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Deltek Insight 2011: Fun with Rates: Setting Up Complex Indirect Rate Structures in Costpoint

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  • 1. CP-306Fun with Rates:Setting Up ComplexIndirect RateStructures inCostpointPresented bySusan Zimmermann, ZooMConsulting LLCGary Brenning, Deltek
  • 2. Enabling Success Project Human Financial Project Manufacturing Resources Management Management Do More Market Teaming CRM and Capture Win More Intelligence Solutions Management Know More Business Performance Management Winning More Increasing Project Improving Cash Reducing the Cost Business Visibility Flow of Compliance2 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 3. Do More Project Human Project Financial Manufacturing Resources Management Management Do More Market Teaming CRM and Capture Win More Intelligence Solutions Management Know More Business Performance Management Project Execution Project & Corp Time, Expense, Reporting, GRC & & Management Accounting Labor, Payroll Compliance3 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 4. Agenda  Causes of a Complex Structure  Costpoint Tools Defined  Concepts and Examples  Costpoint Setup Discussion  Key Take Aways  Conclusion4 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 5. Key Takeaways Costpoint has the flexibility to allocate costs in a variety of different ways to fit your business needs. Understand how other supporting elements aid in driving costs to accounts and organizations. Other ways to structure your accounts and organizations to fit your organizations needs. Use all the functionality that’s available in the system.5 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 6. Causes of a Complex Structure Acquisitions Divestitures Internal Growth and Diversity Flexibility in Costing Actions of a Competitor New Customers New Requirements from Current Customers6 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 7. Causes of a Complex Structure Multiple entities in database with multiple disclosure statements meaning same costs may be treated differently depending on disclosed practices of group. Merging of companies into single database with varying Costpoint architectures requiring need for flexibility. Decentralized back office accounting functions. Outsourced functions such as payroll. Internal reporting requirements. Lack of understanding.7 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 8. Costpoint Indirect Rate Tools Defined Indirect Rate Tools  Cost Pool  Service Centers  Multi-jobs8 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 9. Costpoint Indirect Rate ToolsDefined COST POOLS  A cost pool is an automated calculation of indirect costs allocated over base costs  The base of calculation must be dollars or hours  Cost and base are derived from account/organization combinations  Allocation accounts must be non-project required9 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 10. Costpoint Indirect Rate ToolsDefined SERVICE CENTERS  A service center is an automated calculation of indirect cost allocated over base costs that are derived automatically or manually  The base of calculation can be either dollars or hours, but usually consist of units  Cost is derived from account/organization combinations, base is either automated from hours or dollars or manual from units input  Allocation accounts can be project required or non-project required10 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 11. Costpoint Indirect Rate ToolsDefined MULTI-JOB ALLOCATIONS  A multi-job is an automated allocation of indirect or direct project cost allocated over base costs  The base of calculation can be either dollars, hours, or a percentage  Cost and base is derived from project/account/organization combinations  Allocation accounts must be project required11 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 12. Concepts and Examples The key to your rate structure is how do you drive a cost to an account and organization?  Projects  Vendor Defaults  Labor Defaults  Labor Groups  Leave Types  PAGs12 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 13. Concepts and Examples Fringe Organizations  Concept where fringe costs are coded to one organization number that corresponds to a single fringe pool versus coding to the home org of the employee.  Use when performing payroll and leave calculation external to Costpoint database.  Pro’s  Allows for easier coding of costs from external sources  More simplistic wildcarding for pools  Con’s  Lose ability to run income statement by originating employee organization13 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 14. Concepts and Examples Using Multi-Job Allocations for Service Centers Collects cost of a service center using single project and distributes as a direct project cost. Used when desire is to have service center costs charged directly back to a project as a line item. Pros  Allows flexibility of costing Cons  Disjointed rate calculation process14 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 15. Concepts and Examples Driving Pools – By Account with Flat Org Structure Separate set of accounts for flavors of overhead (ie Onsite versus offsite) No inherent logic in organization delineating pool Pros  Easier identification on Project status report  Flat organization structure allows for easier reorganizations (ie don’t have to change owning orgs on projects and employees if developing new structure) Cons  Wildcarding organizations for pools more difficult  Increases size of Chart of accounts15 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 16. Concepts and Examples Driving Pools – By Organization and Account Separate set of accounts for flavors of overhead (ie Onsite versus offsite) Inherent logic in organization delineating pool Pros  Ability to wild card pools  Maintains small chart of accounts Cons  If changing organization structure could lead to significant org changes on projects and account/org linkings at FY change.  Requires printing project reports by organization if needing to see delineations of labor by pool.16 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 17. Concepts and Examples Touch Charging with Residual Pool  Employees charge different projects based on what they are working on.  Charges such as general training that can’t be identified to a specific objective are charged to a residual pool and allocated over a basis.  Used when functions such as contracts will charge direct  Pros  Allows company to charge typical indirect function as direct.  Allows the flexibility needed to comply with disclosed practices  Cons  Requires significant training of employees to ensure they understand what is charged to residual pool.  Periodic review of charges to residual suggested to mitigate risk of improper charging.17 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 18. Cost Pool Setup  Cost Pool is determined by the Service Center box being unchecked  Required fields  Default Credit Account  Group  Fiscal Year  Pool Number  Sequence Number  Pool Type  Name  Short Name  Basis Description18 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 19. Service Center Setup  Service Center is determined by checking the service center box  Required fields  Default Credit Account  Group  Fiscal Year  Pool Number  Sequence Number  Pool Type  Name  Short Name  Basis Description19 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 20. Service Center Subtask  If Basis is Hours or Dollars, Calculation of Base can be either Automatic or Manual  If Basis is Units, Calculation of Base must be Manual  Can apply allocation at a standard rate20 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 21. Cost Creation Setup  Set up wildcards to build pool cost for cost pool and service center21 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 22. Base Creation Setup  Set up wildcards to build pool base for cost pool and automated service center22 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 23. Multi-job Setup  Multi-jobs can be based on costs, hours, or a percentage  Required fileds include –  Project Allocation Code  Project to Allocate  Allocation Method  Allocation Basis  Credit Infomation  Rate Type23 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 24. Cost Accounts Subtask  Accounts can be listed in a range, but no wildcarding24 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 25. Cost/Hours Base Subtask  Projects, Accounts, and Organizations can be listed in a range, but no wildcarding  Must have a Debit Account and Organization25 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 26. Percentage Base Subtask  Projects are listed individually with the Debit Account and Organization that the allocation should go to  Total Percentage must equal to 100%26 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 27. Conclusion Costpoint has the flexibility to allocate costs in a variety of different ways to fit your business needs. Understand how other supporting elements aid in driving costs to accounts and organizations. Other ways to structure your accounts and organizations to fit your organizations needs. Use all the functionality that’s available in the system.27 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 28. Questions? www.twitter.com/deltek www.facebook.com/deltekinc www.linkedin.com/company/163414 www.youtube.com/user/deltekinc28 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved
  • 29.  For additional questions regarding this presentation we can be reached at Susan Zimmermann – szimmermann@zoomconsultingllc.com Gary Brenning – GaryBrenning@deltek.com29 5/22/2012 ©2011 Deltek, Inc. All Rights Reserved