Material costs for Clay Court 8 | $1650 |
| Clay Court 8 | Labor costs for Clay Court 8 | $350 |
| Total | $16,000 |
The grouped project costs are now distributed and allocated to the appropriate project asset. These 16 lines of allocated cost are your 16 asset lines which, once they're transferred into Oracle Assets, will be associated with each tennis court separately.