You are on page 1of 8

R12 Oracle Project Accounting: Few Basic Concepts

August 26, 2014 neetaoraclepa Oracle Functional

https://knoworacle.wordpress.com/2014/08/26/r12-oracle-projectaccounting-few-basic-concepts/

8 Votes

Once we understand the basic terminologies of PA it would be


easier to move ahead with the process.
Project: A project is a primary unit of work that can be broken down
into one or more tasks.
Task: It is the small unit of work created under the project against
which transaction can be created.
Note: we cannot create transaction/expenditure items directly on
the project, hence it is mandatory for each project to have at least
one task.
Project Classes:
Oracle PA has provided three pre defined project classes.

Indirect projects Track overhead activities and costs of the


organization. Note: Does not generate revenue and invoicing
process.

Capital projects Track asset development activities and


costs, and costs are capitalized as one or more assets.

Contract projects Contract projects created with external


customer to track cost, revenue, and billing.
Project Type:
The project type controls how Oracle Project Foundation creates
and processes projects, and is a primary classification for the
projects your business manages. You must set up at least one
project type to create projects. You must set up project types for
each operating unit.

Examples of Indirect project: Admin Project, Transport Facility


etc.

Example of Contract project: External Project, Intercompany


project etc.
Expenditure category: It is the category created to classify the
different types of cost an organization may incur.
Revenue category: It is the category created to classify the
different types of revenue an organization may earn.
Expenditure type: It is the identification of cost that is associated
to an expenditure item. It is assigned to the expenditure category
and revenue category during the setups.
Expenditure class: It is the classification for an expenditure type
as how the expenditure type can be used to create transaction.
When an expenditure type is classified for a certain type then only
those expenditure class transactions are allowed to enter.
In Oracle Project Costing we have predefined expenditure
classes.
Labor:

Straight Time: For standard time entry. We use the cost rate
multiple with number of hours.
Overtime: Labor cost calculated using a premium cost rate
multiplied by hours.
Non-labor project costs:
Expense Reports Expense reports from Oracle Payables or
Oracle Internet Expenses. You cannot enter expense reports
directly into Oracle Project Costing. Expense reports that you import
into Oracle Project Costing must be fully accounted prior to import.
Usages You must specify the non-labor resource for every usage
item you charge to a project. For each expenditure type classified
by a Usage expenditure type class, you also define non-labor
resources and organizations that own each non-labor resource.
Supplier Invoices Supplier invoices, discounts, and payments
from Oracle Payables or an external system, and receipt accruals
from Oracle Purchasing.
Miscellaneous Transaction Miscellaneous Transactions are used
to track miscellaneous project costs. Examples of uses for
miscellaneous transactions are:

Fixed assets depreciation

Allocations

Interest charges
Burden Transaction Burden transactions track burden costs that
are calculated in an external system or calculated by Oracle Project
Costing as separate, summarized transactions. These costs are
created as a separate expenditure item that has a burdened cost

amount, but has a quantity and raw cost value of zero. You can
adjust burden transactions that are not system-generated.
Work In Process You use this expenditure type class for Oracle
Project Manufacturing WIP transactions that you interface from
Manufacturing to Oracle Project Costing. You can also use this
expenditure type class when you import other manufacturing costs
via Transaction Import or when you enter transactions via preapproved batch entry.
Inventory This expenditure type class is used for the following
transactions:

Oracle Project Manufacturing transactions that you import


from Manufacturing or Oracle Inventory.

Oracle Inventory Issues and Receipts that you import from


Oracle Inventory in a manufacturing or non-manufacturing
installation.
Example:
Sr No

Expenditure
Category

Revenue category

Expenditure type

Expenditure Class

Labor Time

Labor Revenue

Standard_Time

Straight Time

Vendor Cost

Service Revenue

Supplier_cost

Supplier Invoices

Travel Cost

Travel Revenue

Travel Cost

Expense Report & Supplier


Invoices

Misc Cost

Misc Revenue

Misc_Transactions

Miscellaneous and usages

In the above examples for line number 1, time can be entered for
expenditure type Standard_Time.
Similarly for line number 2 & 4 the respective expenditure class
transactions can be entered.
For line number 3 supplier invoices & expense reports can be
entered as it has been classified for two different classes.
Types of Currencies
Transaction amounts are stored in the following currencies:

Transaction Currency:The currency in which a project


transaction occurs.

Expenditure Functional Currency: The functional currency of


the expenditure operating unit.

Project Functional Currency: The functional currency of the


operating unit that owns the project.

Project Currency: The userdefined project currency.


When you enter transactions in a currency that is different from
functional currency or project currency, Oracle Project Costing must
convert the transaction amount to the functional and project
currencies. To convert transaction currencies, Oracle Project
Costing must first determine the exchange rate type and exchange
rate date.
Task Type:

Billable Item: It is a functionality associated at the task level


identifying the expenditure items created against the task to be
billed to the client.

Non Billable Item: It is functionality associated at the task level


identifying the expenditure items created on the task is only to
record the cost incurred against it.
Note: We can adjust the task at the expenditure item window to
make the non billable as billable and vice versa. This is called as
expenditure item adjustments.
Employee/Job bill rate Override: Incase a different rate needs to be
updated for a particular job or employee the same can be updated
at the project or task level.
The employee name needs to be entered along with the bill rate,
currency and period applicable. The rate at the task level overwrites
the rates at the project level and the rates at the project level
overwrites the rate of the bill rate schedule attached at the project
level.
Cost rate: It is the rate defined at the job or employee level to
derive at the basic cost for a particular expenditure item. The cost
rate scheduled are defined in the OU functional currency.
The cost rate can be defined at two levels:

In the setups -> Expenditure -> Rate schedule.

Overrides: Labor Costing Overrides


( Navigation: PA Responsibility->Setup->Costing->Labor->Labor
Costing Overrides.)
Bill rate: It is the rate defined at the job or employee level to derive
at an amount which will be billed to the client.
The bill rate can be defined at two levels:

1.

In the setups -> Expenditure -> Rate schedule.

2.

Overrides: At the project level as employee or job override.

For employee override: Navigation: Project -> Options ->


Bill Rates and Discount Overrides -> Employee Bill Rate and
Discount Overrides

For job override: Navigation: Project -> Options -> Bill Rates
and Discount Overrides -> Job Bill Rate and Discount Overrides
Transfer Price Rules and Schedule: Transfer price rules control
the calculation of transfer prices for labor and non-labor cross
charged transactions. To drive transfer price calculation for cross
charge transactions between the provider and receiver, use the
Transfer Price Schedule window to assign labor or non-labor (or
both) transfer price rules to the provider and receiver pair on a
schedule line
ICB: It is a process, where we have different legal entities involved,
and the OUs under these LE owns the employees and projects.

The OU to which the employee is assigned is called


PROVIDER OU.
The OU to which owns the project is called RECEIVER OU.
Note: In ICB process, an internal invoice is generated in provider
OU.
Borrowed And Lent: It is a process, where we have one legal
entity involved, and the OUs under the LE owns the employees and
projects. The employee and project can be in the same OU or
different OU but the LE has to be same.
Note: No internal invoice is generated in B&L process, only
accounting happens to post cost.

Labor: When an employee enters time on a specific project it is


known as charging efforts of the employee on the project for a given
time frame. This time further has some cost defined to calculate the
actual cost incurred by the employees on the project.
The calculation process of the raw cost for such labor/time entered
is called as Labor Cost.
The time can be entered via a third party tool or via the PA pre
approved batch.
Overtime Labor cost calculated using a premium cost rate
multiplied by hours.
Non labor expenditure types: The expenditure items created via
supplier invoices or expense reports are called as non labor
expenditure types. The expenditure types created need to be added
in the non labor expenditure schedules.
Navigation: PA -> Setups -> Expenditure -> Rate schedule.