Payroll Cost Distribution to Projects Using Time Cards

This demonstration shows how you can use the Payroll Cost Distribution to Projects Using Time Cards functionality to enhance your business. This feature is part of the ongoing investment in the effective and efficient distribution of payroll costs to associated projects. I will now provide an overall context of how this new feature is part of the comprehensive Labor Distribution functionality.

Starting in the upper left, everything starts with people and their assignments. People are paid either by a salary or based on hours that are reported through their time cards. Currently, all of the major activities represented in this flow can be done for both first-party integrations using Oracle Fusion products or via third-party integrations of external payroll, time reporting, and labor scheduling systems.

This new feature enhances the payroll to projects distribution section of this diagram by adding a new method for distributing payroll costs to projects, that is, by using the hours already recorded against projects in project costing as the basis for distributing payroll costs.

All previously delivered labor distribution methods require the creation of rules that list the target projects and/or GL accounts and a specific percentage for each to be used when distributing payroll costs. With this new time card distribution method, however, payroll costs are distributed to target projects dynamically based on the person's reported time. This eliminates the need to revise specific distribution rules on labor schedule versions over time.

To understand how this new feature can enhance your business, I will demonstrate a scenario that uses this time card distribution method with the existing person assignment-based labor schedule type. Meet Katie. Katie Mackenzie is a full-time, salaried employee for Vision City, and she is paid on a weekly basis. She works as a technical consultant in the IT department.

On any given week, Katie is requested to provide her expertise to many projects, and her engagements vary in duration from a few hours to multiple days. Katie reports her time spent on the various projects in a week using Oracle Fusion Time and Labor.

Vision City wants the most accurate labor costing of the hours Katie charges to projects and has therefore chosen to implement the new Payroll Cost Distribution to Projects Using Time Cards functionality. A labor distribution administrator in Vision City operations creates an assignment type labor schedule version for Katie, with effective dates for the entire calendar year of 2025.

A new Distribute Using Time Cards option is available for assignment labor schedules. This option is not available for any other labor schedule type. This option is enabled for Katie's labor schedule version.

Here's the active labor schedule version for Katie's assignment. The Green Check icon in the Time Card Distribution field on the version indicates that the method used to distribute payroll costs to projects is based on time cards. Upon schedule version creation, if the Distribute Using Time Cards option is enabled, then a rule with a percentage of 100 is automatically created.

This rule also indicates the usage of time card distribution method. Note that the automatically created rule can't be edited or deleted. Furthermore, you can't create additional rules when the labor schedule version is enabled for time card distribution. With this active version, when Katie's payroll costs are imported, these costs will be distributed to the projects on which Katie reported time in the same period and for the same assignment as per the labor schedule version and payroll period dates of the payroll costs.

If Oracle Fusion Payroll is the source of your payroll costs, then Manage Project Payroll Pay Elements is a mandatory setup task in Labor Distribution. Only those pay elements that you define in this setup task are eligible to be interfaced into project costing. A new Time Card Distribution Basis attribute has been added to this setup object.

This attribute is required when costs for the pay element are distributed using the new time card distribution method. But it's not necessary for rules that use projects or GL accounts. If the time card distribution basis is provided on a project payroll pay element, it's used when distributing to time cards. But it's ignored when distributing to projects or GL accounts.

The Time Card Distribution Basis attribute specifies which target time cards are eligible to receive payroll costs for the pay element, based on the expenditure type class of the target time card transactions. The possible values for this attribute are All Hours. This option specifies that any eligible target time card can receive distributed costs for this pay element, regardless of the expenditure type class on the target time card transaction; Overtime Hours: this option specifies that only target time cards classified as overtime are eligible to receive costs for this pay element; and Straight Time Hours: this option specifies that only target time cards with an expenditure type class of straight time are eligible to receive costs for this pay element.

For the purposes of this demo, we'll focus on the following three payroll pay elements. At Vision City, both standard and overtime hours are captured on time cards. Payroll costs for the regular salary pay element are applicable to a person's standard or straight time hours.

Therefore, on this payroll pay element, the Time Card Distribution Basis value of Straight Time Hours is chosen. Similarly, the payroll costs for overtime are applicable to only overtime hours. Thus, the overtime earnings payroll pay element has a Time Card Distribution Basis value of Overtime Hours.

And lastly, the bonus payroll pay element is not specific to either straight time or overtime hours. Instead, costs for this pay element should be distributed to all eligible hours reported in the payroll period.

If the source of payroll costs is an external third-party application, then the Manage Project Payroll Pay Elements setup task is not relevant or required. The Time Card Distribution Basis attribute, therefore, has been added to the import payroll costs FBDI template. This new attribute must be populated for a payroll cost record if that payroll cost is to be distributed to projects using the new time card distribution method.

Katie reports her time worked for week 4 of 2025, the period of January 20 through January 26. For simplicity in this demo, the weekly hours for each project, task, and expenditure type combination are recorded as a total value on the Friday date. Katie worked her 40 hours of standard straight time on two projects: the Fox Stores SCM Implementation project and the Department of Health and Human Services Study project. She also worked four hours of overtime, which were charged to the DHHS Study project.

Katie's time card is approved and imported into project costing. When importing a time card, the import cost process checks if there is an active labor schedule version for the time reporters assignment that's enabled for time card distribution. If one exists, then the time card is imported with a cost rate of 0. If one is not found, then the time card is costed using the standard costing method.

An active time card labor schedule version exists for Katie's assignment as of the dates of the time card entries. Therefore, the transactions were imported with a cost of 0.

At the end of the week, Katie's payroll is also calculated. Looking at her gross pay for the period, we see that she earned $2,600 before deductions, comprised of three payroll pay elements: regular salary, overtime, and a bonus payment. Remember that each of these payroll pay elements was defined within Labor Distribution as eligible to be interfaced to project costing.

Furthermore, each of these payroll pay elements was updated with the Time Card Distribution Basis value. The payroll results are costed and transferred to subledger accounting. They are now eligible to be imported into project costing.

The import payroll cost process is run. After successfully importing payroll costs from Oracle Fusion Payroll, Clayton Smith, a labor distribution accountant, reviews the imported cost for Katie in the Manage Labor Costs page. He's entered filter criteria for the period date range, the employee Katie, and the new yes/no filter for time card distribution.

There are three labor costs imported from payroll for Katie for the period. And these three costs correspond to the pay elements that we reviewed on Katie's gross pay for the period in Oracle Fusion Payroll. All three labor costs have been successfully distributed to projects in project costing, as indicated by the status and the status reason.

Looking at the details of the labor costs, we see that the Time Card Distribution Basis defined on the Project Payroll Pay Element setup object in Labor Distribution was derived and is populated on each labor cost record. Also, the distribution rule for each labor cost is flagged as being time card distribution based. And the green check icon under the Errors column informs Clayton that there are no errors raised when distributing that labor cost to target time cards in project costing.

Let's now requery Katie's corresponding time card transactions in the Manage Project Costs page to review the results of the payroll distribution. When we query Katie's time card transactions for the same date ranges of the payroll costs, we now see that the time card transactions no longer have a cost of zero. Each of them has been requested using payroll actuals. The total raw cost amounts across all of Katie's time card transactions is $2,600, which corresponds to Katie's gross pay for the period.

Before we look at the cost details of the time card transaction, I want to point out that the recosting of a target time card is performed via project cost adjustment. A new distributed payroll cost adjustment type is used to record the recasting adjustment. And the adjustment source indicates that the adjustment originated with the import payroll cost process.

If we look at the costing details for the first time card transaction, we see that after payroll cost distribution, there are three cost distributions. The original zero cost line number 1 was reversed with line number 2. And a new payroll costed distribution was created as line number 3.

The raw cost rate shown for this transaction was calculated during the payroll cost distribution to time card's process. And it was not sourced from standard costing rate schedules or project cost rate overrides. This calculated raw cost rate was multiplied by the quantity of hours for the time card transaction, resulting in the raw cost displayed.

Now, let's take a closer look at how the distribution process calculates and applies the raw cost rates to target time cards based on imported payroll pay element costs. Let's look at our demo data to see how the actual calculation of the distributed payroll costs to target time cards is performed.

To recap, remember that we imported three payroll costs for Katie, each of which had a different time card distribution basis defined: regular salary of $2,000 to be distributed to only straight time hours, bonus of $200 to be distributed to all eligible hours, and overtime of $400 to be distributed to only overtime hours. This gives us the source and basis amounts for the distribution. Now, we need to look at the targets.

Looking first at the Regular Salary pay element, the Time Card Distribution basis is Straight Time Hours. Let's remind ourselves of Katie's time card entries for the payroll period. Katie reported a total of 40 hours of straight time in the payroll period. This total then is used as the target quantity for any of Katie's pay elements in the period, which use straight time hours as the time card distribution basis

Now that both the source cost of $2,000 and the target quantity of 40 are known for the regular salary pay element, the cost rate is calculated as cost divided by quantity. For regular salary, then the results are $2,000 divided by 40 hours equals $50 per hour.

Continuing to the overtime pay element, the time card distribution basis is overtime hours. Katie reported a total of four hours classified with the expenditure type class of overtime. This total is used as the total quantity for Katie's pay elements in the period, which use overtime hours as the time card distribution basis. Using the source cost of $400 divided by the target quantity of 4 hours gives us a cost rate to be used for overtime hours of $100 per hour.

Finally, we look at the bonus pay. The time card distribution basis for this pay element is all hours. Katie reported a total of 44 hours. So this becomes the target quantity for Katie's pay elements in the period that have all hours as the time card distribution basis. Using the source cost of $200 divided by the target quantity of 44 gives us a rounded cost rate to be used for any target hour of $4.54545 per hour.

We now have the cost rates calculated for each pay element of Katie's current payroll run. Opening the costing details for the first time card transaction, which is classified as straight time, we are reminded that the cost rate used to calculate the cost of the reported 25 hours is 54.54545.

Since this time card transaction is classified as straight time, it's eligible to receive costs for the regular salary pay element. It's also eligible to receive costs for the bonus pay element, as the distribution basis for that pay element is defined as All Hours. Therefore, the raw cost rate to be used for this specific time card transaction is the sum of the rates of these two pay elements 50 and 4.54545.

With minimal setup, Vision City achieved their objective of distributing Katie's payroll costs to projects based on her reported card hours, thus providing the most accurate project labor cost information. This concludes the demonstration. Thanks for watching.