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.
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.
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):
Update Baseline Budget with Approved COs (change orders)
Allow Workplan Budgets (use for workplan budgets)
Freeze on Save Baseline Budget
Set up an undistributed account called "manage reserve."
Use the following accounts in this example:
Direct Labor Engineering - 0675
Direct Labor Construction - 0650
Direct Labor Project Management - 0600
Travel - 0575
Misc ODC ("Other Direct Cost") - 0550
Subcontractor Costs - 0500
Project Revenue - 0400
The following are average cost amounts and PLC categories:
PM - Project Manager; and an average cost rate of 50/hour
PM1 - Assistant Project Manager; and an average cost rate of 25/hour
ARCH - Architect; and an average cost rate of 40/hour
ENG - Engineer; and an average cost rate of 40/hour
CA - Contract Administrator; and an average cost rate of 25/hour
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.
Click the DIRECT button and proceed to the Direct subtask to enter the ODC and subcontractor charges. Enter the following data:
Select Line Type D for direct costs. Org 1 will default into the Org and Org Name columns.
Tab to the Account column and use to select Travel - 0575.
Tab to Budget Amount and enter 50,000.
Click the New Line icon on the toolbar and proceed to a new line.
Select Line Type D for direct costs. Org 1 will default into the Org and Org Name columns.
Tab to the Account column and enter 0550 for Misc ODC.
Tab to Budget Amount and enter 100,000.
Click the New Line icon on the toolbar and proceed to a new line.
Select Line Type S for subcontractor. Org 1 will default, but for this example, change it to Org 2.
Tab to the Account column and use to select Subcontractor Costs - 0500.
Tab to Vendor and use to select a vendor that has been established in the Maintain Vendors screen (Accounting » Accounts Payable » Vendor Info).
Tab to the Subcontract No column and enter A275 for the subcontract number.
Tab to Budget Amount and enter 450,000.
Click OK at the bottom of the screen to save this 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.
Notice that the Budget Amt and Total Budget fields for the Direct summary information row contain 600,000.
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.
Tab to the Account column and enter 0675 - Direct Labor Engineering.
Tab to PLC and use to select ENG - Engineer, and the rate of 40/hour defaults into the Average Cost Rate column.
Tab to the Budgeted Hours column, enter 5,000 hours, and tab to the Cost Budget Amount column where 200,000 is displayed.
Click the New Line icon on the toolbar to move to a new line.
Org 1 defaults into the Organization and Org Name columns.
Tab to the Account column and enter 0675 - Direct Labor Engineering.
Tab to PLC and use to select ARCH - Architect.
The rate of 40/hour defaults into the Average Cost Rate column.
Tab to the Budgeted Hours column, enter 5,000 hours, and tab to the Cost Budget Amount column where 200,000 is displayed.
Click the New Line icon on the toolbar to move to a new line.
Org 1 defaults into the Organization and Org Name columns.
Tab to the Account column and enter 0650 - Direct Labor Construction.
Tab to PLC and use to select ENG - Engineer.
The rate of 40/hour defaults into the Average Cost Rate column.
Tab to the Budgeted Hours column, enter 2,500 hours, and tab to the Cost Budget Amount where 100,000 is displayed.
Click the New Line icon on the toolbar to move to a new line.
Org 1 defaults into the Organization and Org Name columns.
Tab to the Account column and enter 0650 - Direct Labor Construction.
Tab to PLC and use to select ARCH - Architect.
The rate of 40/hour defaults into the Average Cost Rate column.
Tab to the Budgeted Hours column, enter 2,500 hours, and tab to the Cost Budget Amount where 100,000 is displayed.
Click the New Line icon on the toolbar to move to a new line.
Org 1 defaults into the Organization and Org Name columns.
Tab to the Account column and enter 0600 - Direct Labor Project Management.
Tab to PLC and use to select PM - Project Manager. The rate of 50/hour defaults into the Average Cost Rate column. Change this rate to 60/hour.
Tab to the Budgeted Hours column, enter 5,000 hours, and tab to the Cost Budget Amount column where 300,000 is displayed.
Click the New Line icon on the toolbar to move to a new line.
Org 1 defaults into the Org and Org Name columns.
Tab to the Account column and enter 0600 - Direct Labor Project Management.
Tab to PLC and use to select PM1 - Assistant Project Manager.
The rate of 25/hour defaults into the Average Cost Rate column.
Tab to the Budgeted Hours column, enter 2,000 hours, and tab to the Cost Budget Amount where 50,000 is displayed.
Click the New Line icon on the toolbar to move to a new line.
Org 1 defaults into the Organization and Org Name columns. Change this to Org 3.
Tab to the Account column and enter 0600 - Direct Labor Project Management.
Tab to PLC and use to select CA - Contract Administrator.
The rate of 25/hour defaults in the Average Cost Rate column.
Tab to the Budgeted Hours column, enter 2,000 hours, and tab to the Cost Budget Amount where 50,000 is displayed.
Click the OK button at the bottom of the screen and save this data.
Return to the Maintain Project Budgets and ETC screen and click the Recalculate button.
Notice that the labor summary cost budget and total amount row contains the amount 1,000,000.
The Quantity column displays the amount 24,000 for total labor hours.
The Total Budget is 1,600,000.
The Undistributed Amount field displays the 400,000, which is the management reserve amount.
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.
In the Labor subtask, Org 1 defaults into the Org and Org Name columns.
Tab to the Account column and enter 0675 - Direct Labor Engineering.
Tab to PLC and use to select ENG - Engineer and the rate of 40/hour will default into the Average Cost Rate column.
Tab to the Budgeted Hours column, enter 5,000 hours, and tab to the Cost Budget Amount column where 200,000 is displayed.
The labor multiplier of 1.4 is displayed in the Multiplier column.
Tab to the Profit Amt column where 80,000 is displayed; the Total Budget Amt is 280,000.
Click the New Line icon on the toolbar to move to a new line.
Org 1 defaults into the Organization and Org Name columns.
Tab to the Account column and enter 0675 - Direct Labor Engineering.
Tab to PLC and use to select ARCH - Architect. The rate of 40/hour defaults in the Average Cost Rate column.
Tab to the Budgeted Hours column, enter 5,000 hours, and tab to the Cost Budget Amount where 200,000 is displayed.
The labor multiplier of 1.4 is displayed in the Multiplier column.
Tab to the Profit Amt column where 80,000 is displayed; the Total Budget Amt is 280,000.
Click the New Line icon on the toolbar to move to a new line.
Org 1 defaults into the Organization and Org Name columns.
Tab to the Account column and enter 0650 - Direct Labor Construction.
Tab to PLC and use to select ENG - Engineer. The rate of 40/hour defaults in the Average Cost Rate column.
Tab to the Budgeted Hours column, enter 2,500 hours, and tab to the Cost Budget Amount where 100,000 is displayed.
Our labor multiplier of 1.4 is displayed in the Multiplier column.
Tab to the Profit Amt column where 40,000 is displayed; the Total Budget Amt is 140,000.
Click the New Line icon on the toolbar to move to a new line.
Org 1 defaults into the Organization and Org Name columns.
Tab to the Account column and enter 0650 - Direct Labor Construction.
Tab to PLC and use to select ARCH - Architect. The rate of 40/hour defaults in the Average Cost Rate column.
Tab to the Budgeted Hours column, enter 2,500 hours, and tab to the Cost Budget Amount column where 100,000 is displayed.
The labor multiplier of 1.4 is displayed in the Multiplier column.
Tab to the Profit Amt column where 40,000 is displayed; the Total Budget Amt is 140,000.
Click the New Line icon on the toolbar to move to a new line.
Org 1 defaults into the Organization and Org Name columns.
Tab to the Account column and enter 0600 - Direct Labor Project Management.
Tab to PLC and use to select PM - Project Manager. The rate of 50/hour defaults in the Average Cost Rate column. Change this rate to 60/hour.
Tab to the Budgeted Hours column, enter 5,000 hours, and tab to the Cost Budget Amount column where 300,000 is displayed.
The labor multiplier of 1.4 is displayed in the Multiplier column.
Tab to the Profit Amt column where 120,000 is displayed; the Total Budget Amt is 420,000.
Click the New Line icon on the toolbar to move to a new line.
Org 1 defaults into the Organization and Org Name columns.
Tab to the Account column and enter 0600 - Direct Labor Project Management.
Tab to PLC and use to select PM1 - Assistant Project Manager. The rate of 25/hour defaults in the Average Cost Rate column.
Tab to the Budgeted Hours column, enter 2,000 hours, and tab to the Cost Budget Amount column where 50,000 is displayed.
The labor multiplier of 1.4 is displayed in the Multiplier column.
Tab to the Profit Amt column where 20,000 is displayed; the Total Budget Amt is 70,000.
Click the New Line icon on the toolbar to move to a new line.
Org 1 defaults into the Organization and Org Name columns. Change this or Org 3.
Tab to the Account column and enter 0600 - Direct Labor Project Management.
Tab to PLC and use to select CA - Contract Administrator. The rate of 25/hour defaults in the Average Cost Rate column.
Tab to the Budgeted Hours column, enter 2,000 hours, and tab to the Cost Budget Amount column where 50,000 is displayed.
The labor multiplier of 1.4 is displayed in the Multiplier column.
Tab to the Profit Amt column where 20,000 is displayed; the Total Budget Amt is 70,000.
Click the OK button at the bottom of the screen to save this data.
Return to the Maintain Project Budgets and ETC screen and click the Recalculate button. Notice that Budget Amt displays the amount 1,000,000.
The Profit column displays the amount 400,000 and Total row displays the amount 1,400,000.
The Quantity column displays 24,000, which represents total labor hours.
The Total Budget is 2,000,000, and the Undistributed Amount is 0.
The profit has taken the place of what was formerly the management reserve.
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.
Click the FEES button in the Maintain Project Budgets and ETC screen.
The default for Organization and Org Name is Org 1.
Tab to the Account column and use to select 0400 - Project Revenue.
Tab to the Fee Percentage column and enter 1.25, click the OK button, and save this data.
Returning to the Maintain Project Budgets and ETC screen (Projects » Advanced Project Budgeting » Project Budget and ETC Master) and click the Recalculate button.
The screen displays Direct and Total budget of 600,000, Labor and Total budget of 1,000,000, Fee and Total budget of 400,000, and a Total Budget amount of 2,000,000 with an Undistributed Amount of 0.
Click the FEES button in the Maintain Project Budgets and ETC screen (Projects » Advanced Project Budgeting » Project Budget and ETC Master).
The default for Organization and Org Name is Org 1.
Tab to the Account column and use to select 0400 - Project Revenue.
Tab across to the Fee Amount column and enter 350,000 and an Other Fee Amount of 50,000. (The 50,000 Other Fee Amount is an award fee for timely project completion.)
Click OK to save this information.
Return to the Maintain Project Budgets and ETC screen (Projects » Advanced Project Budgeting » Project Budget and ETC Master) and click the Recalculate button.
The screen displays Direct and Total budget of 600,000 Labor and Total budget of 1,000,000, Fee and Total budget of 400,000, a Total amount of 2,000,000 with an Undistributed Amount of 0.