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ITD Fee on Cost

This method applies a set fee percentage to ITD allowable costs to arrive at revenue amounts. With this method, allowable costs and burdens within the current fiscal year must first be determined.

Costpoint compares costs incurred to costs ceilings to arrive at allowable costs. Cost ceilings can be set at the summary or detail account level. Cost ceilings can also be set at multiple project levels. Only ceilings set at project levels equal to or lower than the level of the revenue formula are observed, however. For example, you set up a three-level contract. The revenue formula exists at the second level, and costs are charged at the third level. Ceilings set at the second or third level are observed when allowable costs are determined; however, ceilings set and costs incurred at level one of the project are ignored.

Allowable costs and burdens for prior years are taken from the project history tables (PSR_PY_SUM and PSR_PY_BURD_SUM).

Once allowable costs and burdens have been determined, fee is applied. Costpoint multiplies the fee percentage from the revenue formula by ITD allowable costs to determine the fee amount. Fee overrides are next taken into consideration. Fee overrides are set by account for both direct and burden costs. Overrides can exist at higher project levels. For example, you set up a three-level project with the revenue formula at level 2. Costs are charged at level 3. The project has a fee percentage of 10%, except for travel costs, which receive a fee of 2%. You can set up a fee override percentage of 2% at the top level of the project for all project accounts to which travel is charged. This override is observed when revenue is calculated. Overrides can increase or decrease fee calculations.

Fees entered on the Manage Revenue Information are used when computing fees for this revenue calculation. Cost fee overrides and burden fee overrides can be set up on the Manage Cost Fee Overrides and the Manage Burden Fee Overrides screens, but the overrides are not used.

The next step is to apply contract fee ceilings. Contract fee ceilings are set on the Manage Total Ceilings screen. Funded value ceilings are also set in the Total Ceilings screen. If a code of R displays next to the fee amount, it is used for revenue purposes. If a code of A displays next to the fee amount, it is used as a ceiling for revenue and billing. If ITD fee computed exceeds the fee ceiling, a credit is placed in the revenue account of the owning organization at the project level at which the revenue formula is entered. Thus, the amount of fee calculated is the allowable fee.

Costpoint adds allowable fee to allowable costs and burdens to arrive at a current period revenue amount. It then sums revenue for the fiscal year up to and including the subperiod being calculated to arrive at year-to-date revenue recognized. It sums prior year revenue and adds the sum to year-to-date revenue to arrive at contract-to-date revenue recognized.

Next, Costpoint compares this revenue amount to the Contract and Funded Values set on the Manage Total Ceilings screen. If a code of R displays next to the amount, this value is used as a total revenue-ceiling amount. If a code of A displays, the total value is used as a ceiling for both revenue and billing. If total revenue computed exceeds the revenue ceiling, a credit is placed in the revenue account of the owning organization at the project level at which the revenue formula is entered. Thus, the amount calculated is allowable total revenue.

If you are posting revenue by performing organization, you need to run the Redistribute Revenue screen at this time to reallocate revenue across organizations that incurred the over-ceiling costs and fee proportionately.

Please note that revenue is calculated on a period-by-period basis. Allowable costs and fee incurred for a given period constitute revenue for that period. Adjustments made to prior period costs are reflected in the revenue recognized for that period. For example, assume the current period for revenue calculation is period 5. Adjusting timesheets are entered into period 3 for corrections to costs incurred in period 3. Financial Statements for period 3 are final, and are not rerun for this period. When you calculate revenue for period 5, allowable costs and fee are recognized as current period revenue for period 5 along with revenue on the adjusted timesheets for period 3. Revenue does not change in the Project Summary table for period 3. When you post revenue, revenue for all periods of the current fiscal year up to and including the period selected is summarized in the Project Summary table. In the GL_POST_SUM table, revenue account balances are summarized for all periods of the current fiscal year up to and including the period selected. The difference is posted to the current period in GL_POST_SUM. Therefore, on a period-by-period basis, revenue amounts in GL_POST_SUM may not equal revenue per the Project Summary table. The amounts tie on a YTD basis, however.