Costpoint uses labor categories to classify labor hours for reporting and to provide project-specific job titles for which labor hours can be billed and used in revenue calculations. The focus of this special topic is Project Labor Categories (PLCs). This topic contains information on how to select the appropriate method of PLC initialization, how to process labor hours for use in revenue and billing calculations, how to utilize labor reports, how to understand PLC validation, and how to evaluate options available for PLC defaulting on timesheets.
The system has two types of labor categories: General Labor Categories (GLCs) and Project Labor Categories (PLCs). They are used in the following manner:
General Labor Category (GLCs) (otherwise known as the company classification) are used to classify employee hours. A GLC is a required entry for all labor transactions and is used for all employees regardless if they are incurred for direct or indirect hours. GLCs cannot be used with labor rates for billing and revenue. Most labor reports are available by GLC.
Project Labor Categories (PLCs) are used to identify a labor title that is used on a particular project. The PLC is then assigned a labor rate and is used in billing and revenue calculations. There are several methods available for using PLCs. Only PLCs can have labor rates associated with them.
GLCs can be defaulted on each timesheet line and are stored with the hours charged against them. You must assign a GLC to all employees in the Basic Employee Info screen (People » Employee » Basic Employee Setup). GLCs are required for all labor transactions and are stored in the Maintain Labor Summary screen (Projects » Project Setup » Project History) and Timesheet History screens in Costpoint Labor. You can use GLCs for reporting in the Projects, Human Resources, and Labor modules.
PLCs are optional and are usually used when the project is using Loaded Labor or Multiplier revenue and billing methods. You must associate labor rates with the PLCs if you are using PLCs in revenue and billing computations. You can also use PLCs to customize job titles for projects when the GLC description is not specific enough or when an employee’s job title changes on specific projects. The PLC, if set up properly, also defaults onto each timesheet line and is stored with the hours charged against it.
In order to use PLCs effectively on your project, you should identify the need for labor categories on your project before any labor is charged to the project.You need to use PLCs on your project if you are using an hours-based (loaded labor) revenue or billing formula or if you use hours-based multiplier formulas for revenue or billing. Hours-based formulas are those that use hours incurred times a labor rate to derive revenue or produce a bill. Often the type of bill that is required by the client is identified in the contract.
Once you have determined that PLCs are needed for your project you must evaluate the following options:
Project Level - At which level of the project should I set up my PLC rate tables?
Rate Method - Does my project require project-specific job titles and billing rates, or can I use the company-wide labor rates?
Labor Rates and Rate Types - What labor rates do I need for my project, and are any special calculations required?
Define Rate Sequence - In which tables do the labor rates exist for my project?
The level of the project where labor rates tables should be set up could be a “summary level project” if rates can be used across several projects or the level of the project at which labor is charged or the transaction level. If you have selected the Top Level Workforce check box in the Maintain Project Master screen (Projects » Project Setup » Project Master)you should set up the labor rates at the top level of the project. You must also enter the top level of the project when initializing the Assign PLCs to Projects, Project Employee Work Force, Project Vendor Work Force, Assign PLC to Employee Work Force, Assign PLC to Vendor Work Force, and the Project PLC Rates by Employee/Vendor screens (all in Projects » Project Setup » Project Labor).
You can use a source project for your labor rates if the labor categories and billing rates that you need for your project are already being used on another project. You can set this up in the Define Rate Sequence screen (Projects » Project Setup » Revenue Setup). The system automatically substitutes the source project for the transaction project during PLC validation and defaulting and during the Load Labor Rates process (Projects » Cost and Revenue Processing » Revenue Processing or Projects » Billing » Prepare Billings). If you decide to use this method, you should enter the transaction level of the project in the Project field and enter the source project in the Source Project field of the Define Rate Sequence screen. The source project is the project for which labor rates have been established and for which you want to use these rates.
Three rate methods are available for initializing project PLCs and labor rates. The method selected determines how PLCs are validated during transaction entry. For example, if you select the project-specific PLCs, only those PLCs that have been assigned to the project are valid for the project during transaction entry .
The method selected for a particular project depends on how specific the labor description and billing rates need to be for that project. In some cases, a company-wide billing rate and PLC description will work, and in others a more project-specific rate is necessary. The PLC rate method is selected on a project-by-project basis. There is no need to have one method for all projects.
The rate methods are as follows:
Company-wide labor categories and billing rates - Use company-wide PLCs if billing rates and labor descriptions do not vary from project to project. You can use company-wide billing rates for most projects and use other rate methods for projects that require more specific descriptions and billing rates. Use the Set Up Project Labor Categories (PLC) screen (Projects » Project Setup » Project Labor) to enter the PLC and related description. You must first enter all PLCs in this screen regardless of the rate method that you select. Only PLCs entered in this screen will be valid for the project-specific screens that follow. If you select company-wide billing rates, use the Billing Rates subtask of the Set Up Project Labor Categories screen (PLC) screen to enter billing rates. Company-wide PLCs are the easiest to initialize and maintain. If you are using a PLC discount method, you can set up the discount percent in this screen.
Project-specific PLCs - Use project-specific PLCs if there are specific PLCs that are required for the project. Use the Assign PLC to Projects screen (Projects » Project Setup » Project Labor) to create a set of PLCs that are valid for the project. Once you have selected this method, only those PLCs that are assigned to the project will be valid. The transaction entry screens will use the PLCs in the Assign PLCs to Projects screen to validate the project/PLC combination entered. You must first enter PLCs in the Assign PLCs to Projects screen if you plan to use a project work force for your project. Use the Project PLC Rates screen (Projects » Project Setup » Project Labor) to enter the billing rates associated with the project-specific PLCs. You may have specific labor category titles required for your project. You can customize the PLC descriptions in this screen. This rate method requires more maintenance than the company-wide PLCs method. If the source project in the Define Rate Sequence screen (Projects » Project Setup » Revenue Setup) is using a discount method of PLC Discounts, you can enter the discount percent in this screen.
Project Work Force - Use this method if you have specific PLCs and employees, vendors, or vendor employees that are required on a project or you want to have a PLC default by employee on the timesheet for this project. This method requires the most maintenance of all the rate methods. Initialize this method in the Project Employee Work Force, Project Vendor Work Force, Project Vendor Employee Workforce, Assign PLC to Employee Work Force, Assign PLC to Vendor Work Force, and Assign PLC To Vendor Employee Workforce screens (all in Projects » Project Setup » Project Labor). Use the Project Employee Work Force, Project Vendor Work Force, and Project Vendor Employee Workforce screens to select the employees, vendors, and vendor employees that are valid for this project. If you select the Project Workforce Required check box in the Maintain Project Master screen (Projects » Project Setup » Project Master), only the employees/vendors/vendor employees in these screens will be valid for the project. If you do not select the Project Workforce Required check box, there will be no validation of employees, vendors, or vendor employees. However, if you want to use the work force for PLC defaulting, you must identify the employees, vendors, and vendor employees for this project. Use the Assign PLC to Employee Work Force, Assign PLC to Vendor Work Force, or Assign PLC to Vendor Employees screens to assign PLCs to the employees, vendors, or vendor employees in the work force. You can assign multiple PLCs to an employee, vendor, or a vendor employee, but only one PLC can be the default for that employee, vendor, or vendor employee. Labor rates are assigned for the work force in Project PLC Rates by Employee/Vendor screen. This method prevents charging of employees and PLCs that are not valid for the project. If the source project in the Define Rate Sequence screen (Projects » Project Setup » Revenue Setup) is using a discount method of PLC Discounts, you can enter the discount percent in this screen.
Rate types are used to calculate the labor rates that are inserted into the Maintain Labor Summary screen (Projects » Project Setup » Project History) and the Maintain Open Billing Detail screen (Projects » Billing » Prepare Billings). The Load Labor Rates screen (Projects » Cost and Revenue Processing » Revenue Processing or Projects » Billing » Prepare Billings) calculates the billing rates based on the rate type selected for the project and PLC. The rate types available are as follows:
Actual Rate (A) - This rate is calculated by dividing the total labor cost by the hours incurred. The Post Labor Distribution process (People » Labor » Timesheets) posts the labor cost and hours directly from the timesheet line for the project/account/organization/GLC/PLC to the Maintain Open Billing Detail screen (Projects » Billing » Prepare Billings) and the Maintain Labor Summary screen (Projects » Project Setup » Project History). The labor cost on the timesheet can be affected by auto-adjustment, or several labor processes including the Wage Determination Rates screen (People » Labor » Labor Rate), the Recompute OT for Weighted Average Rate screen (People » Labor » Overtime Processing of Timesheets), and the Alloc Comp OT across TS lines screen (People » Labor » Overtime Processing of Timesheets). As a result, the rate that is calculated and inserted into the Maintain Labor Summary and Maintain Open Billing Detail screens may not be equal to an employees standard hourly rate. If you want the employees standard hourly rate in the Salary Info and History screen (People » Employee » Basic Employee Setup), you should select the "S" rate method. This rate type is usually used for multiplier billing and revenue formulas.
Billing Rate (B) - This is the rate that is entered into the billing rates screens. There will be no further calculation to the rate entered. This is the rate type that is generally used by Time & Materials billing and revenue formulas. These rates are generally defined by the contract for the project.
Ceiling Rates (C) - This is the lower of the Actual Rate or a Ceiling Rate entered in billing rate screen. The system first calculates the actual rate and then compares it to the rate entered in the billing rate screen and uses the lower of the two. The billing rate screen used to obtain the ceiling rate will depend on the sequence in the Define Rate Sequence screen. This rate type is usually used for multiplier billing and revenue formulas.
Standard (S) - This is the standard hourly rate for the employee. This rate is derived from the employees record in the Salary Info and History screen (People » Employee » Basic Employee Setup). The Load Labor Rates screen (Projects » Cost and Revenue Processing » Revenue Processing or Projects » Billing » Prepare Billings) identifies the employee for each transaction and selects the rate in the Effective Rate field in the Rates group box of the Salary Info and History screen. See the screen documentation for this field to obtain more information on how the Effective Rate field is calculated. This rate type is only for employees and should not be used when entering vendor or subcontractor labor. This rate type is usually used for multiplier billing and revenue formulas.
Transactional (T) - This rate is used by projects that bill using foreign currencies. To use this rate type, enter the labor rate that you want to use in the currency in which you want to bill. If you use the T rate type no conversion will be used for those labor rates. The rate entered in the billing rates screens will be used on the bills. If you bill in foreign currencies and you do not use T rates, exchange rates will be applied to the labor rates during the Load Labor Rates process (Projects » Cost and Revenue Processing » Revenue Processing or Projects » Billing » Prepare Billings).
Use the Define Rate Sequence screen (Projects » Project Setup » Revenue Setup) for PLC validation and for the selection of labor rates for billing and revenue. The system uses the following methods to perform these tasks:
PLC Validation The system validates PLCs based on the source project in the Define Rate Sequence screen (Projects » Project Setup » Revenue Setup). The project entered in the Project field is the transaction project or the project that is entered in the transaction screen. It should be the transaction level of the project or the top-level project if the Use Top Level Work Force check box is selected in the Maintain Project Master screen (Projects » Project Setup » Project Master). The source project is the project that the system will use to validate the PLC used with transaction project in the transaction entry screen. The system will substitute the source project for the transaction project when performing PLC validations. The transaction project and the source project are very often the same project number. Use a source project that is different from the transaction project if you have an existing project that has the same PLC and labor rate requirements as the project that you are initializing. You must set up a record in the Define Rate Sequence screen for all projects that will use PLCs.
Labor Rate Selection - The Load Labor Rates screen (Projects » Cost and Revenue Processing » Revenue Processing or Projects » Billing » Prepare Billings) uses the source project, PLC, sequence number, and effective date range in the Define Rate Sequence table to select the labor rates that should be inserted into the Open Billing Detail and Labor History tables. The source project in the Define Rate Sequence screen (Projects » Project Setup » Revenue Setup) is used to select labor rates. Very often the transaction project and the source project are the same but when they are not the same, the source project will be used. Since project labor rates can be set up in several screens, you must establish a sequence of screens that the Load Labor Rates process should use for selecting labor rates. The labor rate selected must also have an effective date range that includes the effective date in the Maintain Labor Summary screen (Projects » Project Setup » Project History) and the Maintain Open Billing Detail screen (Projects » Billing » Prepare Billings). The Define Rate Sequence screen contains codes that refer to the screen in which labor rates are located for that project. Select the code of the first screen from which you want to select labor rates. This screen should be assigned a Seq No of 1. The next screen from which you want to select labor rates should be assigned a Seq No of 2 and so forth. The Load Labor Rates process will continue through all the sequences in the Define Rate Sequence screen until one is found for the PLC and effective date range. If no matches are found, no rate will be inserted into the billing and revenue tables. The system-defined rate table codes are as follows:
C (Set up Project Labor Categories) - These labor rates are in the Billing Rates subtask of the Set Up Project Labor Categories (PLC) screen (Projects » Project Setup » Project Labor). They are the company-wide rates.
PC (Project PLC Rates) - These labor rates are in the Project PLC Rates screen (Projects » Project Setup » Project Labor) and are considered project-specific labor rates.
PEC (Project PLC Rates by Employee) - These labor rates are set up in the Project PLC Rates by Employee/Vendor screen (Projects » Project Setup » Project Labor). These labor rates are those that are associated with the project work force.
PVC (Project PLC Rates by Employee/Vendor) - These labor rates are set up in the Project PLC Rates by Employee/Vendor screen (Projects » Project Setup » Project Labor). These labor rates are those that are associated with the project work force.
The Load Labor Rates process (Projects » Cost and Revenue Processing » Revenue Processing or Projects » Billing » Prepare Billings) tells Costpoint how to select the correct labor rate to compute revenue and billing on hours-based billing and revenue formulas. This process uses the PLC entered in the transaction entry screen,the source project,the effective date of the transaction, and the rate type to select the labor rate that is inserted into the Maintain Open Billing Detail screen (Projects » Billing » Prepare Billings) and the Maintain Labor Summary screen (Projects » Project Setup » Project History). Once the correct labor rate is inserted into these tables, you can compute revenue and calculate bills.
The project number entered in the transaction entry screen is used to find the correct Define Rate Sequence record. The Load Labor Rates process identifies the source project associated with the transaction project number using the first row (or sequence) in the table. Using the rate table code on the first row of the Define Rate Sequence screen for the transaction project, the system identifies the screen from which to select a labor rate for the transaction PLC. The system then compares the effective date range for the transaction PLC to the effective date in the Maintain Labor Summary and Maintain Open Billing Detail screens If the effective date in the Maintain Labor Summary and/or Maintain Open Billing Detail screens falls within the date range for the transaction PLC, the system uses the rate type to calculate the labor rate. The labor rate is inserted into the Billing Rate field in the Maintain Labor Summary screen and the Billing Rate field in the Maintain Open Billing Detail screens. The Compute Revenue screen (Projects » Cost and Revenue Processing » Revenue Processing) and Calculate Billings screen (Projects » Billing » Calculate Billings) use this information to calculate revenue and billings.If the T&M Rate Sequence Search for PLC Source Project in the Project Settings screen (Projects » Project Setup » Controls) is set to All Rows, the process previously described continues searching the Define Rate Sequence table record until the transaction PLC is located.
The second area involved in determining PLC setup is the maintenance that you want to undertake in order to get a correct PLC to default on a timesheet. You have a variety of choices:
No Timesheet Default - You must use the Set Up Project Labor Categories (PLC) screen (Projects » Project Setup » Project Labor) to establish the company-wide list of PLCs that are valid for all projects. Then you must manually enter the appropriate PLCs on the timesheet screen. As long as the Labor Category you enter on the timesheet exists in the company-wide set of PLCs, it is valid for the project charged.
The fact that you did not use the Assign PLC to Projects screen (Projects » Project Setup » Project Labor) (to assign each of the applicable PLCs to specific projects) precludes you from using separate labor rates for a Labor Category within a project. If you must have separate project PLC rates for a given Labor Category for each project, but do not want to worry about a default on timesheets, you must set up using the following screens:
Set Up Project Labor Categories (PLC) (Projects » Project Setup » Project Labor
Assign PLC to Projects (Projects » Project Setup » Project Labor
Project PLC Rates (Projects » Project Setup » Project Labor
Timesheet Default menu in Costpoint Labor - In this case, you have multiple areas within Costpoint Labor that you can use to provide a default PLC. These include the following:
Set up a default project labor category in the Employee Project-Acct-Grp TS Defaults screen (People » Labor » Timesheet Default) either by project number, by labor group, or by employee.
Set up a default project labor category for each general labor category in the General Labor Categories screen (click People»Labor»Labor Controls).
To set up this level of default, use the following screens:
Set Up Project Labor Categories (PLC) (Projects » Project Setup » Project Labor)
Employee Project-Acct-Grp TS Defaults (People » Labor » Timesheet Default) (Optional)
General Labor Categories (People » Labor » Labor Controls) (Optional)
Timesheet Default Based on Mapping of Project Labor Category to General Labor Category for a Specific Project - In this case, you set up a default by "mapping" each PLC for a specific project to a "company-wide classification," or GLC. This will provide a correct default in MOST cases, but will often require that the default PLC for certain employees be manually overwritten on the timesheet.
To set up this level of default, use the following screens:
Set Up Project Labor Categories (PLC) (Projects » Project Setup » Project Labor)
Assign PLC to Projects (Projects » Project Setup » Project Labor)
Link GLC to Project PLC (Projects » Project Setup » Project Labor)
Timesheet Default Based on Employee ID for a Specific Project. This is the most detailed way to ensure that the PLC default is correct. It is also the level of default that requires the most maintenance, but this method also requires fewer manual PLC changes on the timesheet. In this case, assign a PLC to each employee who can work on a given project. For example: Joe Smith and Ed Jones both have a company classification (GLC) of Engineer. Both work on project "1234;" however, Joe charges as an Engineer and Ed charges as a Senior Engineer. Here, you simply assign the appropriate category to each employee in order to provide the correct Project Labor Category default.
In order to set up the default at this level, use the following screens:
Set Up Project Labor Categories (PLC) (Projects » Project Setup » Project Labor)
Assign PLC to Projects (Projects » Project Setup » Project Labor)
Project Employee Work Force (Projects » Project Setup » Project Labor) or Project Vendor Work Force (Projects » Project Setup » Project Labor)
Assign PLC to Employee Work Force (Projects » Project Setup » Project Labor) or Assign PLC to Vendor Work Force (Projects » Project Setup » Project Labor)
Using the Assign PLC to Employee (or Vendor) Work Force screens, you can make more than one PLC valid for an individual for a specific project; however, you must specify the "normal default" category for the timesheet. The category marked as the default displays on the timesheet, but can be overwritten by any of the other categories listed on the Assign PLC to Employee (or Vendor) Work Force screen.
When a project number is entered on a timesheet line, the system searches the following screens in order for a default PLC:
Projects » Project Setup » Project Labor
Employee Project TS Defaults (People » Labor » Timesheet Default)
Link GLC to Project PLC (Projects » Project Setup » Project Labor)
Employee Project-Acct-Grp TS Defaults (People » Labor » Timesheet Default)
General Labor Categories (People » Labor » Labor Controls)
Labor-Grp Project-Acct-Grp TS Defaults (People » Labor » Timesheet Default)
If no PLC is found, the system will offer no default and allow entry of a valid category from the Set Up Project Labor Categories (PLC) screen (Projects » Project Setup » Project Labor). Additionally, if a default is found, but it is not the desired PLC, you can generally override the default with a valid category. The only exception is when you have selected the Project Work Force Required check box and either the PLC or the employee is not found on the Assign PLC to Employee Work Force screen.
As you can see, you can achieve a great deal of variation with the PLCs and their associated Billing Rates. To test your choice of setup for a timesheet default, enter the setup for one employee or GLC, and then enter a "test" timesheet. If the correct PLC is defaulted, your setup is correct. Remember, DO NOT SAVE the "test" timesheet.
Testing your setup for billing rates requires considerably more effort. If you need to test your billing rate setup, please contact your System Consultant.