Oracle Projects - An Overview

© 2006.Deloitte Consulting India Private Limited. All rights reserved.

Oracle Projects – An Overview

Day 2

© 2006.Deloitte Consulting India Private Limited. All rights reserved.

Agenda

OverviewBasic ConceptsProcess FlowProject Template and ProjectBudgetsAgreement and FundingCost CollectionCapitalizationProjects BillingInvoicing and Revenue Process FlowBilling and Revenue Generation MethodBilling Terminologies and FunctionalitiesAccountingReporting

Copyright © 2006 Deloitte Development LLC. All rights reserved.3

Cost Collection


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


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.

Straight Time

Supplier Invoice

Regular Pay

Bonus

Furniture & Fixtures

Exp Type Class Exp Type

Leasehold Improv.


Expenditure Type Setup


P O E T • 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).


POET – AP Invoice Distribution


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.


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.


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.


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


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


Manual Exp Batch - Header


Manual Exp Batch - Lines


Knowledge Check


Question 1Q. What does POET stands for?

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


Question 1Q. What does POET stands for?

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

Answer – Project Number Organization (Expenditure)Expenditure TypeTask Number Date


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

o Trueo False


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

o Trueo False

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


Cost Collection - Exercise• Upload a cost line using WebADI


Capitalization


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.


Capitalization


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

Projects Billing


Business Process

Create Project

Define Tasks, project and Task options,

revenue and invoicing rules

Project Manager

Enter Project Customer

ProjectResources

Awards Contract

Customer

Project Costs

Create Agreement

Contract/Account Manager

Fund Projects

Enter Timecards, Expense Reports

Project Accountant

Enter Usage and Miscellaneous

expenses, import inventory and manufacturing

costs

Enter Cost and Revenue

BudgetsProject

Budgets

Project Accountant

Accrue Revenue

Interface Revenue to

General Ledger

Generate Invoices

Interface to Accounts

Receivables

Print Invoices


Invoicing and Revenue Process Flow

© 2006.Deloitte Consulting India Private Limited. All rights reserved.29

Start Identify Milestone

GenerateEvents onmilestone

GenerateDraft Invoice

ReviewDraft Invoice

ApproveInvoice

NO

YES

Run CancelDraft Invoice

Approve& Release Invoice

Run InterfaceInvoice to

ReceivablesRun

Auto InvoiceRun

Tie Back End

Project Invoicing Flow


Revenue Generation Flow

Start Identify Milestone

GenerateEvents onmilestone

GenerateDraft

Revenue

Review theRevenue

GeneratedRelease the

RevenueNO

YES

Run CancelDraft

Revenue

InterfaceRevenue to

GLEnd


Billing and Revenue Generation Methods


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


Distribution Rule in Project Template


Distribution Rules – Cost/Cost

• Accrue on % Complete and Bill on % complete

Actual Cost on a Project = $ 50,000Budgeted Cost on a Project = $ 80,000Budgeted Revenue on a Project = $ 120,000

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

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


Distribution Rules – Cost/Event

• Accrue on % complete and Bill on events

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

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

Billing = $ 80,000


Distribution Rules – Cost/Work

• Accrue on % complete and Bill as work occurs

Actual Cost on a Project = $ 50,000Budgeted Cost on a Project = $ 80,000Budgeted Revenue on a Project = $ 120,000Employee 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


Distribution Rules – Event/Event

• Accrue on events and bill on events

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

Revenue = $ 80,000

Billing = $ 80,000


Distribution Rules – Event/Work

• Accrue on events and bill as work occurs


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


Distribution Rules – Work/Event

• Accrue as the work occurs and bill on events


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


Distribution Rules – Work/Work

• Accrue as work occurs and bill on work occurs


Employee on a project ‘A’ has worked for 100 hours.Cost rate for this employee is $ 450 per hourBilling rate for this employee is $ 650 per hour

Revenue = $ 450 * 100 = $ 45,000

Billing = $ 650 * 100 = $ 65,000


Knowledge Check


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

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


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

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

Answer – Cost/ CostCost/ EventCost/ WorkEvent/ EventEvent/ WorkWork/ WorkWork/ Event


Billing Terminologies and Functionalities


• 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.

Bill Rate


• 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

Event


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.


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.


Revenue & Invoice Accounting


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


Revenue and Invoice Accounting

• Revenue Accrual prior to billing

Account Debit CreditUnbilled Receivables 200Revenue 200

• Invoicing prior to Revenue Accrual

Account Debit CreditReceivables 200Unearned Revenue 200


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

Account Debit CreditUnbilled Receivables 200Revenue 200

Account Debit CreditReceivables 100Unbilled Receivables 100


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

Account Debit CreditReceivables 200Unearned Revenue 200

Account Debit CreditUnearned Revenue 200Unbilled Receivables 100Revenue 300


Auto Accounting Rules


Auto Accounting Rules


Reporting


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.


Project Status Inquiry


End of Day 2

Documents

Oracle Projects - An Overview