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Loaded Labor Rate

Before computing revenue for T&M-based contracts, you must run the Load Labor Rates screen.

This program uses the T&M Rate Sequence table to determine which billing rate should be used for the labor. This labor rate is then stored in the Labor History table with actual hours. Therefore, if more than one accounting period has labor transactions since the last time this program was run, you must run this process for each period with labor transactions.

You must charge hours used in the calculation of T&M Revenue to an account with a Function Code of LABOR. Hours charged to accounts with any other function code are not recognized. For subcontractor and vendor hours that are to be billed and recognized as T&M revenue, be sure to set up an account with a Function Code of LABOR. A Project Labor Category (PLC) must be entered on the timesheet for any hours included in the T&M revenue calculation.

The program first calculates allowable hours by comparing actual hours to ceiling amounts. Ceilings are set by employee, vender, and by labor category. You can also set ceilings at multiple project levels. Only ceilings at project levels equal to or lower than the project 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 in the determination of allowable hours. Ceilings set at level one of the project are ignored. If a ceiling is set for an employee and an additional ceiling is set for the labor category of that employee, the employee ceiling takes precedence. For example, an employee is limited to charging 100 hours to a project. His labor category may charge 250 hours to the project. When Costpoint calculates allowable hours, hours in excess of 100 charged by this employee are considered over ceiling. The hours of other employees can be used in the calculation of allowable hours for this labor category; however, this employee's hours are not considered allowable. In other words, the program determines allowable hours by employee as the first phase of the calculation. Allowable hours by labor category are determined during the second phase of the calculation.

After allowable hours are determined, they are copied to the Labor History table. The billing rate is then multiplied by the allowable hours to determine the total T&M revenue.

The program compares this revenue amount to the contract value and funded value 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. Revenue for the fiscal year up to and including the subperiod being calculated is summarized to arrive at year to date revenue recognized. If a code of A displays next to the amount, this value is used as a total revenue and billing ceiling amount. Prior year revenue from the Manage Prior Year Cost and Revenue screen is summarized and added to year to date revenue to arrive at contract-to-date revenue recognized. This amount can be positive or negative. If total revenue computed exceeds the revenue ceiling, the program places a credit in the PROJ_SUM table on the revenue account line 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 org, you must 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. You enter adjusting timesheets 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 revenue for period 5 is calculated, allowable costs and fee are recognized as current period revenue for period 5 along with the revenue on the adjusted timesheets entered in period 3. In the Project Summary table, revenue for period 3 does not change. When revenue is posted, 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.