Oracle Applications: PA - Oracle Project Costing Setups Training Manual

Expenditure Categories:

An expenditure category describes the source of your organization’s costs. For example, an expenditure category with a name such as Labor refers to the cost of labor. An expenditure category with a name such as Supplier refers to the cost incurred on supplier invoices.

In addition, you can use expenditure categories in your AutoAccounting rules and in your reporting. Expenditure categories are used for grouping expenditure types for costing.

Defining Expenditure Categories

N èSetup è ExpendituresèExpenditure Categories

To Define expenditure categories:

In the Expenditure Categories window, enter a unique name for the expenditure category and enter its description and also the Effective Dates.

Save your work.

Some of the Examples of commonly Used Expenditure Categories

Expenditure Category Name	Description
Labor	Labor costs
Travel	Travel expenditures
In-House Recoverable	Use of corporate assets
Outside Services	Outside services
Material	Materials
Other Expenses	Expenses, excluding travel

Units
N èSetup è SystemsèUnits

A unit of measure records quantities or amounts of an expenditure item. You assign a unit to each expenditure type. Oracle Projects predefines the units Currency and Hours.

To define a unit of measure:

1. Navigate to the Unit Lookups window.

2. Enter Type as UNIT, Meaning as UNIT, Application-Projects, and Description as UNIT.

3. Enter the following information-Code, Meaning, Description, Tag Value (optional –– tag value is not used by Oracle Projects), Effective dates & Enabled Checkbox checked.

Save your work.

Define Expenditure Types

An expenditure type is a classification of cost that you assign to each expenditure item you enter in Oracle Projects.

N èSetup è ExpendituresèExpenditure Types

1. Name: Enter a unique name for the expenditure type.

2. Expenditure Category and Revenue Category: Enter the expenditure category and revenue category you want to associate with this expenditure type.

3. Unit of Measure: Enter the unit of Measure you want Oracle Projects to use when calculating the cost for this expenditure type. You must enter Hours for labor expenditure types.

4. Tax Classification Code: This is a new feature in R12. You need to click Tax Classification Code and select the tax classification code for customer invoice lines for this expenditure type and operating unit. Oracle Projects uses this code as the default tax classification code based on the Application Tax Options hierarchy that you define in Oracle E-Business Tax for Oracle Projects and the specified operating unit.

5. Rate Required: If this expenditure type requires a cost rate, check the Rate required check box, then choose Cost Rate to navigate to the Expenditure Cost Rates window and enter a cost rate and its effective date(s).

6. Description and Dates: In the Description, Dates region, enter a description for the expenditure type. You can optionally enter effective dates for the expenditure type.

7. Expenditure Type Classes: In the Expenditure Type Classes region, enter the Expenditure Type Class or classes you want Oracle Projects to associate with This expenditure type, to determine how to process the expenditure item.

Expenditure Type Classes

An expenditure type class tells Oracle Projects how to process an expenditure item. Oracle Projects predefines all expenditure type classes.

Oracle Projects uses the following expenditure type classes to process labor costs for interfacing to Oracle General Ledger:

1. Straight Time – Payroll straight time

2. Overtime – Overtime premium on a project

Oracle Projects uses the following expenditure type classes to process non–labor project costs:

1. Expense Reports – Oracle Projects expense reports are interfaced to Oracle Payables for employee reimbursement.

2. Usages – Asset usage costs are interfaced to Oracle General Ledger.

3. Supplier Invoices – Oracle Payables supplier invoices are interfaced from Oracle Payables to Oracle Projects.

4. Miscellaneous Transaction – Miscellaneous Transactions are used to track miscellaneous project costs.

5. Inventory – This expenditure type class is used for the following transactions:

– Project Manufacturing transactions that are interfaced from Manufacturing or Inventory to Oracle Projects.

-Oracle Inventory Issues and Receipts that are interfaced from Oracle Inventory to Oracle Projects in a manufacturing or non–manufacturing installation

For Example: Expenditure Category is Labor; Expenditure Type is Administrative & Expenditure Type Class is Straight Time.

Define Event Types

An implementation-defined classification of events that determines the revenue and invoice effect of an event. Typical event types include Milestones, Scheduled Payments, and Write-Offs.

N èSetup è Billing è Event Types

1. Enter a unique, descriptive name for this event type.

2. Revenue Category: Enter the revenue category that you want to associate with this event type.

3. Class: Enter a classification for this event type

Automatic. An Automatic classification generates an automatic event for revenue or invoice amounts that may be positive or negative, depending on your implementation of billing extensions.

Manual. A Manual classification allows you to enter both a revenue amount and a bill amount. These two amounts can be different. Classify an event type as manual when you need to indicate different revenue and bill amounts.

4. Enter the effective start and end dates.

5. Tax Classification Code. This is a new feature in R12 .Optionally; click Tax Classification Code to select the tax classification code for customer invoice lines created for this event type and operating unit. Oracle Projects uses this as the default tax classification code based on the Application Tax Options hierarchy that you define in Oracle E-Business Tax for the Oracle Projects application and the project's operating unit. For more information on setting up tax classification codes and the hierarchy of application tax options, see the Oracle E-Business Tax User Guide.

Define Budget Entry Method

Budget entry methods specify and control how you enter a budget or forecast. You use budget entry methods when you create budgets and forecasts that use budgetary controls and budget integration features.

N èSetup è Budgetsè Entry Methods

Oracle Projects predefines three budget entry methods:

By lowest tasks and date range, Categorized by Resources

By lowest tasks and GL period, Categorized by Resources

By lowest tasks and PA period, Categorized by Resources

You can define additional budget entry methods during implementation.

Defining Budget Entry Methods

1. Navigate to the Budget Entry Methods window.

2. Enter a name and description for the budget entry method.

3. Select an entry level. The entry level can be Project, Top Tasks, Lowest Tasks, or Top and Lowest Tasks.

4. Select Categorized by Resources if you want to categorize amounts by resources.

5. Select a time phased type. The choices are Date Range, GL Period, PA Period, or None.

6. Select the enterable fields for cost and revenue using the displayed check boxes.

7. Save your work.

Define Resource List

Define the resource list as a hierarchy of resources up to two levels. The top level is restricted to resource types, such as organization, expenditure category, and revenue category. Use the resource types Event Type, Expenditure Type, Revenue Category, and Expenditure Category to define the second level of the hierarchy:

N èSetup è Budgetsè Resource Lists

1. Enter the Resource List name and Description.

2. Group Resources By: Choose how you want to group the resource list. If you choose to group the resource list, and then you enter resource groups. Select the resource group, and override the alias and order if necessary.

3. If the resource list is job-based, then you must enter a job group to be used for summarization. The Resources region then displays jobs that belong to the job group you entered.

4. In the Resources region, enter the resources for each resource group. If you do not use grouping for the resource list, then use the Resources region to enter resources for the resource list.

5. Select the resource type and resource .Resource type could be Expenditure type, Event etc

6. Alias and the Order number defaults automatically .Override the values if required.

Define Rate Schedules.

Oracle Projects determines rates from a combination of rate schedules or rate overrides and uses these rates to calculate cost, revenue, and bill amounts. We can define four types of rate schedules:

· Employee

· Job

· Non-Labor

· Resource Class

Define Billing and Non Billing rate schedules

N èSetup è ExpendituresèRate Schedules

First Define Employee Bill Rate Schedule

To define a rate schedule:

1. Specify the Operating Unit. This is a new feature in Release 12. Specify the operating unit to which your organization and rate schedule belong. When you have access to only one operating unit, that operating unit appears as a default value in this field.

2. Specify the organization that maintains the schedule.

The organization you enter can be any organization from your organization hierarchy, regardless of whether the organization has the Expenditure Organization classification, and regardless of the start and end dates for the organization.

3. Enter a schedule name and a description of the schedule.

4. Specify a currency for the schedule.

Note: You can specify a different currency for your Bill Rate Schedule if the Enable Multi Currency Billing option is enabled for the operating unit. See: Enable Multi Currency Billing, Billing Implementation Options, and Oracle Projects Implementation Guide.

4. Check the Share across Operating Units check box to allow other operating units to use this schedule.

Note: To share bill rate schedules, you must also enable the Share Bill Rate Schedules across Operating Units options in the Billing tab of the Implementation Options window. See: Share Bill Rate Schedule Across Operating Units, Billing Implementation Options, and Oracle Projects Implementation Guide.

5. Select a schedule type.

6. Rates can be defined employee wise or Job wise. Incase of job wise rate Click on the Job Tab and Select Job group.

7. Select Employee name against whom the rate need to be defined.

8. Employee Number and UOM defaults.

9. Enter the Rate or Markup percent.

10. Enter the effective start and end date for the rate.

Now, define Job Bill Rate Schedule

Just update the Organization, Schedule Name and Currency and save your work.

Now, define Non Labor Bill Rate Schedule

Just update the Organization, Schedule Name and Currency and save your work.

Define Transaction Sources

N èSetup è ExpendituresèTransaction Sources

Transaction sources identify the source of external transactions you import into Oracle Projects using Transaction Import The transaction source determines how Transaction Import processes transactions. Some transaction sources are system–defined, and you can create others to fit your business needs. When you create a transaction source, you control the Transaction Import processing by the options that you select.

Predefined Transaction Sources

Oracle Projects predefines several transaction sources. The following table lists some of the predefined transaction sources:

Transaction Source Used to Import Records From:

AP INVOICE Oracle Payables (supplier invoices)

WARNING: Do not use this transaction source when you run the PRC: Transaction Import program. It is intended only for use by the Oracle Projects processes to import Oracle Payables invoices.

ORACLE PAYABLES Oracle Self–Service Expense.

Oracle Self–Service Time Oracle Self–Service Time

Time Management Oracle Time Management

Oracle Time and Labor Oracle Time and Labor

Predefined Transaction Sources for Manufacturing and Inventory Costs:

Oracle Projects predefines three transaction sources for importing expenditures from Oracle Manufacturing and Oracle Inventory:

Transaction Source Used to Import:

Inventory- Manufacturing material costs Inventory

Misc Inventory- issues and receipts entered in the Miscellaneous Transactions window in Oracle Inventory

Work In Process- Manufacturing resource costs

Implementation Option Set Ups

Costing Implementation Options

Navigate to the Implementation Options Screen.

N èSetup è System è Implementation Options

1. Operating Unit: It’s a new feature in R12. You can define your Implementation options based on your Operating Units. It means that from a single responsibility you can Define/Query Multiple Operating Unit based Implementation Options Set Ups. The same feature was not available in previous releases.

2. Ledger: In R10.5.10 the same information was defined under Set of Books Tab. In R12 the name has been changed to Ledger. If you are implementing Oracle Projects for a single organization, then you must specify a set of books to tell Oracle Projects which set of general ledger books to use. If your implementation of Oracle Projects is for multiple organizations, Set of Books is a display-only field. Its value defaults from the Legal Entity for the operating unit.

3. Summarization Period Type: summarization period type is used when updating project summary amounts.

4. Calendar Name: When you implement Oracle Projects, you can select the calendar used to maintain PA periods.

5. PA Period Type: Specify a Period Type, which is used to copy Project Accounting Periods from the calendar associated with the GL Set of Books.

6. Maintain Common PA and GL Periods: When this option is enabled, the system automatically maintains PA period statuses as you maintain the GL period statuses.

7. Default Asset Book: Optionally, select a default asset book from the list of values. The value that you select for this field will be the default value for all project assets that you create. You can override the default value at the asset level.

8. Default Reporting Organization Hierarchy: You specify an organization hierarchy and version to indicate which organization hierarchy you want Oracle Projects to use as the default reporting organization hierarchy.

1. Functional Currency: This display-only field shows the functional currency of your company’s set of books.

2. Exchange Rate Date Type: Specify a default exchange rate date type for converting foreign currency transactions from the transaction currency to the functional and project currencies.

3. Exchange Rate Type: Select the GL Rate Type to determine the rate. The system-defined rate types, such as Corporate, User, or Spot, are defined in Oracle General Ledger.

1. Project Numbering: Specify whether you want Oracle Projects to number projects automatically, or whether you plan to enter project numbers manually.

2. Project/Task Owning Organization Hierarchy: You assign a project/task owning organization hierarchy to the operating unit to control which organizations can own projects and tasks.

3. Version: Enter the version number.

1. Expenditure Cycle Start Day- You specifies an Expenditure Cycle Start Day to indicate the day your seven–day expenditure week begins. If you specify Monday as the expenditure cycle start day, the week ending date on all expenditures, including timecards and expense reports, is the following Sunday. You can choose any day of the week as your expenditure cycle start day.

2. Interface Cost to GL: If you want to interface costs with Oracle General Ledger, you must enable the system options for labor and usage costs interface.

Interface Employee Labor Cost- Enabled

Interface Usage, Inventory, and WIP, Miscellaneous and Burden Costs-Enabled.

3. Expenditure/Event Organization: You assign an expenditure/event organization hierarchy to the operating unit to control which organizations have the following capabilities:

– incur expenditures

– own project events

– be assigned to a resource list as a resource

4. Version: Enter the version number.

Auto Accounting

N èSetup è Auto AccountingèAssign Rules

Oracle Projects creates many different accounting transactions throughout its business cycle (when posting labor cost debits and labor revenue credits, for example). You can use AutoAccounting to specify how to determine the correct general ledger account for each transaction.

When you implement AutoAccounting, you define the rules and circumstances that determine which general ledger accounts Oracle Projects uses. Oracle Projects then uses the rules when performing accounting transactions.

Define AutoAccounting rules to generate account combinations, and then assign a set of rules to each AutoAccounting transaction you want to use for your company.

Costing
Expense Report Cost Account	Determined cost account for expense report items.
Expense Report Liability Account	Determines liability account for expense report costs
Labor Cost Account	Determines cost account for all labor items, including straight time and overtime
Labor Cost Clearing Account	Determines clearing account for labor costs
Supplier Invoice Cost Account	Determines cost account for adjusted supplier invoice items.
Total Burdened Cost Credit	Determines credit account for total burdened costs for all items on burdened projects
Total Burdened Cost Debit	Determines debit account for total burdened costs for all items on burdened projects
Usage Cost Account	Determines cost account for usage items
Usage Cost Clearing Account	Determines clearing account for usage costs

Labor Cost Account Function

When you run the PRC: Distribute Labor Costs process, Oracle Projects calculates labor cost amounts based upon employee labor cost overrides and labor costing rules. After calculating labor costs, Oracle Projects uses the Labor Cost Account transactions to debit an expense account for raw labor costs.

The Labor Cost Account function consists of the following transactions:

• Indirect Private Labor

• Indirect Public Labor

• Private Billable Labor

• Private Non–Billable Labor

• Public Billable Labor

• Public Non–Billable Labor

• All Labor

• Capital, All

• Contract, All

• Indirect, All

• Capital, Private, Capital

• Capital, Private, non–Capital

• Capital, Public, Capital

• Capital, Public, non–Capital

Dening a Lookup Set

In lookup sets you specify pairs of values. For each intermediate value, you specify a corresponding account segment value. One or more related pairs of intermediate values and segment values form a lookup set. Use the Segment Value Lookup Region zone to specify an intermediate value, and then map that intermediate value to a specific segment value of your Accounting Flexfield.

To implement the Labor Cost Account function, Implementation team defines three lookup sets:

• One lookup set to map organizations to companies

• One lookup set to map organizations to cost centers

• One lookup set to map service types to each Fremont’s six expense accounts for indirect labor

Segment Value Lookups

You may need several lookup sets to map organizations to cost centers, expenditure types to account codes, event types to account codes, or for other situations where the segment value depends upon a particular predefined parameter.

You can use a lookup set more than once; several AutoAccounting rules can use the same lookup set.

You define and modify lookup sets using the AutoAccounting Lookup Sets window.

AutoAccounting Lookup Sets Window Reference

Use this form to define, view, and maintain AutoAccounting lookup sets.

Name. Enter a unique, descriptive name for this lookup set.

Segment Value Lookup Region

Use this zone to specify an intermediate value, and then map that intermediate value to a specific segment value of your Accounting Flexfield.

AutoAccounting matches an intermediate value derived from an AutoAccounting rule with an intermediate value in the lookup set and determines the corresponding segment value you specify to derive an account code from your chart of accounts.

Intermediate Value. Enter the intermediate value that you want to map to an Accounting Flexfield segment value.

Ensure that you have entered a valid intermediate value. Valid intermediate values are those that match intermediate values that may be derived from AutoAccounting rules. Specify the values in the base language and ensure that the case and spelling match exactly. (For more information about the base language, see: Multilingual Support in Oracle Projects, Oracle Projects Fundamentals.) For example, if you are mapping organization intermediate values to cost center segment values, you cannot enter 'RISK ANALYSIS' for an organization with the name of 'Risk Analysis'.

If AutoAccounting does not find a matching intermediate value in the lookup set, AutoAccounting provides an error message (Incomplete AutoAccounting Rules) notifying you that it could not build an Accounting Flexfield combination. You must correct your AutoAccounting setup and resubmit the process that triggered the AutoAccounting error.

Selecting an Intermediate Value Source

To define an AutoAccounting rule, you first specify an intermediate value (an "input" for the rule). You can draw an intermediate value from one of three intermediate value sources:

Constant	Always supply a particular intermediate value (usually an Accounting Flexfield segment code)
Parameter	Use a predefined parameter as an intermediate value; make the rule context-sensitive based on one value
SQL Select Statement	Execute a SQL select statement to retrieve an intermediate value; make the rule dependent on multiple values and/or conditional statements

Segment Value. Enter the Accounting Flexfield segment value that you want to map to with this intermediate value.

Ensure that you have entered a valid segment value. Valid segment values are those that are defined for your Accounting Flexfield segments. Values must match exactly numerically.

If AutoAccounting does not find a matching segment value in the lookup set, AutoAccounting provides an error message (Invalid Accounting Flexfield) notifying you that it could not build a valid Accounting Flexfield combination. You must correct your AutoAccounting setup and resubmit the process that triggered the AutoAccounting error.

Dening AutoAccounting Rules

AutoAccounting rule you define supplies one Accounting Flexfield segment value at a time. Thus, you need to specify one AutoAccounting rule for each segment in your Accounting Flexfield for each AutoAccounting transaction you want to use. Some of the AutoAccounting rules you define can be quite simple, such as always supplying a constant company code or natural account. Others can draw upon context information (parameters), such as the revenue category for a particular posting or the organization that owns a particular asset. You can even use multiple parameters to provide a segment value. You can reuse the same AutoAccounting rules for many different functions and their transactions.

One rule supplies the appropriate value for the Company segment of Organization’s Accounting Flexfield; Organization uses a lookup set to define this rule.
One rule supplies the appropriate value for the Department segment; Organization uses a lookup set to define this rule.
Rules supply the appropriate account code for the Account segment; the indirect, private labor rule uses a lookup set, and the other five use constant values.
Rules supply the appropriate account code for the Sub Account segment; the indirect, private labor rule uses a lookup set, and the other five use constant values.
Rules supply the appropriate account code for the Product segment; the indirect, private labor rule uses a lookup set, and the other five use constant values.

Assigning Rules to Transactions

AutoAccounting function consists of several distinct transactions; you assign rules to each transaction you want to use. These rule assignments then determine which general ledger account AutoAccounting uses to process that transaction. After you enable a transaction, you match each segment in your Accounting Flexfield with the appropriate AutoAccounting rule. For example, if you have a two-segment Accounting Flexfield containing a Company segment and an Account segment, you assign one rule to the Company segment and one rule to the Account segment.

Function Transaction’s Enabled

All Labor- All Labor Items Enabled Checkbox Ticked

Capital, ALL – All Labor Items on Capital Projects.

In the same manner you will need to define other Auto Accounting Rules

Non Labor Resources

You specify a name and a description of an asset, or pool of assets, to define a non–labor resource. For example, you can define a non–labor resource with a name such as Earth Mover to represent one earth mover your business owns.

Every usage item you charge to a project must specify the non–labor resource utilized and the non–labor resource organization that owns the resource.

When defining your non–labor resources, you can choose only expenditure types with the Usage expenditure type class.

You can use the non–labor resource organization in your AutoAccounting rules for Usage & Miscellaneous cost and revenue.

Defining Non-Labor Resources

N èSetup è ExpendituresèNon Labor Resource

To define non-labor resources:

1. In the Non-Labor Resources window enter a name, description, effective date(s), and a usage expenditure type for each non-labor resource your organization owns.

2. For each non-labor resource you define, enter the organization(s) to which the resource is assigned in the Organizations region. Enter the effective dates during which the resource is owned by each organization.

The organizations you enter can include any organization from your organization hierarchy, regardless of whether the organization has the Expenditure Organization classification, and regardless of the start and end dates for the organization.

3. If you want to override the cost rate of the expenditure type by the resource and organization combination, choose Cost Rates and enter the cost rate for the operating unit in question and the effective date in the Cost Rates Overrides window.

4. Save your work.

Non Labor Cost Rates - Defining Cost Rates for Expenditure Types

An expenditure type cost rate is a currency amount that Oracle Projects multiplies by the expenditure type unit to calculate cost.

You define a cost rate in the Expenditure Types window by selecting an expenditure type and entering a cost rate for it. You can select only a non–labor expenditure type that requires a cost rate. You cannot define a cost rate for a non–labor expenditure type that does not require a cost rate. Instead, you must disable the expenditure type and create a new one that requires a cost rate and has a unique name.

Labor Costing Rules

N èSetup è Costingè LaborèLabor Costing Rules

A labor costing rule determines how an employee is paid. You define a labor costing rule for each pay type your business uses.

For example, you can define a labor costing rule for pay types such as exempt, non–exempt, uncompensated, compensated, or hourly.

When an employee charges time to a project, Oracle Projects processes the labor hours according to the employee’s labor costing rule.

For example, if an employee’s labor costing rule is Hourly, the employee is eligible for overtime pay; if the employee’s labor costing rule is Exempt, the employee is not eligible for overtime pay.

1. In the Labor Costing Rules window, enter a unique rule name and select a costing method.

Costing methods determine how labor costs are calculated. The available options are:

Rates: When you select Rates, Oracle Projects calculates the labor costs for entered hours using hourly cost rates.

Extension: When you select Extension, labor costs are calculated by the labor costing extension. When using this option you are not required to maintain hourly cost rates in Oracle Projects.

2. If overtime hours are created by the overtime calculation extension, you can select Overtime Trans Defaults and specify a default project and task by operating unit for system generated expenditure items.

3. Enter the Effective Dates during which the labor costing rule is valid.

4. If your employees enter overtime hours manually, use the Overtime Cost Multipliers region to assign cost multipliers to overtime expenditure types. When a costing method of Rates is selected and a transaction is charged to an expenditure type that has an assigned multiplier, the multiplier is applied as labor costs are calculated.

Note: If the transaction is charged to an overtime task and a cost multiplier is assigned to the task, the task multiplier takes precedence over the expenditure type multiplier.

If overtime hours are derived using the overtime calculation extension, you can use the Overtime Cost Multipliers region to default expenditure types for system generated expenditure items.

5. Save your work.