1. Introduction to Oracle Projects
Project is any short term or long term
activity to which either investment or generation of revenue can be associated.
To mange it a system must be in place wherein fragmentation of activity to
various sublevels, association of budgets, expenditure and resources can be done.
Oracle Projects suite work together to provide a complete enterprise project
management solution. It provides a flexible approach of defining and managing
projects and the people, schedules, deliverables, and finances associated with
them.
At the aggregate level, enterprise
project management involves the collection and coordination of corporate
resources (such as people, money, and hard assets) to accomplish a predefined
scope of work in a scheduled time frame and budget. Some enterprises only have
projects that are internal in nature, such as projects that track time and
costs related to marketing campaigns or infrastructure build-out programs for capital
development. Alternatively, many enterprises are entirely project oriented:
they derive their entire income stream from projects that provide client
services. Oracle Projects includes billing functionality that enables these
enterprises to generate project invoices of varying complexity for their
clients.
Mainly 3 different types of projects are
involved namely (Capital, Indirect, Contract projects).Capital projects are all
those projects which are internal to an organization and would serve as an
asset to company and on the other hand contract project are services which a
company provides to another and on behalf of service revenue is generated.
Oracle Projects consists of the following
products:
• Oracle Project Costing
• Oracle Project Billing
• Oracle Project Resource Management
• Oracle Project Management
• Oracle Project Collaboration
• Oracle Intelligence for Projects
• Oracle Project Portfolio Analysis
2. Oracle Project Costing
Oracle Project Costing provides an integrated
cost management solution for all projects and activities within an enterprise.
With Project Costing you can manage costs across currency and organizational
boundaries. Project Costing also acts as a central repository of project plans
and transactions, processes project costs, and creates corresponding accounting
entries to satisfy corporate finance requirements.
Main area of focus of this document would be
Project Costing and its implementation in a Book Publishing Company (SAS
Publication)
3. About the company structure
SAS Publication is a book publishing
company where every year thousands of books are published. Every book serves as
an asset to company. Costs are involved in each activity of book publishing.
Those activities can be like (editorial, design, production, manufacturing, ed
tech/media, translations, permissions, tech/media (cdi), miscellaneous,
restricted).Each of these activities are further subdivided into several sub activities.
A book may comes across various phases like (Active, Cancelled, Published, Recovered
etc.) in its journey of production.
Each of these books are categorised
based on some defined classification rules. According to these rules company
maps any of its produces book to any of the 3 collections* (Higher
Education Courses, School Group Courses, Professional Courses).Each collections
have several Divisions, each divisions several departments and further each department
have several PU* (Publication Units).Finally project are tagged to a
PU. From top to bottom it is one to many mapping and each and every relation is
unique. This structure serves as a base for accounting also.
(Collection->Division->Department->PU->Projects)
*Publication Units (PU) - It is a
collection of Projects (Books)
4. Business requirement and its mapping to Oracle
Company’s intent is to have a system in place
which is capable of capturing various activities of book publishing and
associate all those activities to each of the new book produced. Creation of
new book must be routed through some user inputs like (Book name, Book Number,
Start date, End date, Division, Department, and Publication Units etc.). System
should provide a provision of associating an estimate and at the same time
actual for each activity of book publishing. Estimate and Actual at the book
level must be compared as per the requirement and various reports must be
generated for business analysis. Finally it aims at distributing (amortizing)
the total cost incurred for publishing any book over a specified time frame.
Monthly amortized cost should be calculated based on the monthly production
supplied for each asset assuming total production of any book at the end of the
time frame would be 10000 units.
The
entire business requirement could be mapped in the Oracle environment as
follows:
·
Each book serves as a project/Asset
·
Activity and sub activity are different Tasks
and Sub Tasks of projects
·
Phases are like different project
status.
·
Book Creation Option implemented
thorough quick entry fields
·
Estimate through budget window and
Actual through Expenditure window
·
Project Status Inquire serve as the
base for Reports
·
Amortization the cost is done through
Fixed Asset after transferring the book form Oracle Projects to Fixed asset
through standard programs
5. Business process execution in Oracle for SAS
Project
Creation from Template
|
Set Up Required:
Setup 6.2, 6.3, 6.4, 5.5, 6.6, 6.8,
5.9
|
Budget
Creation
|
Expenditure
Creation
|
Transferring
Assets to FA
|
Depreciation
in FA
|
Reports
Generation
|
Set Up Required:
Setup 6.7
|
Set Up Required:
Setup 6.10, 6.11
|
1. Project
Creation:
Project is created by copying it from a template defined below as part
of setup. While copying system prompts to enter the quick entry fields like
(Project Number, Name, Project Start date, project end date, BU, Department, PU
etc.) as defined in template setup. Project gets created on entering quick
entry fields. System automatically copies project start date and end date in
the transaction start date and finish date for the entire parent and child task
in work breakdown structure. Created project will have same work break
structure, project type, OU and other features as of template.
As
each project is asset to company so it is created form the asset window by
providing details like asst name, asset description, Asset Key, Category,
Depreciation account, Location, Asset Book and assigned to project at project
level only.
2.
Budgets: It is the approximation of amount which would
be spared for completion of project. In SAS two types of budget are created one
is forecast cost budget and other is approved cost budget. Budget is created at
the child level task. Total budget is aggregation of budgets at all child level
tasks.
3.
Expenditure: This is the actual cost created on the
project. Expenditures are created form the pre-approved expenditure batch
screen supplying expenditure batch name, expenditure class and expenditure
ending date. In SAS all the expenditures are entered under “miscellaneous
expenditure” class as auto accounting is set for this class. Now for entering
expenditure first an expenditure organization is selected from organization
LOV. This LOV lists all the expenditure owning organizations which are part of
the expenditure hierarchy associated to US OU as part of implementation option
setup. Secondly project number, task, expenditure type and quantity is selected
and at the same time expenditure DFF is also supplied with appropriate values
of LE, BU, Department, and account for accounting. Project number field will
allow all projects except in cancelled, closed and Recovered status to be
entered. Task field will accept all chargeable child level tasks associated to
project. Expenditure type will list out all the expenditure type associated to
“miscellaneous expenditure” class. Quantity is entered based on which raw cost
would be calculated at the time of distributing cost. Raw cost will product of
quantity and rate. Rate is set for each expenditure type at the time of
expenditure type definition. If no rate is defined it is considered to be one.
After entering all the expenditure for a particular batch it s submitted and
released for processing.
To
process an expenditure batch a series of standard programs are submitted.
·
PRC Distribute Usage and Miscellaneous
Cost: This process computes the costs
and determines the GL account to which to cost must be posted.
·
PRC generate cost accounting events
·
Create accounting
·
PRC update Project summary amounts
4.
Capitalization: It is the method of transferring asset from
oracle projects to fixed assets. Book becomes an asset to SAS when it gets
published. For publishing a book
·
Status of the project(book in SAS) is
changed to published
·
Cost of asset is calculated based on
expenditure created for all capitalized task associated to project. Total cost
of asset reflects in CIP field of the capitalization screen after successful
completion of PRC update project summary amounts. This cost will be the cost of
asset reflecting in FA.
·
Asset type is changed form “Estimated”
to “As-Built” and Actual in service date is also supplied. All mandatory asset
information is filled if not filled earlier at the time of asset creation.
·
Asset lines needs to be generated for each
asset associated to project. PRC generate asset line program generates the
asset line. Generated line will reflect asset name and cost in the asset lines
window.
·
PRC Interface assets to oracle asset
process transfer assets from Oracle projects to fixed asset. Once asset is
transferred cost moves form CIP to interfaced CIP column in capitalization
screen
5. Depreciation:
It is the method of distributing cost of asset throughout its life. In SAS
predefined Units of Production methodology (UOP) is used for calculating
depreciation in FA. As per UOP monthly production against each asset is entered
in the production table. Ratio of monthly production to total production
(assumed to 10000) times the total cost calculates to depreciation amount for
that month.
6. Setups required for Implementation
1.
It is considered that (define chart of
accounts, define calendar, define a currency, define a sub ledger accounting
method, and define a ledger) is complete as part of GL setup.
2.
Prof.
|
US OU
|
HE
|
SAS BG
|
IT_SAS
|
IT OU
|
SP_SAS
|
SP OU
|
MX_SAS
|
MX OU
|
SAS
|
ELS
|
CTB
|
SC
|
3. Organization Hierarchy:
It defines the roll up structure between the organizations.
Company
has its business in 4 different geographies (Italy, Mexico, Spain, US) so it
have 4 different operating units.US OU have 5 different organizations (HE, SG, Prof,
CTB, ESL) which hold projects and an organization (SAS) to hold all the
events/expenditure associated to these organizations. Similarly for Italy, Mexico,
Spain, Colombia OU event/expenditure org are SAS_IT, SAS_MX, SAS_SP, and SAS_CO
respectively. For each Operating unit one organization hierarchy is defined. It
starts from corresponding OU and having all the subordinate are at the same
level in a particular hierarchy.
4. Implementation
option: This form is used to relate operating unit to the
corresponding ledger, business group,
currency, calendar project and expenditure related setup. In
projects/expenditure tab a unique organization hierarchy (as defined in step 3)
is assigned to each operating unit. Organizations in these hierarchies will be populated
for project organizations and expenditure LOV while creating project and
expenditure respectively for a particular operating unit.
5. Classificaion:
This form help to define the characteristics used to differentiate between the
projects. They are department, Division, PU, copyright year, Legal Entity,
Attribute. These attribute are entered when new projects are defined in the
system.
6. Service Type:
This category is used to segregate type
of task. Permissible values are (Prepub, Can, WRO, OVS, LATE, Reorg, CIP, MGF)
7. Budget Entry Method: This defines the way how budget would be
entered for a particular project. Here only raw cost for lowest level task is
entered.
8. Project Types:
Oracle broadly divides projects in 3 different types, namely Capital, Contract,
Indirect project. Capital project are those projects which an organization
develops for internal use and after completion it could be considered as an
asset eg. (Construction of building). Contract project are those which an
organization does for another company as service and in turn would generate
revenue (Any project which Wipro does for a particular org.). Indirect project
are used to aggregate the overhead cost. Oracle provides the facility to create
any number of project type belonging to any of the above three classes. New project
type will have features defined by the class to which it belongs. While
defining project types, information for Costing, Budgeting, Capitalization,
Classification, Workflow etc. are specified.
Here Capital project is taken
into consideration as book is an asset to SAS. Each OU (US, MX, IT, SP, CO)
will hold one capital project under the project type name as (Prepub) .SAS
Company is not dealing in burden cost, so the costing tab will not have any
setup information. Entry method for raw cost at lowest level task is assigned
as budget entry method in budget option tab. All the Classification (BU, PU, Department,
Copyright year, Attribute) are made compulsory for defining a particular
project in classification tab. Capitalized information is entered to have asset
information associated to every project in the capitalization information tab.
A new project created must have Active status is set in the project
status/workflow tab.
9. Project Template: It is a repository of initial setup done for
project creation. It has everything defined in it (Organization, Type, Work break
down structure, Quick entry fields etc.).This is required so that user might
not enter all the information each time new project is created. Once project is
created from template necessary changes can be done.
In SAS one template is
created for each and every organization .As in US OU 5 different organization
(HE, SC, Professional, CTB, ESL) are present 5 templates are created. All 5
template mandates entry of classification (Project name, Number, BU, Department,
PU, Attribute, Copyright year). Further 4 another template for other OU’s
(Italy, Mexico, Spain, and Colombia).
10. Expenditure:
Expenditures are charged to a project to
record actual work performed or cost incurred commitments to future,
committed costs expect to incur. Expenditure is a group of expenditure
items, or transactions, incurred by an employee or an organization for
an expenditure period.
All
actual expenditure items and future commitments must be charged to a project
and task. Examples of actual expenditures are timecards, expense reports, usage
logs, and supplier invoices. Examples of commitments are requisitions and
purchase orders. Oracle Projects processes transactions by associating each
expenditure type with an expenditure type class. For every expenditure items, expenditure
type is identified such as professional, labour or personal automobile use. Expenditure
class associated to this expenditure type is used to distribute the cost for
that particular transaction.
Predefined
expenditure types classes are (Straight time, Overtime, Expense reports, Usages, Supplier
invoices, Miscellaneous transactions, Burden transactions, Work in process, Inventory)
To setup the expenditure initially
expenditure category must be setup. Secondly all the expenditure type belonging
to this category must be setup. At the same time expenditure type must be
associated to rate if required. Each expenditure type must be associated with a
pre defined expenditure type class which helps for distributing the cost for a
particular transaction.
In MHG Expenditure categories are (Conversion, Vendor supply charges,
Miscellaneous cost).
Name
|
Expenditure
Category
|
Revenue
Category
|
UOM
|
Conversion
|
Conversion
|
UNASSIGNED
|
Currency
|
ABC Vendors
|
Vendor Supply Charges
|
UNASSIGNED
|
Currency
|
Vendor Services
|
Vendor Supply Charges
|
UNASSIGNED
|
Currency
|
MSS Vendors
|
Vendor Supply Charges
|
UNASSIGNED
|
Currency
|
Miscellaneous
Costs
|
Miscellaneous
Costs
|
UNASSIGNED
|
Currency
|
Project
Worker
|
Miscellaneous
Costs
|
UNASSIGNED
|
Currency
|
Name
|
Description
|
Effective
Date From
|
Effective
Date To
|
Expenditure
Type Class
|
Effective
Date From
|
Effective
Date To
|
Conversion
|
|
01-Jan-2000
|
|
Miscellaneous Transaction
|
01-Jan-2000
|
|
ABC
Vendors
|
|
01-Jan-2000
|
|
Supplier Invoice
|
01-Jan-2000
|
|
Vendor
Services
|
|
01-Jan-2000
|
|
Supplier Invoice
|
01-Jan-2000
|
|
Miscellaneous
Costs
|
|
01-Jan-2000
|
|
Miscellaneous Transaction
|
01-Jan-2000
|
|
MSS
Vendors
|
|
01-Jan-2000
|
|
Supplier Invoice
|
01-Jan-2000
|
|
Project
Worker
|
|
01-Jan-2000
|
|
Miscellaneous Transaction
|
01-Jan-2000
|
|
11. Auto
accounting: Any
transaction that is created in oracle projects need to be accounted. It aims at
determining the correct account for each transaction. Oracle project creates the accounting events
and creates accounting for the events for the Sub ledger Accounting .Oracle
provides predefined rules for SLA which accepts default account for auto
accounting without change. These sub ledger accounting rules can be modified as
per the implementation requirements.
Accounting
transaction is identified by an auto accounting function. Each accounting
function is associated with some user defined rules. These rules are used to
find segment value for each accounting segment. Rules are so defined that the
values derived out of them are in line with COA defied in GL. Programs which
are submitted to generate the account code combination calls the accounting
function associated to the transactions. Some of the auto accounting functions
are like (Miscellaneous transaction cost account, Misc. transaction clearing
account etc.)
To
implement auto accounting following steps must be followed:
·
Define lookup sets (optional): These
are required if mapping exist from one set of values to another set of values.
·
Define rules :Each rules have an sql
statement associated which process the value based on the input parameter and
lookup sets .(As required in implementation)
·
Assign rules to auto accounting
function.
11.1 Implementation
of auto accounting in SAS:
11.1.1 Lookups:
In SAS six segment account structure is followed of the format (LE.DIVISION.DEPARTMENT.ACCOUNT.INTERCOMPANY.FUTURE1.FUTURE2).
From top to bottom one-many unique relationship exists.
Three
lookups are defined to find the values for LE, BU, and Account. Values for LE, BU are derived based on department
and value for account based on service type of task (Each task is associated
with predefined service type).
1. Department
to LE: Used to derive LE value based on department(eg.:100723—0101)
2. Department
to BU: Used to derive BU value based on department(eg.:100723—1042)
3. Service
type to Account: Each task is associated with a service type and each service
type is linked to an account. Linkage between service type and account is
defined.(eg.:Prepub—15121101)
11.1.2
Rules: Rules are defined to evaluate the segment
values for each account segment. Each segment value is determined in two steps.
In first step intermediate value is determined and in the second step segment
value. To determine intermediate value SQL statement is defined which evaluates
this value based on some input parameter. Various input parameter can serve as
the feed to SQL statement (Class codes, Expenditure ID, Expenditure Type,
Project Type, Project ID etc.) .Intermediate value can be a constant also. Once
intermediate value is known, it may be either mapped to auto accounting lookup
defined or can itself be the segment value.
Various
rules defined are like
Rule Name
|
0-LE
from Exp Item DFF
|
Description
|
|
Intermediate Value
Source
|
SQL
Statement
|
Value
|
select
ATTRIBUTE1 from PA_EXPENDITURE_ITEMS_ALL where Expenditure_item_ID = :1
|
Segment Value
Source
|
Intermediate
Value
|
Lookup Set
|
|
Rule Parameters
Sequence
|
Parameter
|
Description
|
1
|
Expenditure
Item ID
|
Internal
ID of Expenditure Item
|
2.
Rule Name
|
1-BU
from Exp Item DFF
|
Description
|
|
Intermediate Value
Source
|
SQL
Statement
|
Value
|
select
ATTRIBUTE2 from PA_EXPENDITURE_ITEMS_ALL where Expenditure_item_ID = :1
|
Segment Value
Source
|
Intermediate
Value
|
Lookup Set
|
|
Rule Parameters
Sequence
|
Parameter
|
Description
|
1
|
Expenditure
Item ID
|
Internal
ID of Expenditure Item
|
As six segment accounting is followed 6
different rules must be defined to generate one account code combination.SAS
deals with only miscellaneous cost class so twelve different rules as above are
defined. Six rules for the credit line and six rules for debit line.
11.1.3
Assign rule to auto accounting function: Oracle provides functionality to account
different type of project in different manner by associating different set of
rules for the same function based on project types. In SAS all projects are
accounted based on the same rules. Six rules are assigned to function
“Miscellaneous Transaction cost account” and Six to “Miscellaneous transaction
clearing account”.
Name
|
Misc Trans Cost Account
|
Operating Unit
|
SAS_US_USD_CORP_OU
|
Description
|
Determines
cost account for Miscellaneous Transaction Items
|
Function Transactions1.
Name
|
Description
|
Enabled
|
Capital, All
|
All
Miscellaneous Transaction items on capital projects
|
Checked
|
Segment Rule Pairings
Number
|
Segment Name
|
Rule Name
|
0
|
Legal
Entity
|
0-LE
from Class-LE or Department
|
1
|
Division
|
1-BU
from Class-BU or Department
|
2
|
Department
|
2-Dept
from Department
|
3
|
Account
|
3-Acct
from Task Service Type
|
4
|
Intercompany
|
4-Intercompany
0000
|
5
|
Future
Use 1
|
5-Future1
|
6
|
Future
Use 2
|
6-Future2
|
Function 2
Name
|
Misc
Trans Clearing Account
|
Operating
Unit
|
SAS_US_USD_CORP_OU
|
Description
|
Determines clearing account for Miscellaneous Transaction Items
|
Function Transactions.
Name
|
Description
|
Enabled
|
All Misc Transactions
|
Clearing
account for all Miscellaneous Transaction Costs
|
Checked
|
Segment Rule Pairings
Number
|
Segment Name
|
Rule Name
|
0
|
Legal
Entity
|
0-LE
from Exp Item DFF
|
1
|
Division
|
1-BU
from Exp Item DFF
|
2
|
Department
|
2-Dept
from Exp Item DFF
|
3
|
Account
|
3-Acct
from Exp Item DFF
|
4
|
Intercompany
|
4-Intercompany
from Exp Item DFF
|
5
|
Future
Use 1
|
5-Future1
|
6
|
Future
Use 2
|
6-Future2
|
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