Cost Pools

Cost pools are essentially fractions that are converted to percentages and are used to allocate indirect costs to projects.  The numerator, or pool cost, of the fraction consists of a group of costs such as overhead, fringe, or general and administrative expenses.  The denominator, or base, is made up of the costs that will have indirect costs allocated to them.  Pool costs are allocated to the base costs using the percentage of total pool costs to total base costs.

The allocation amount is derived as follows:

Cost Account/Org  (Amount)

Rate = -------------------------------------------------------------------------

Base Accounts/Orgs (Amount, Hours, or Units)

Rate * Individual Base Account/Org = Debit Allocation Amount

Service centers are pools that allocate costs using a base other than dollars.  A cost pool must use a base of either dollars or hours.  The base of a service center can be square feet, head count, number of copies, etc. and can be computed on a year-to-date, current period, or a standard cost per unit basis.  

The base of a service center can be automatic or manual.  If you select an automatic service center, you must use the Pool Base subtask to identify the account/organizations for the base.  An automatic service center differs from a cost pool because you can use current period basis allocations, standard unit cost, or allocation of service center cost directly to projects.  These functions are not available when you use cost pools.

If you select a manual service center, you must identify the base in the Maintain Allocation Journal screen (Projects\Transactions\Allocations).  You can use the Import Allocation Basis Journal screen (Projects\Utilities\Import)to populate the Allocation Basis Journal on a monthly basis.

You can use service centers to allocate costs to projects as a direct cost of that project or to another overhead pool as an indirect cost.  Cost pool allocations can allocate only to projects as indirect costs.

You must create new cost pools and service centers for each fiscal year.  A valid pool must have a pool number, fiscal year, allocation group, and pool type.  

You can set up pools for a new fiscal year or set up a new pool in the current year using two different tools in the system: the Clone feature and the Copy Pools toolkit.  

The Clone feature is available in this screen through the File menu. You can use the Clone feature to set up new pools, one at a time, using an existing pool as a template.

Use Copy Pools toolkit to clone one or all pools from a source fiscal year and allocation group into a destination fiscal year and allocation group.  

You should execute the Build Rate Application Table process (Projects\Process\Allocations) when you make a change to the Apply Rates to Projects checkbox, the sequence number, or the base of the pool. The Compute & Print Pools Rates screen (Projects\Process\Allocations) uses the rate application table to determine how to calculate indirect rates and to apply burden costs.  

Before computing indirect rates for the period, you should check the Allocation Groups screen (Projects\Configure\Allocations) to determine whether the Build Rate Application Table process should be run first. If the Rebuild Rate Application TableRequired checkbox is selected, you should run the Build Rate Application Table process before computing indirect rates.

Warning: If you do not execute the Build Rate Application Table at the correct time, your indirect rates will be misstated. You should always select the Rebuild of Rate Application Table Required checkbox in the Allocation Groups screen before calculating your indirect rates.

Enter, or use Lookup to select, an allocation group number that has been set up in the Allocation Groups screen (Projects\Configure\Allocations).

Group 1 is the primary allocation group, in that all the pools in that group can allocate to projects. You can, however, select any valid allocation group. The adjacent field displays the description of the allocation group.

Enter, or use Lookup to select, a fiscal year that has been set up in  the Fiscal Years screen.

You can choose any fiscal year, including years that have been closed.  Pools are identified by pool number and fiscal year.

Enter a number that corresponds to the sequence in which the pool will be allocated. The sequence number is required on this screen, and you can modify it in the Pool Processing Sequence screen (Projects\Maintain\Allocations).  

Some pools can be calculated simultaneously and can use the same sequence number.  Example: Pools 1-4 in Sequence 1, Pools 5-10 in Sequence 2, and Pools 11-20 in Sequence 3. Sequence 1 pools will be processed before Sequence 2 pools, etc.  Some pools will need to receive an allocation of costs from other pools before they can properly calculate a rate. These pools will require a higher sequence number than the pool sending the allocation.

Enter a number, up to six numeric characters, that identifies a specific pool within an allocation group and fiscal year.

The pool can be an indirect cost pool, which allocates in accordance with a system-derived amount, or a service center, which allocates in accordance with either a system-derived amount or a user-supplied

Enter, up to 25 alphanumeric characters, the name of the cost pool. The pool name entered here will be displayed on the Statement of Indirect Expenses.

Enter, up to six alphanumeric characters, the abbreviation of the cost pool. The abbreviated pool name will be displayed on the Project Status Report.