PROJECT BUDGET - Special Topic BP-1

General Overview

Costpoint Advanced Project Budgeting provides a system-wide solution that integrates labor hours, units, materials, direct charges (ODCs), subcontractor expenses, and overhead charges. You can calculate project revenues using multipliers at the detail subtask level or a fee rate (percentage) and fixed fee amount at the project level. The currency equivalent of these budgeting mechanisms is identified by either one or a combination of the following: project, organization, account, reference number (cost code), line type, budget type, and budget format.

You can budget by specific labor categories, employees, vendors, and unit/material classifications to provide for project benchmarking. You can develop forecasts using the estimate-to-complete function or a workplan budget.

There are two types of project budgets: a baseline budget and a workplan budget. You can create only one baseline budget per project. You can create multiple workplan budgets per project. Build a total budget or multi-year period budget depending on the project reporting requirements.

You can create a project budget using the performing organization, the owning organization, or a combination of organizations for a given project. In addition to editing an existing project budget, you can make modifications to baseline and workplan budgets through approved change orders. A change order will also modify the actual contract and the funded value of a project.

You can set up projects at the project level or at a more detailed account or reference number level (cost code). You can present project budgets for each project manager or roll them up to consolidate data at a higher or total project level.

Use Costpoint Advanced Project Budgeting to build a total budget and spread it across fiscal years and periods. You can create period budgets for a project, and a total budget will automatically be created.

Getting Started

Depending on the budget characteristics specified in the budget setting and information screens, specific columns will be enabled (available) or disabled (hidden) for data entry. For this reason, you must make basic budget decisions before beginning the project budget process. First go to the Maintain Project Budget Settings screen and establish global settings that will affect the creation and maintenance of both baseline and workplan budgets (refer to the documentation for this screen for more detailed information). These selections will act as the default attributes for all project budgets.

1You create workforce or material budgets using system-generated cost rates or billing rates (T&M for labor, Price for units/materials) for the labor categories (GLC or PLC) and unit classifications (Price Catalog or CLIN). You must build these tables before getting started with the budget process. Refer to the documentation for the Labor and Units subtasks of the Maintain Project Budgets and ETC screen (Projects » Advanced Project Budgeting » Project Budget and ETC Master). The cost or bill/price rates will automatically default into the Project Budget Information subtask when you select a labor category (PLC or GLC), a CLIN, or a price catalog.

To include overhead rates that will apply to labor and direct (ODC) costs, create a burden template. For more information, refer to the Maintain Burden Templates screen (Projects » Advanced Project Budgeting » Controls). Select a burden template for a project budget in the Project Budget Information subtask of the Maintain Project Budgets and ETC screen (Projects » Advanced Project Budgeting » Project Budget and ETC Master). The composite rate will default for each row in the Labor and Direct subtasks.

You can use T&M rates for workforce budgeting and Costpoint will automatically create a labor cost budget (for reports) if the average cost rate tables are complete. The T&M/Bill rate selection will automatically follow the T&M sequencing process.

You can use unit price rates for material budgeting and the system will automatically create a unit cost budget (for reports) if the cost rate portion of the rate tables is complete.

The columns in the Maintain Project Budgets and ETC subtasks can be set in any order for ease of data entry.

Please remember that you should use only one of the Costpoint budgeting modules. Please do NOT enter data in both Advanced Project Budgeting and Budgeting and ETC.

Examples of the Costpoint Project Budget Process

For Part One of this example, create a total budget using labor cost rates. This will be a baseline cost budget using project labor categories.  For the example, set up the project where the project number is 1000.001, the project name is New York City, the period of performance is 01/01/00 to 12/31/05, the default organization is 1, and the contract value is $2,000,000.

Make the following selections in the Maintain Project Budget Settings screen (Projects » Advanced Project Budgeting » Controls):

Use the following accounts in this example:

The following are average cost amounts and PLC categories:

Baseline - Step 1 - Information

In the Maintain Project Budgets and ETC screen (Projects » Advanced Project Budgeting » Project Budget and ETC Master), create the baseline project budget and enter "1000.001."  Click the Baseline option as the Budget Type. Click the INFO button and proceed to the Project Budget Information subtask (refer to the subtask documentation). Notice that the Contract Amount of $2,000,000 is displayed along with the period of performance (01/01/00 to 12/31/05). Select the Labor Cost option, which is the default in the Labor Budgeting group box, and save this information. Go back to the main screen (Maintain Project Budgets and ETC) and the other buttons (DIRECT, LABOR, UNITS, FEES, ETC, and Recalculate) are enabled.

Once you save the Labor and Unit Budgeting settings for the selected project, you CANNOT change them.

Baseline - Step 2 - Direct

Click the DIRECT button and proceed to the Direct subtask to enter the ODC and subcontractor charges. Enter the following data:

Return to the main screen (Maintain Project Budgets and ETC (Projects » Advanced Project Budgeting » Project Budget and ETC Master)) and click the Recalculate button.

Baseline - Step 3 - Labor

Now click the LABOR button and proceed to the Labor subtask to enter labor charges and the following information:

Org 1 defaults into the Organization and Org Name columns.

Org 1 defaults into the Organization and Org Name columns.

Org 1 defaults into the Organization and Org Name columns.

Org 1 defaults into the Organization and Org Name columns.

Org 1 defaults into the Organization and Org Name columns.

Org 1 defaults into the Org and Org Name columns.

Org 1 defaults into the Organization and Org Name columns. Change this to Org 3.

Revenue - Row Multiplier

For Part Two of this example, use Costpoint to calculate revenue by using a multiplier on each row and the Fee subtask.

This section will use a multiplier to calculate revenue. In the first example, you created a total budget using labor cost rates and direct costs. Now you will set up multipliers for the Labor subtask using the Project Budget Information subtask.

Beginning at the Project Budget Information subtask, enter a Target Multiplier of 1.4. Then, in the Multiplier Method drop-down list, select Use Multiplier on Budget Amt. Click the OK button to return to the Maintain Project Budgets and ETC screen (Projects » Advanced Project Budgeting » Project Budget and ETC Master). As shown in the first example, the Direct subtask charges are already entered. The Labor subtask data is the same, but the revenue portion of the Labor subtask entries will be highlighted below.

You can override the multiplier on any row of the Direct, Labor, or Units subtasks with a different multiplier.

Org 1 defaults into the Organization and Org Name columns.

Org 1 defaults into the Organization and Org Name columns.

Org 1 defaults into the Organization and Org Name columns.

Org 1 defaults into the Organization and Org Name columns.

Org 1 defaults into the Organization and Org Name columns.

 Org 1 defaults into the Organization and Org Name columns. Change this or Org 3.

 Return to the Maintain Project Budgets and ETC screen and click the Recalculate button. Notice that Budget Amt displays the amount 1,000,000.

Revenue - Fee Subtask

In this section, you will use the Fee subtask to calculate revenue. You created the total budget using labor cost rates and direct costs. You can also set up the entire cost budget using the Fee subtask. This is an example of a cost plus fee percentage (or a cost plus a fixed fee if you are using a fee amount). Remember the information entered in part one of this example. Our cost budget total was 1,600,000. You have entered data in the Direct and Labor subtasks.

Cost Plus Fee Percentage

Cost Plus Fixed Fee Amount

This award fee can be recorded as a fee percentage with an Other Fee (fixed) Amount.