If you are creating a budget for a proposal, backlog project or non-backlog project, Budgeting & Planning will use, for each staff resource, the hourly rate associated with the compensation change date closest to, but on or before, the project start date, which may not necessarily be the staff current rates. It is up to you to make sure the escalation factors are properly set in the project budget tool to reflect what increases would be expected for each staff resource after the project’s start date.
For an EAC the rule is the same except the compensation change date is related to the date the EAC is created rather than the project’s start date. When calculating burden, Budgeting & Planning will use PSR/JSR final rates if available, or the target rates from past fiscal year periods, while the current fiscal year target rates will be used for the current fiscal year periods and beyond. If you have set up rates for future fiscal year periods in Budgeting & Planning, they will be applied instead of just extrapolating the current fiscal year rates.
If you don’t want a project’s budgeted costs to change every time you open it, approve the budget to freeze it. Once approved, its details can be viewed without opening the project budget tool.
Resources that have an escalation factor of 1 means that Budgeting & Planning is using 100% of a resource’s determined rate.
If you find a resource that hasn’t had a rate increase in 2 years, enter the company default escalation rate squared, where appropriate; i.e. 1.03².
If you clone a proposal budget from a project budget, but with future start and end dates, you’ll get different numbers for resource costs each time you open the proposal budget because hourly rates change over time.
Assigned escalation factors persist; only hourly rates change.
When you’re awarded the contract and want to make a proposal budget real, Budgeting & Planning will pick the most recent rates for the resources based on the date you create the new backlog project budget. However, it will inherit the escalation factors from the proposal being copied. Therefore, you will need to adjust the escalations to reflect the rate increases.
When you create an EAC from a budget, the EAC will use staff hourly rates with effective dates less than or equal to the last closed period when the EAC is created—not the date the project started.
For an EAC, when the escalation month is set to 0 in Budgeting & Planning, then the escalation factor is increased when the employee’s hire/adjusted hire date falls into that period.
When the escalation month equals 1 through 12, then the escalation factor is increased when the first of the selected month falls in that period.
If the escalation date is the same as the creation date of the EAC, then the value is 1. It is assumed that the employee has had their pay raise in that same period, and that is the hourly rate that will be used for calculating labor.