Thursday, March 19, 2009

Oracle Project Costing - some new features in 11.5.10.2

Business Challenges:

It’s difficult to get information when you need it:

Transactions come from many sources
•Labor costs are captured in time entry systems
•Supplier cost is captured in Accounts Payable
•In many industries, the majority of cost is captured in manufacturing
•Frequently Indirect and Overhead costs must calculated and applied manually

In order to manage to budget, you need to track outstanding commitments as well as amounts spent.

In a Global Environment, you have to process and translate foreign currency transactions and if you are sharing resources across organizations, you have to process intercompany adjustments to account for cost reimbursement and revenue sharing agreements.

For Capital Projects, you have to ensure that cost is allocated to assets appropriately and you have to track your different types of cost: Construction cost (CIP), Cost of Removal, and Proceeds of Sale.

How do you accomplish these things in a timely manner, Project Costing can help.


New Features for Oracle Project Costing:

•Capital Projects Enhancements
–Create and Assign Assets using AMG
–Automatically Allocate Indirect and Common Costs
–Calculate Interest on CIP Cost
–Periodically Group Cost and Assets for Capitalization
–Automate Retirement Cost Processing
•Labor Costing Enhancements
•Cross-Charging Enhancements
•Burdening Enhancements
•MRC Schema Elimination
•PO/AP Integration


Create and Assign Assets using API’s:

# To enable integration with external asset management systems, project asset API’s have been added to the Activity Management Gateway
# The new API’s allow you to create, update and delete project assets and project asset assignments

Automatically Allocate Indirect and Common Costs:


It is sometimes necessary to apply cost to multiple assets. For example, if you are replacing wooden light poles with new steel ones and each pole is an asset, you need to distribute labor costs across the number of poles replaced. If all the poles are the same, you can just spread the cost evenly, but if some poles are longer than others, you may want to distribute based on the cost of the pole, recognizing that the longer poles no only cost more and require more time to install.

Project Costing now supports the predefined cost allocation methods displayed here. In the past, unless you were using a consulting solution, all indirect and common cost had to be manually allocated across assets.

The following new predefined allocation methods are now supported:
•Spread Evenly
•Actual Units
•Standard Unit Cost
•Estimated Cost
•Current Cost
•Client Extension

Periodically Group Costs and Assets for Capitalization:

Assets placed in service within a period and cost collected for the period can be grouped together for capitalization.

For repetitive jobs and phased projects, Project Costing has introduced Capital Event Processing. Assets placed in service within a period and cost collected for that period can be grouped together for capitalization.

Continuing our light pole example, if you placed 100 poles in service in January, you can now automatically assign all cost collected in January to those new poles and send the information to Fixed Assets to begin capitalization. In February, you repeat the process; the cost for February is associated with the new poles installed in February and sent to FA.

Process Retirement Costs:


Project Costing has added support for retirement cost processing.
You can now track retirement costs by identifying retirement tasks and generating retirement asset adjustments to be sent to Fixed Assets.
You can improve the accuracy of the adjustments by also tracking Proceeds of Sales. Let’s complete the light pole example, it you sale the old wooden poles for firewood, you can subtract the proceeds of these sales from the cost of removal when you generate the retirement asset adjustment lines.

Identify retirement assets:
•Assign asset group number to project or task
Identify retirement tasks
Classify retirement costs
•Use expenditure categories and/or expenditure types to track Costs of Removal and Proceeds of Sale
Generate retirement asset lines and prorate common costs

Calculate Interest on CIP Costs:

We all know there is cost associated with funding a project. If you borrow money, you have to pay interest. If you invest your own funds, you lose dividends.

In many industries, you are allowed to capitalize all or a part of this cost. So Project Costing has added a feature that allows you to generate interest expenditure batches based on the open CIP balance.

Labor Costing Enhancements:

To reduce maintenance and overhead and pave the way for some future integration, Project Costing has redesigned the labor costing model.
You now maintain rates in rate schedules and can enter rates by employee or by job.
Labor Costing Rules define how labor cost is calculated. You can select a costing method of Rates or Client Extension. You can also apply cost multipliers to overtime expenditure types without implementing the overtime extension.
Costing rules and rate schedules are then assigned to organizations. You are no longer required to enter an assignment for each employee.
However, when necessary, you can enter overrides at the employee level. You can override the assigned rate schedule or you can enter an overriding rate value.

Cross Charge EnhancementsDescription:

Prior to Family Pack-K Rollup, cross charge transactions were converted to the reporting currencies of the Provider Operating Unit only. After Family Pack-K is installed, transactions are converted to the reporting currencies of both the Provider and Receiver Operating Units.
An upgrade script is provided with this patch to convert existing cross charge transactions to the reporting currencies of both the Provider and Receiver Operating Units.


Burdening Enhancements:

Many customers reported that we needed to improve the burdening process; that moving from provisional to firm rates was taking too long and generating too much database volume.
So we made the process smarter and we added an option that allows you to create incremental adjustments.
When you modify a schedule we now track your changes and only mark the transactions impacted by those changes for recalculation.
Ad if you choose to use the incremental option, we no longer reverse the original accounting entries; we just create incremental entries for delta amounts.

MRC Schema Elimination:

Oracle Projects now allows you to use a single responsibility to perform the following:
•View amounts in Primary and Reporting Currency
•Generate Reports in Primary and Reporting Currency
•Interface Primary and Reporting amounts to GL

Supplier Invoice Adjustment:

Oracle Projects now allows you to adjust supplier invoice expenditures that are matched to accrue on receipt purchase order lines
When the adjustment is interfaced from Oracle Projects to Oracle Payables, the following occurs:
•Two New Invoice Distributions are created
–A distribution created to reverse the accrual against the PO charge account
–A distribution is created to record the expense with the adjusted project attributes
•AP Generates Tax for the new Distributions