Deltek Insight 2011: Factors to Consider when Restructuring Indirect Rates
 

Deltek Insight 2011: Factors to Consider when Restructuring Indirect Rates

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    Deltek Insight 2011: Factors to Consider when Restructuring Indirect Rates Deltek Insight 2011: Factors to Consider when Restructuring Indirect Rates Presentation Transcript

    • GCS-301Factors to Considerwhen RestructuringIndirect RatesPresented byNeoSystems CorpJerry Falvey, IVVice President
    • 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 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • 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, La Reporting, GRC & & Management Accounting bor, Payroll Compliance3 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates Agenda  Key Concepts and Terms  GCS Mechanics  Managing Indirect Rates4 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates Defining Pools (FAR 31.203(c) - Indirect Costs)  Logical cost groupings with due consideration of reasons for incurring costs  Grouping based to permit allocation by a common basis  Allocations based on benefits received by intermediate & final cost objectives  Number and composition of groupings governed by practical considerations and should not unduly complicate allocation process  Costs incurred for the same purpose and in like circumstances must be treated consistently  After determination of base – it can not be fragmented (i.e. include allowable and unallowable cost in base)5 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates Pools Service Centers Fringe Benefits  Facilities Overhead pools  Computer/Network  Function (Eng, Mfg, etc)  Copier Service Centers  Business lines  Bid and Proposal Service Centers  Locations (client/company site)  Equipment Service Centers Material & Subcontracts General & Administrative6 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates Defining/redefining a cost structure  Maximize recovery of allowable costs  Manage and control costs  Competitive advantage  Compliance with regulations  Impact on existing cost reimbursable contracts  Single vs. multiple divisions7 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates Defining/redefining a cost structure  Government approval of system changes should be documented in writing  CAS covered contractors need to up date disclosure statement  Non CAS covered contracts need to obtain approval from their ACO  Submit request at least 60 days in advance  Cost Impact Summary  Detailed Cost Impact Analysis on reimbursable contracts  Indirect rate budgets  Pro forma Statement of Indirect Expenses8 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates  Why go through approval process  Consistency in bidding and accounting for award  Method remain consistent for life of award  Review of cost impact on other government awards  Client approval does not mean acceptance/approval of change  Multiple contract administrators  DCAA audit/review could identify non-compliant issues9 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates GCS and Indirect Rates  Components of a pool  GL Indirect cost accounts  Division (99 user defined)  Pool number ( 7 per division)  Pool Tier (3 tiers)  Base (18 options)  Variance, WIP, Inter-pool and Inter-divisional accounts  Tier Settings10 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates  GCS Indirect Tiers and Pool numbers  Tiering - allocation of indirect costs between intermediate costs objectives Fringe Benefits Tier 1 Service Centers Overhead Pools Tier 2 M&S Pools General & Administrative Pool Tier 311 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates Numbering pools Not a Smart Set up Best Practice  Fringe (Tier 1)  Overhead (Tier 2) 1 1-2  M&S Pool (Tier 2) 2 3-5  G&A Pool (Tier 3) 3 5- 6 4 712 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates Tier Settings Impacting Rates Don’t double burden labor M&S pool settings A – M&S pool costs included in G/A base B – M&S Excluded from base Uncheck if more than one Fringe pool Enter Fringe Credit Account Uncheck if more than one ringe pool13 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates  Tier 2 settings Includes Fringe on DL in pool M&S pool settings A – M&S pool costs included in G/A base Includes Fringe in pool B – M&S Excluded from base = lower rate base Option when using hours as Options for burdening B&P and IR&D base Y =Full, P =Partial, N -None14 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates Tier 3 Settings15 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates Utilizing Divisions to Maximize Indirect Cost Recovery  693 Potential Pools  26 Service Centers per division  System generated inter-pool entries  System generated inter-divisional entries  P&L visibility of indirect costs by business units/services/region16 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates Sample Company Pool Corporate Corporate Engineering Engineering Manufacturing Manufacturing Fringe Co-Wide Co-Wide Co-Wide Fringe Co-Wide Co-Wide Co-Wide Corporate Site OH Divisional Divisional Corporate Site OH Co-Wide Co-Wide Co-Wide G&A Co-Wide Co-Wide Co-Wide G&A Co-Wide Co-Wide Co-Wide17 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates Inter-pool and Inter-divisional rate process18 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates Process Overview Corporate Engineering Manufacturing Fringe 1 Fringe 1 Fringe I N T 2 2 2 E R P Overhead 3 Overhead 3 Overhead O O L 4 4 4 5 5 G&A G&A G&A INTERDIVISIONAL19 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates20 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect Rates21 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved
    • Factors to Consider whenRestructuring Indirect RatesQuestions/Comments www.twitter.com/deltek www.facebook.com/deltekinc www.linkedin.com/company/163414 www.youtube.com/user/deltekinc22 May 22, 2012 ©2011 Deltek, Inc. All Rights Reserved