Oracle Projects Cost Collections

RAJU CHINTHAPATLA
Agenda

Cost Collection
Capitalization
Projects Billing
Invoicing and Revenue Process Flow
Billing and Revenue Generation Method
Billing Terminologies and Functionalities
Accounting
Reporting

RAJU CHINTHAPATLA
 Cost Collection

RAJU CHINTHAPATLA
Expenditure Type Class
• An Expenditure Type Class determines how an expenditure item will be
processed by Oracle.

• These are pre-defined by Oracle and cannot be added by the user:

– Straight Time
– Overtime
– Expense Reports
– Usages
– Supplier Invoice
– Misc Transactions
– Burden Transaction
– Work In Process
– Inventory

RAJU CHINTHAPATLA
Expenditure Type
• Expenditure Type is an extension of Expenditure Type Class and is user
defined.

• Expenditure Type is used for reporting and accounting purposes.

• Expenditure Type needs to be linked to one or more Exp Type Classes.

Exp Type Class Exp Type

Regular Pay
Straight Time
Bonus

Furniture & Fixtures

Supplier Invoice
Leasehold Improv.

RAJU CHINTHAPATLA
Expenditure Type Setup

RAJU CHINTHAPATLA
POET
• POET refers to:

– Project Number

– Organization (Expenditure)

– Expenditure Type

– Task Number

– Date (Expenditure)

• All project cost needs to have POET information.

• This may be entered manually by user (in Payables, Purchasing, Projects) or

may be derived automatically by Oracle (in Inventory, WIP).

RAJU CHINTHAPATLA
POET – AP Invoice Distribution

RAJU CHINTHAPATLA
Accounted vs. Unaccounted Cost
• In Projects context, Accounted costs means costs for which accounting entry
is already recorded in General Ledger (GL). Therefore, accounting will not be
generated in Projects module.

• Accounting Entry will be generated in Projects for Unaccounted transactions

and transferred to GL. This will be done using SubLedger Accounting in 12i.

RAJU CHINTHAPATLA
Sources of Project Cost
• Following are the main sources of project cost collection:

– Payables: Accounted supplier invoices with POET information will be interfaced

to Projects.

– Purchasing: POs and Requisitions will be interfaced as Commitments to

Projects. When AP invoice is interfaced, requisition will be removed.

– Expense Reports: iExpense allows entry of Project related expense reports.

Once reports are imported as invoice, these can be interfaced to Projects.

– Inventory and WIP: Accounted manufacturing cost will be interfaced if Project

Manufacturing is used.

– WebADI: Accounted or Unaccounted costs can be uploaded directly into

Projects using WebADI.

– Manual Exp Batch: Unaccounted pre-approved manual expenditure batches

can be entered in Projects.

– Burden Cost: Cost collected as above can further be loaded with markup in
Projects. This will create accounting for additional markup cost.

RAJU CHINTHAPATLA
Supplier Invoice Cost Collection
• Once a Supplier invoice is accounted in Payables, it can be collected
immediately in Projects.

• Program “PRC: Interface Supplier Costs” needs to be run to collect costs

from Payables.

RAJU CHINTHAPATLA
Cost Upload using WebADI
• Oracle provides 4 different WebADI to upload unaccounted as well as
accounted costs into Projects.

RAJU CHINTHAPATLA
Manual Exp Batch
• Manual Expenditure Batch can be entered for Timecards, Usage, Misc
Transaction, etc.

• After expenditure batch entry, following program needs to be run for

generating cost and accounting:

– PRC: Distribute Usage and Misc Costs

(This will change depending on Exp Type Class entered)

– PRC: Generate Cost Accounting Events

– PRC: Create Accounting

RAJU CHINTHAPATLA
Manual Exp Batch - Header

RAJU CHINTHAPATLA
Manual Exp Batch - Lines

RAJU CHINTHAPATLA
 Knowledge Check

RAJU CHINTHAPATLA
Question 1
Q. What does POET stands for?

-----------------

RAJU CHINTHAPATLA
Question 1
Q. What does POET stands for?

-----------------

Answer – Project Number

Organization (Expenditure)
Expenditure Type
Task Number
Date

RAJU CHINTHAPATLA
Question 2
Q. Projects does not uses SubLedger Accounting (SLA) for creating
accounting entry?

o True
o False

RAJU CHINTHAPATLA
Question 2
Q. Projects does not uses SubLedger Accounting (SLA) for creating
accounting entry?

o True
o False

Answer – False, Projects uses SLA for creating accounting entry for
unaccounted costs.

RAJU CHINTHAPATLA
Cost Collection - Exercise
• Upload a cost line using WebADI

RAJU CHINTHAPATLA
 Capitalization

RAJU CHINTHAPATLA
Capitalization
• Capitalization process can be done only for Capital projects.

• Capitalization process is very simple and completely integrated with Assets

module.

• Put the Date Placed in Service and run following programs:

– PRC: Generate Asset Lines

– PRC: Interface Assets to Oracle Assets

• Above process will interface the data to Fixed Assets Interface, from where it
can capitalized.

• No Accounting is generated in Project module for capitalization process.

Accounting will be generated in Assets module.

RAJU CHINTHAPATLA
Capitalization

RAJU CHINTHAPATLA
 Projects Billing

RAJU CHINTHAPATLA
Projects Billing
• Allows you to define revenue and invoicing rules for your projects, generate
revenue, create invoices, and integrate with other Oracle Applications to
process revenue and invoices.

• Enter project customers and contacts with whom you have negotiated and
contracted project work

• Enter agreements (contracts) from your customers and fund projects with
those agreements

• Generate revenue using various methods including time and materials,

percent complete, and cost plus

• Create draft invoices from detail transactions and milestones for online
approval by your project or accounting managers

• Interface revenue to Oracle General Ledger and invoices to Oracle

Receivables while maintaining a detail audit trail

• Report project revenue, invoice, and receivables status online and in reports

RAJU CHINTHAPATLA
Business Process

Customer Contract/Account Project Project Project

Manager Manager Resources Accountant
Create
Awards Create Enter Usage and
Project Enter
Contract Agreement Miscellaneous
Timecards,
Expense expenses, import
Define Tasks, project Reports inventory and
and Task options, manufacturing
Fund revenue and costs
Projects invoicing rules

Enter Project
Customer

Enter Cost
and Revenue Project Project
Budgets Budgets Costs

Interface
Accrue
Revenue to
Revenue
General Ledger
Project
Accountant
Interface to
Print Generate
Accounts
Invoices Invoices
Receivables

RAJU CHINTHAPATLA
Invoicing and Revenue
Process Flow

RAJU CHINTHAPATLA
 Project Invoicing Flow

Generate
Identify Generate
Start Events on
Milestone Draft Invoice
milestone

NO
Review Approve Run Cancel
Draft Invoice Invoice Draft Invoice

YES

Approve Run Interface Run

Run End
& Release Invoice to Tie Back
Auto Invoice
Invoice Receivables

RAJU CHINTHAPATLA
Revenue Generation Flow

Generate Generate
Identify
Start Events on Draft
Milestone
milestone Revenue

Review the NO Run Cancel

Release the
Revenue Draft
Revenue
Generated Revenue

YES

Interface
Revenue to End
GL

RAJU CHINTHAPATLA
Billing and Revenue
Generation Methods

RAJU CHINTHAPATLA
Billing and Revenue Generation Method
• Oracle Provides the following combination for Billing and Revenue Generation

Billing Method Description

Cost/Cost Accrues revenue and bills using the ratio of actual cost to
budgeted cost (percent complete)
Cost/Event Accrues revenue using the ratio of actual cost to budgeted
cost (percent complete) and bills based on events
Cost/Work Accrues revenue using the ratio of actual cost to budgeted
cost (percent complete) and bills as work occurs
Event/Event Accrues revenue and bills based on events

Event/Work Accrues revenue based on events and bills as work occurs

Work/Event Accrues revenue as work occurs and bills based on events

Work/Work Accrues revenue and bills as work occurs

RAJU CHINTHAPATLA
Distribution Rule in Project Template

RAJU CHINTHAPATLA
Distribution Rules – Cost/Cost
• Accrue on % Complete and Bill on % complete

Actual Cost on a Project = $ 50,000

Budgeted Cost on a Project = $ 80,000
Budgeted Revenue on a Project = $ 120,000

Revenue = (50,000/80,000)*120,000 = $ 75,000

Billing = (50,000/80,000)*120,000 = $ 75,000

RAJU CHINTHAPATLA
Distribution Rules – Cost/Event
• Accrue on % complete and Bill on events

Actual Cost on a Project = $ 50,000

Budgeted Cost on a Project = $ 80,000
Budgeted Revenue on a Project = $ 120,000
Event created for $ 80,000 when actual cost reaches $ 50,000

Revenue = (50,000/80,000)*120,000 = $ 75,000

Billing = $ 80,000

RAJU CHINTHAPATLA
Distribution Rules – Cost/Work
• Accrue on % complete and Bill as work occurs

Actual Cost on a Project = $ 50,000

Budgeted Cost on a Project = $ 80,000
Budgeted Revenue on a Project = $ 120,000
Employee on a project ‘A’ has worked for 100 hours.
Billing rate for this employee is 650

Revenue = (50,000/80,000)*120,000 = $ 75,000

Billing = 650*100 = $ 65,000

RAJU CHINTHAPATLA
Distribution Rules – Event/Event
• Accrue on events and bill on events

Actual Cost on a Project = $ 50,000

Budgeted Cost on a Project = $ 80,000
Budgeted Revenue on a Project = $ 120,000
Event created for $ 80,000 when actual cost reaches $ 50,000

Revenue = $ 80,000

Billing = $ 80,000

RAJU CHINTHAPATLA
Distribution Rules – Event/Work
• Accrue on events and bill as work occurs

Actual Cost on a Project = $ 50,000

Budgeted Cost on a Project = $ 80,000
Budgeted Revenue on a Project = $ 120,000

Event created for $ 80,000 when actual cost reaches $ 50,000

Employee on a project ‘A’ has worked for 100 hours.
Billing rate for this employee is $ 650 per hour

Revenue = $ 80,000

Billing = $ 650 * 100 = $ 65,000

RAJU CHINTHAPATLA
Distribution Rules – Work/Event
• Accrue as the work occurs and bill on events

Actual Cost on a Project = $ 50,000

Budgeted Cost on a Project = $ 80,000
Budgeted Revenue on a Project = $ 120,000

Event created for $ 80,000 when actual cost reaches $ 50,000

Employee on a project ‘A’ has worked for 100 hours.
Cost rate for this employee is $ 450 per hour

Revenue = $ 450 * 100 = $ 45,000

Billing = $ 80,000

RAJU CHINTHAPATLA
Distribution Rules – Work/Work
• Accrue as work occurs and bill on work occurs

Actual Cost on a Project = $ 50,000

Budgeted Cost on a Project = $ 80,000
Budgeted Revenue on a Project = $ 120,000

Employee on a project ‘A’ has worked for 100 hours.

Cost rate for this employee is $ 450 per hour
Billing rate for this employee is $ 650 per hour

Revenue = $ 450 * 100 = $ 45,000

Billing = $ 650 * 100 = $ 65,000

RAJU CHINTHAPATLA
 Knowledge Check

RAJU CHINTHAPATLA
Question
Q. Which distribution rule combinations Oracle provides for Revenue and
Invoice generation?

-----------------

RAJU CHINTHAPATLA
Question
Q. Which distribution rule combinations Oracle provides for Revenue and
Invoice generation?

-----------------

Answer – Cost/ Cost

Cost/ Event
Cost/ Work
Event/ Event
Event/ Work
Work/ Work
Work/ Event

RAJU CHINTHAPATLA
Billing Terminologies and
Functionalities

RAJU CHINTHAPATLA
Bill Rate
• Bill rate is an amount or percentage that is applied to a unit (of time and
materials) to calculate revenue and invoicing. Bill rates are used for time and
materials projects. You can specify the following bill rates in Oracle Projects:

– Employee Bill Rates: Standard hourly bill rates or percentage markups assigned to
employees. You can assign a different bill rate to each employee for customer
invoicing.
– Job Bill Rates: Standard hourly bill rates assigned by job title. For example, all
System Administrators can have one bill rate, while all Consultants can have a
different bill rate.
– Non–Labor Bill Rates: Standard bill rates or standard markups assigned to non–labor
expenditure type or non–labor resources.

RAJU CHINTHAPATLA
Event
• Signifies the occurrence of an event in the course of the project having a
revenue and/or invoice impact. Eg: A milestone, invoice reduction
– Automatic
– Manual

RAJU CHINTHAPATLA
Invoicing Terms
• Bill Through Date: The date through which Oracle Projects picks up eventsand
expenditure items to be billed on an invoice.

• Invoice Date: The date that is printed on the invoice and the date on which an
invoice receivables aging begins. You specify the invoice date when you generate
the invoice.

• Billing Cycle Code: The code that indicates when to generate invoices
automatically a project; determined from the project. The bill cycle code is used
only during mass invoice generation.

• First Bill Offset Days: The number of days that elapse between the project start
date and the date of the project’s first invoice; determined from the project. Bill
offset days are used only during mass invoice generation.

• Invoice Currency: The invoice currency selected for the project customer.

• Invoice Transaction Type: If you choose decentralized invoice processing

during implementation, this is the name of the organization that is the invoice
processing organization for the project owning organization. Otherwise, this is the
default transaction type of Projects Invoice or Projects Credit Memo based on the
PROJECTS INVOICES batch source.
RAJU CHINTHAPATLA
Invoice Generation
• You can generate an invoice for a single project, or for all projects having
potential invoices

– For a single project, run PRC: Generate Draft Invoice process

– Submit the PRC: Generate Draft Invoices for a Range of Projects in the
Submit Request window to run multiple invoice generation processes in
parallel.

• When you generate an invoice, Oracle Projects first select projects, tasks,
and their associated events and expenditure items that are eligible for billing

• Oracle Projects next creates invoice items for billing events, revenue events,
and for expenditure items based on invoice formats defined for labor and
non–labor items. When Oracle Projects creates invoice items, it also searches
for available funding for each invoice item.

RAJU CHINTHAPATLA
 Revenue & Invoice
Accounting

RAJU CHINTHAPATLA
Revenue and Invoice Accounting
• Revenue and Invoice Accounts Function: When you run the PRC: Interface
Revenue to General Ledger process and then the PRC: Interface Invoices to
Receivables process, Oracle Projects uses the Revenue and Invoice Accounts
function to determine which accounts to use when it interfaces draft revenue and
draft invoices.
• The Revenue and Invoice Accounts function consists of the following
transactions:
– Unbilled Receivable Account
– Accounts Receivable
– Invoice Rounding Account
– Unearned Revenue Account
– Invoice Write–Off Account

RAJU CHINTHAPATLA
Revenue and Invoice Accounting

• Revenue Accrual prior to billing

Account Debit Credit

Unbilled Receivables 200
Revenue 200

• Invoicing prior to Revenue Accrual

Account Debit Credit

Receivables 200
Unearned Revenue 200

RAJU CHINTHAPATLA
Revenue and Invoice Accounting
• Revenue Accrual prior to invoicing and invoice partial amount of work

Account Debit Credit

Unbilled Receivables 200
Revenue 200

Account Debit Credit

Receivables 100
Unbilled Receivables 100

RAJU CHINTHAPATLA
Revenue and Invoice Accounting
• Invoicing prior to Revenue Accrual and later Accrue more than Invoice

Account Debit Credit

Receivables 200
Unearned Revenue 200

Account Debit Credit

Unearned Revenue 200
Unbilled Receivables 100
Revenue 300

RAJU CHINTHAPATLA
Auto Accounting Rules

RAJU CHINTHAPATLA
Auto Accounting Rules

RAJU CHINTHAPATLA
 Reporting

RAJU CHINTHAPATLA
Project Status Inquiry
• Oracle has provided many seeded reports and online forms for reporting
purposes.

• Project Status Inquiry screen is an online dashboard, which provides real

time information on the cost, commitments, revenue, billing and budgets for
one or multiple projects.

• This form can be configured to meet complex requirement for online

reporting. Custom SQLs can be written to derive any data.

• This form is refreshed each time “PRC: Update Project Summary Amounts”
program is run.

RAJU CHINTHAPATLA
Project Status Inquiry

RAJU CHINTHAPATLA