deltek insight 2011: fun with rates: setting up complex indirect rate structures in costpoint

CP-306 Fun with Rates: Setting Up Complex Indirect Rate Structures in CostpointPresented bySusan Zimmermann, ZooM Consulting LLC

Gary Brenning, Deltek

04/18/20232 ©2011 Deltek, Inc. All Rights Reserved

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04/18/20233

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©2011 Deltek, Inc. All Rights Reserved

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Agenda Causes of a Complex Structure Costpoint Tools Defined Concepts and Examples Costpoint Setup Discussion Key Take Aways Conclusion


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.


Causes of a Complex Structure Acquisitions Divestitures Internal Growth and Diversity Flexibility in Costing Actions of a Competitor New Customers New Requirements from Current Customers


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.


Costpoint Indirect Rate Tools Defined Indirect Rate Tools

Cost Pool Service Centers Multi-jobs


Costpoint Indirect Rate Tools Defined

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 required



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 required



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 required


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 PAGs


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 organization


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 process


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 accounts


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.


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.


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 Description


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 Description


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 rate


Cost Creation Setup Set up wildcards to build pool cost for cost pool and service center


Base Creation Setup Set up wildcards to build pool base for cost pool and automated service center


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 Type


Cost Accounts Subtask Accounts can be listed in a range, but no wildcarding


Cost/Hours Base Subtask Projects, Accounts, and Organizations can be listed in a range, but no

wildcarding Must have a Debit Account and Organization


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%


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.


Questions?

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For additional questions regarding this presentation we can be reached at

Susan Zimmermann – [email protected]

Gary Brenning – [email protected]

mailto:[email protected]

mailto:[email protected]

deltek insight 2011: fun with rates: setting up complex indirect rate structures in costpoint

Education

base costs

base of calculation

hours cost

units cost

key takeaways costpoint

driving costs toaccounts

nonproject required95222012

nonproject required105222012