Direct Cost Ceilings

A direct cost ceiling is a limit on the amount of direct cost included in the revenue calculation or on the direct cost included on billings.  A direct cost ceiling is placed by individual project and account.  The amount of the direct cost will always display in the cost section of all the project reports, but any amount over the ceiling will not be included in the revenue amount or printed on a bill.

Use the following steps to set up direct costs ceilings:

1. Enter the account number in the Account field of the Project Direct Cost Ceiling Details block for which you want to place a ceiling.  The account may be at the summary or the detail level.

2. Enter the ceiling amount in the corresponding field. The amount can be positive or zero.

3. Select an RBA Code in the Apply to R/B/A drop-down box.  Select "Revenue" to have the ceiling apply to revenue only, "Billing" to apply to billing only, "All" to apply to both revenue and billing, or "None" if it does not apply to either.

Place direct cost ceilings at or below the revenue/billing level of the project.  The system ignores direct cost ceilings placed above the revenue/billing level. Direct cost ceilings placed above the revenue level also tend to slow down the Compute Revenue process (Projects\Process\Revenue). A validate function is available in the Compute Revenue screen that checks for direct cost ceilings that have inadvertently been placed above the revenue level.

The Compute Burden Cost program (Projects\Process\Project) populates the direct amount columns in the PROJ_SUM table with the full amount of the cost and the related burden on that cost.  

The Compute Revenue process (Projects\Process\Revenue) includes only the direct cost and related burden to the extent that the inception-to-date amount does not exceed the direct cost ceiling that has been set up for a specific account. This adjusted revenue amount is placed in the TOT_REV_TGT_AMT and TOT_REV_ACT_AMT columns in the PROJ_SUM table.  The fee on the direct cost and burden is limited to the amount not exceeding the direct cost ceiling. On the billing side, the amount of direct cost in excess of the ceiling will remain in the OPEN_BILLING_DETL table if the ceiling is increased or removed.   

Perform the following steps when you need to change or remove a direct cost ceiling:

1. Make the desired changes in the screen.

2. Execute the Compute Burden Cost (Projects\Process\Project) and Compute Revenue (Projects\Process\Revenue) programs if you have changed a direct cost ceiling.  

3. Run the Calculate Bills screen (Projects\Process\Billing) again if the change involves billings.  

Use an unallowable function code for accounts whose transactions should never be included in revenue or billings.  If the account in question is unallowable for one project, but allowable to some extent for another, use a direct cost ceiling.  If the cost is entirely unallowable, such as alcohol, advertising, or bad debt expenses, assign an unallowable function code to the account in the Project Account Groups screen.

Note: Use an unallowable function code in place of a zero ceiling because direct cost ceilings will slow down the Compute Revenue (Projects\Process\Revenue) processing time.

Enter, or use Lookup to select, a valid project on which you want to place a ceiling.

If a project does not have the Active checkbox selected in the Charging group box in the Basic Info screen in the Project User Flow (Projects\Maintain\Project) or if a project does not allow charging, you can still enter it in this field. However, inactive projects or those projects that do not allow charging will not be available in Lookup.

If you have not set up revenue information for a project, you can still enter the project in this field. However, the system will display the following warning: "Project information has not been set up in the Revenue Information screen."

Enter, or use Lookup to select, an account on which you want to place a direct cost ceiling.  

You can select accounts at any level (including summary levels) contained in the account group for the project, exclusive of the accounts that have a function code of "Revenue," "Billed," or "Unbilled-General."

If an account is not linked to the project account group that is assigned to the project in the Basic Project Info screen, the system will display the following warning: "This account is not set up for this project's Account Group Code."

The system will, however, allow you to enter this or any account in this table.  If accounts are entered in this screen that are not part of the project account group, there will be no direct cost ceiling calculated for that account, and the Compute Revenue (Projects\Process\Revenue) processing time will increase.  Exercise caution when selecting the accounts in this table.  

This field displays the name of each account  displayed in the Account field. Account names are defined in the Maintain Accounts screen (Accounting\Maintain\Accounts\Accounts).

Enter the ceiling amount for the account. Ceiling amounts can be a positive number or can be zero.  

If you are placing a ceiling of zero on an account because amounts charged to the account are considered unallowable, you should evaluate using the unallowable function code for this account in the project account group.  

See the Project Account Groups screen documentation for more information on this topic.

Enter the code that determines whether the Ceiling Amount applies to the Revenue, Billing, or Both computations. Available codes include the following:  "Revenue," "Billing," "ALL," or "None."  

If you decide to change this code after bills or revenue have already been calculated, you must run the Compute Revenue screen (Projects\Process\Revenue) and Calculate Bills screen (Projects\Process\Billing) after you have changed the R/B/A Code.