Deltek Insight 2012: Cost Pools - How to Swim and Not Sink

Cost Pools: How to Swim and Not Sink

David Zalcmann, UTRS, Inc., Chief Financial Officer

GC-67

2 ©2012 Deltek, Inc. All Rights Reserved

Session focus

Cost pool overview

Pre-setup up considerations

Pool account-org structure

Hierarchy and cascading

Agenda


Welcome to the Pool

Disclaimer

Cost pools – 50 shades of grey

Audience Poll

Welcome to the Pool

Cost pool – grouping of costs that are allocable within

an organization

Direct cost – attributable to a single final cost

objective (project)

Indirect costs – not attributable to a single final cost

objective

Burdening – process of allocating indirect expenses

to direct expenses

Welcome to the Pool

Indirect Rates:

___Numerator = cost pool (grouping of indirect costs)___

Denominator = base (costs/units that absorb pool allocation)

Cost pools reside within a single fiscal year

Provisional vs. target vs. actual rates

Welcome to the Pool


Preparing to Swim


Pool setup starts well before you click Cost Pools in

CP

Driven by dependent architecture and processes

Proper consideration, understanding and setup

imperative to pool functionality and administration

Begin with the end in mind

What pools need to be established?

Final or intermediary?

Future needs?

Preparing to Swim


• Pool data resides

• Account-Org driven

• Data compressed

General Ledger

• Burdening occurs

• Details storedProject Ledger

Preparing to Swim


Design Account and Org structure to support pools

Considerations:

Onsite vs offsite

Employee classes/benefit plan

Business units

Allocations are combo-driven

Avoid a “wild” goose chase by using logical groupings

for wildcarding

Preparing to Swim


Inputs

Onsite Labor

Engineering ArchitectureOffsite Labor

Preparing to Swim


• Org 2• Acct 2

• Org 1• Acct 1

Onsite Eng.

Arch.Offsite

Preparing to Swim


Entering the Pool


Map out pool architecture

Visual representation –

list, flowchart, diagram, et

c…

Identify accounts needed

Determine account-org

combos

Hierarchy and timing

Fringe

Facility

Intermediary

Final Pools

Entering the Pool

Hierarchy Example


Pool account setup

Accounts are for system generated pool

computations only

Two accounts required for each pool

Allocation Debit (AD) Account

Receives the allocation

Can have multiple AD accounts per pool

Allocation Credit (AC) Account

Offset of allocation

Only one per pool (could result in needing reclass pool)

Entering the Pool


Optional pool accounts (final pools only)

Cost Variance (CV) Account

Captures rate variance between target/actual during revenue posting

Shifts GL from an actual to target position

Receivable Variance (RV) Account

Offset of CV account Capitalizes variance on B/S

Financial Statement Reclass Accounts (RD & RC)

Used to shift expenses and indirect burden during cost transfer process between performing to owning to org

Entering the Pool


Considerations for setting up pool accounts

Isolate on CoA – start with alpha characters

Embed pool type within account code

Embed pool number within account code

Embed allocation type within account code

Obviously limited by account structure

The more info you can embed, the easier to follow

the flow of pools through the system and leverage the

allocation data

Entering the Pool


Base Account Type

Pool Number

Pool Account Type AD/AC

100

DL OH

200

DL

Entering the Pool


Each account that impacts pools needs to be

assigned to an org

Use existing orgs, no special pool orgs needed

Can use mirror orgs for AD accounts

AC account must have org assigned

One AC account per pool,

meaning only one org

May need reclass pools to

keep integrity of FS by Org

Entering the Pool

Account Org 1 Org 2

Original Expense $300 $500

AD-100-DL $150 $400

AD-100-OH $150 $100

AC-100-00 ($800) ($0)

Total ($200) $1,000


Pool structure will determine sequence of pool

processing

Sequence is absolutely critical to ensure that

allocations cascade through the system properly

Mismanagement will result in improper final rates and

circular references

Entering the Pool


Ultimate goal of

setup, design an

architecture file outlining

pools

Identifies accounts needed

Identifies account-org

combos

Arrange in sequence

Will provide tool for setup

and ongoing administration

Pool Cost

Pool Cost Allocation Credit

60-100-10 C.%.%

AC-100-00 C.9.9960-200-10 C.%.%

61-%-% C.%.%

Pool Base

Pool Base Allocation Debits

50-100-10 C.%.% AD-100-DL

50-100-20 C.%.% AD-100-DL

50-200-10 C.%.% AD-100-DL

70-100-10 C.%.% AD-100-OH

80-100-10 C.%.% AD-100-GA

Entering the Pool


Pool account structure will offer added visibility

Extremely helpful in pool setup/reconciliation

Scalability

Allow for bucketing of allocated costs in presentation

of managerial financial statements

Entering the Pool


Time to Swim


General overview on cost

pools

For more

information, examples, se

tup files, tips, etc…

please contact David at

856-667-6770 x162 or

[email protected]

Call to Action

mailto:[email protected]

Thank You!

Technology

Deltek Insight 2012: Cost Pools - How to Swim and Not Sink