Project Costing Fundamentals 1 - Instructors Guide

Instructor Guide
D60115GC10
Edition 1.0
February 2010
D65241
For Instructor Use Only.

This document should not be distributed.
R12.x Oracle Project Costing

Fundamentals
Copyright 2010, Oracle. All rights reserved.

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Author
Debjit Nag
Technical Contributors and Reviewers
Ivy Farren, Mayank Khandelwal, Ruth Kukla, Erin Moss
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Oracle Tutor

Restricted Rights Notice
Overview of Oracle Project Costing...............................................................................................................1-1

Overview of Oracle Project Costing..............................................................................................................1-3
Objectives ......................................................................................................................................................1-4
Agenda...........................................................................................................................................................1-5
Oracle Enterprise Project Management Solution...........................................................................................1-6
Oracle Project Costing and Integration..........................................................................................................1-7
Agenda...........................................................................................................................................................1-11
Oracle Project Costing and Project Classes ...................................................................................................1-12
Overview of Resources In Oracle Projects ....................................................................................................1-13
Costing Flow .................................................................................................................................................1-15
Collect and Manage All Costs .......................................................................................................................1-17
Manage Costs ................................................................................................................................................1-18
View Accounting: Transaction Details..........................................................................................................1-20
View Accounting: Final Subledger Accounting Entries................................................................................1-21
View Expenditure Item Details .....................................................................................................................1-22
Summary........................................................................................................................................................1-23
Quiz ...............................................................................................................................................................1-24
Defining Projects for Costing .........................................................................................................................2-1
Defining Projects for Costing ........................................................................................................................2-3
Objectives ......................................................................................................................................................2-4
Agenda...........................................................................................................................................................2-5
Overview of Projects and Tasks ....................................................................................................................2-6
Project Classes and Project Types .................................................................................................................2-7
Overview of Project Templates .....................................................................................................................2-8
Organizing a Project Structure.......................................................................................................................2-9
Basic Project Information ..............................................................................................................................2-10
Quiz ...............................................................................................................................................................2-12
Agenda...........................................................................................................................................................2-14
Burden Schedules for Costing .......................................................................................................................2-15
Organization Overrides..................................................................................................................................2-16
Project Currency ............................................................................................................................................2-17
Currencies and Expenditures .........................................................................................................................2-18
Costing Currency Options .............................................................................................................................2-19
Quiz ...............................................................................................................................................................2-20
Agenda...........................................................................................................................................................2-21
Controlling Expenditures Overview ..............................................................................................................2-22
Project Statuses..............................................................................................................................................2-23
Task Chargeable Status .................................................................................................................................2-24
Transaction Dates ..........................................................................................................................................2-25
Transaction Controls......................................................................................................................................2-26
Exclusive and Inclusive Transaction Controls...............................................................................................2-28
Allowable Charges for Each Transaction Control .........................................................................................2-29
Determining if an Item is Chargeable............................................................................................................2-30
Quiz ...............................................................................................................................................................2-31
Summary........................................................................................................................................................2-32
Overview of Budgetary Controls, Budget Integration and Core Budgeting ..............................................3-1
Overview of Budgetary Controls, Budget Integration and Core Budgeting ..................................................3-3
Objectives ......................................................................................................................................................3-4
Agenda...........................................................................................................................................................3-5
Overview of Budgetary Controls...................................................................................................................3-6
Budgetary Control Settings: Time Intervals ..................................................................................................3-7
Copyright Oracle 2010. All rights reserved.
R12.x Oracle Project Costing Fundamentals Table of Contents

i

Table of Contents
Entering Expenditures ....................................................................................................................................4-1

Entering Expenditures ...................................................................................................................................4-3
Objectives ......................................................................................................................................................4-4
Agenda...........................................................................................................................................................4-5
Costing Flow: Enter Expenditures.................................................................................................................4-6
Expenditures Overview .................................................................................................................................4-7
Multiple Organization Access Control (MOAC)...........................................................................................4-8
Expenditures Overview .................................................................................................................................4-9

ii

Budgetary Control Settings: Control Levels..................................................................................................3-9

Example: Budgetary Control Rollup .............................................................................................................3-10
Entering Budget Amounts for Controlled Budgets........................................................................................3-11
Budget Definition Strategies..........................................................................................................................3-13
Transaction Processing with Controlled Budgets ..........................................................................................3-14
Overview of the Budgetary Control Process Flow ........................................................................................3-16
Viewing Budgetary Control Results ..............................................................................................................3-18
Maintaining Budgetary Control Balances......................................................................................................3-19
Budgetary Controls Cross Charge Restriction...............................................................................................3-20
Quiz ...............................................................................................................................................................3-21
Agenda...........................................................................................................................................................3-24
Overview of Budget Integration ....................................................................................................................3-25
Generating Accounting for Integrated Budgets .............................................................................................3-26
Accounting Event Model Overview ..............................................................................................................3-28
Budget Check Funds Processing Overview...................................................................................................3-31
Creating a Baseline for an Integrated Budget ................................................................................................3-33
Budget Integration Workflow........................................................................................................................3-35
Reviewing and Overriding Budget Account Details......................................................................................3-36
Viewing Encumbrance and Budget Subledger Accounting...........................................................................3-37
Quiz ...............................................................................................................................................................3-38
Agenda...........................................................................................................................................................3-39
Top-Down Budget Integration.......................................................................................................................3-40
Top-Down Budget Integration Procedures ....................................................................................................3-41
Encumbrance Accounting Example...............................................................................................................3-43
Creating Project Budgets for Top-Down Budget Integration ........................................................................3-46
Maintaining the Project Budget .....................................................................................................................3-47
Year-End Processing .....................................................................................................................................3-49
Agenda...........................................................................................................................................................3-50
Bottom-Up Budget Integration ......................................................................................................................3-51
Bottom-Up Budget Integration Procedures ...................................................................................................3-52
Agenda...........................................................................................................................................................3-54
Non-Integrated Budgets with Budgetary Controls Procedures......................................................................3-55
Agenda...........................................................................................................................................................3-56
Budgeting Implementation Steps...................................................................................................................3-57
Define Additional Core Budgeting Setup......................................................................................................3-58
Implementing Budgetary Controls ................................................................................................................3-59
Budgetary Controls: Enable Budgetary Controls and Encumbrance Accounting .........................................3-60
Budgetary Controls: Define Profile Options..................................................................................................3-61
Budgetary Controls: Define Control Levels and the Time Interval...............................................................3-62
Budgetary Controls: Create an Initial Budget................................................................................................3-64
Budgetary Controls: Adjust Default Control Levels .....................................................................................3-65
Implementing Budget Integration..................................................................................................................3-67
Budget Integration: Define the Project Budget Account Generation Workflow ...........................................3-68
Budget Integration: Define Profile Options...................................................................................................3-70
Budget Integration: Implement Top-Down Integration .................................................................................3-71
Budget Integration: Implement Bottom-Up Integration ................................................................................3-73
Quiz ...............................................................................................................................................................3-74
Summary........................................................................................................................................................3-75
Implementing Expenditures ...........................................................................................................................5-1

Implementing Expenditures...........................................................................................................................5-3
Objectives ......................................................................................................................................................5-4
Expenditures Implementation Steps ..............................................................................................................5-5
Agenda...........................................................................................................................................................5-6
Expenditure Categories..................................................................................................................................5-7
Define Revenue Categories ...........................................................................................................................5-8
Define Units...................................................................................................................................................5-9
Expenditure Type Classes..............................................................................................................................5-10
Define Expenditure Types .............................................................................................................................5-12
Multiple Expenditure Type Classes Per Expenditure Type ...........................................................................5-14
Quiz ...............................................................................................................................................................5-15
Agenda...........................................................................................................................................................5-17
Transaction Control Extension ......................................................................................................................5-18
Quiz ...............................................................................................................................................................5-19
AutoApproval Extension ...............................................................................................................................5-20
Agenda...........................................................................................................................................................5-21
Define Transaction Sources...........................................................................................................................5-22
Example Predefined Transaction Sources .....................................................................................................5-23
Example Predefined Transaction Sources: Manufacturing and Inventory.....................................................5-24
Quiz ...............................................................................................................................................................5-26
Agenda...........................................................................................................................................................5-27
Listings ..........................................................................................................................................................5-28
Summary........................................................................................................................................................5-29
Performing Cost Processing............................................................................................................................6-1
Performing Cost Processing ..........................................................................................................................6-3

iii

Currency Fields for Expenditures ..................................................................................................................4-11

Pre-Approved Batch Expenditure Entry Flow Overview ..............................................................................4-12
Statuses for Pre-Approved Expenditure Batches...........................................................................................4-13
Enter Pre-Approved Batches .........................................................................................................................4-14
Submitting an Expenditure Batch ..................................................................................................................4-16
Reversing an Expenditure Batch ...................................................................................................................4-17
Correcting Expenditure Batches ....................................................................................................................4-18
Copying an Expenditure Batch......................................................................................................................4-20
Reviewing Project Expenditures....................................................................................................................4-21
Viewing Accounting Lines ............................................................................................................................4-24
Quiz ...............................................................................................................................................................4-25
Agenda...........................................................................................................................................................4-27
Automatically Reversing Expenditure Batches .............................................................................................4-28
Releasing the Batch .......................................................................................................................................4-29
GL Periods for the Expenditure Items ...........................................................................................................4-30
Agenda...........................................................................................................................................................4-31
Upload Expenditure Batches from Microsoft Excel......................................................................................4-32
Upload Contingent Worker Timecards..........................................................................................................4-34
Quiz ...............................................................................................................................................................4-36
Agenda...........................................................................................................................................................4-37
Expenditure Batch Reports ............................................................................................................................4-38
Quiz ...............................................................................................................................................................4-39
Agenda...........................................................................................................................................................4-40
Costing Flow: Import Transactions ...............................................................................................................4-41
Overview of Transaction Sources..................................................................................................................4-42
Overview of Transaction Import ...................................................................................................................4-43
Resolving Import Exceptions ........................................................................................................................4-44
Quiz ...............................................................................................................................................................4-45
Correcting Rejected Transactions within Oracle Project Costing..................................................................4-46
Summary........................................................................................................................................................4-48
Accounting for Costs .......................................................................................................................................7-1

Accounting for Costs .....................................................................................................................................7-3
Objectives ......................................................................................................................................................7-4
Agenda...........................................................................................................................................................7-5
Overview of Accounting for Costs ................................................................................................................7-6
AutoAccounting ............................................................................................................................................7-7
AutoAccounting Rules ..................................................................................................................................7-8
AutoAccounting Rule Mapping.....................................................................................................................7-9
Constant Value ..............................................................................................................................................7-10
Parameter Value ............................................................................................................................................7-11
SQL Select Statement Value .........................................................................................................................7-12
Lookup Sets ...................................................................................................................................................7-13
Selecting a Segment Value Source ................................................................................................................7-15
Assign Rules..................................................................................................................................................7-16
Quiz ...............................................................................................................................................................7-18
Agenda...........................................................................................................................................................7-19
AutoAccounting for Costs Implementation Steps .........................................................................................7-20
Accounting for Labor Costs...........................................................................................................................7-21
Accounting for Expense Report Costs...........................................................................................................7-22
Accounting for Usage Costs ..........................................................................................................................7-23
Accounting for Miscellaneous Costs .............................................................................................................7-24

iv

Objectives ......................................................................................................................................................6-4
Agenda...........................................................................................................................................................6-5
Overview of Costing......................................................................................................................................6-6
Costing Concepts...........................................................................................................................................6-9
Overview of Encumbrance Accounting.........................................................................................................6-10
Quiz ...............................................................................................................................................................6-12
Agenda...........................................................................................................................................................6-13
Costing Flow: Distribute Costs......................................................................................................................6-14
Cost Distribution Processing Flow ................................................................................................................6-15
Determining Costs .........................................................................................................................................6-16
Quiz ...............................................................................................................................................................6-18
Burden Cost Calculations ..............................................................................................................................6-19
AutoAccounting: Distribution Programs .......................................................................................................6-20
Cost Distribution Concurrent Programs ........................................................................................................6-21
Agenda...........................................................................................................................................................6-23
Costing Flow: Create Accounting .................................................................................................................6-24
Integration with Oracle Subledger Accounting .............................................................................................6-25
Generating Cost Accounting Events..............................................................................................................6-26
AutoAccounting: Generate Accounting Events.............................................................................................6-27
Creating and Transferring Accounting ..........................................................................................................6-28
Oracle General Ledger Journal Import ..........................................................................................................6-29
Quiz ...............................................................................................................................................................6-30
Agenda...........................................................................................................................................................6-31
Streamline Processes .....................................................................................................................................6-32
Submitting Streamline Processes...................................................................................................................6-34
Agenda...........................................................................................................................................................6-35
Overview of Period Processing .....................................................................................................................6-36
Control of GL Period Statuses for Project Transactions................................................................................6-37
Transaction Accounting Methods..................................................................................................................6-38
Period End Date Accounting .........................................................................................................................6-39
Expenditure Item Date Accounting ...............................................................................................................6-41
Expenditure Item Date Accounting with Common Accounting Periods .......................................................6-43
Sweeping Transaction Accounting Events ....................................................................................................6-45
Quiz ...............................................................................................................................................................6-47
Summary........................................................................................................................................................6-48
Implementing Non-Labor Costing .................................................................................................................8-1

Implementing Non-Labor Costing.................................................................................................................8-3
Objectives ......................................................................................................................................................8-4
Agenda...........................................................................................................................................................8-5
Implementing Non-Labor Costing.................................................................................................................8-6
Non-Labor Costing Implementation Steps ....................................................................................................8-7
Defining Non-Labor Resources.....................................................................................................................8-8
Non-Labor Cost Rates ...................................................................................................................................8-9
Non-Labor Cost Rate Overrides ....................................................................................................................8-10
Agenda...........................................................................................................................................................8-11
Listings ..........................................................................................................................................................8-12
Quiz ...............................................................................................................................................................8-13
Summary........................................................................................................................................................8-15
Implementing Labor Costing..........................................................................................................................9-1
Implementing Labor Costing.........................................................................................................................9-3
Objectives ......................................................................................................................................................9-4
Agenda...........................................................................................................................................................9-5
Labor Costing Implementation Steps ............................................................................................................9-6
Define Labor Costing Multipliers..................................................................................................................9-7
Quiz ...............................................................................................................................................................9-8
Labor Costing Rules ......................................................................................................................................9-9
Quiz ...............................................................................................................................................................9-11
Rate Schedules...............................................................................................................................................9-12
Assign Costing Rules and Rate Schedules ....................................................................................................9-14
Labor Costing Overrides ...............................................................................................................................9-16

v

Accounting for Burden Transactions.............................................................................................................7-25

Accounting for Total Burdened Cost.............................................................................................................7-26
Accounting for WIP and Inventory Costs......................................................................................................7-27
Accounting for Supplier Cost Adjustments ...................................................................................................7-29
Listings ..........................................................................................................................................................7-31
Quiz ...............................................................................................................................................................7-32
Agenda...........................................................................................................................................................7-33
Account Generator.........................................................................................................................................7-34
Account Generator Terminology ...................................................................................................................7-36
Implementing Accounting for Project-Related Supplier Costs and Expense Reports ...................................7-37
Quiz ...............................................................................................................................................................7-39
Agenda...........................................................................................................................................................7-40
Encumbrance Accounting and Project Budgets.............................................................................................7-41
Project Budget Account Generation Workflow.............................................................................................7-42
Quiz ...............................................................................................................................................................7-43
Agenda...........................................................................................................................................................7-44
Overview of Oracle Subledger Accounting...................................................................................................7-45
Integration with Oracle Subledger Accounting .............................................................................................7-46
Accounting Event Model Overview ..............................................................................................................7-47
Quiz ...............................................................................................................................................................7-49
Agenda...........................................................................................................................................................7-50
Oracle Subledger Accounting for Costs Implementation Steps.....................................................................7-51
Oracle Subledger Accounting for Costs Implementation Steps (continued) .................................................7-52
Sources and Custom Sources.........................................................................................................................7-53
Journal Entry Methods and Definitions .........................................................................................................7-54
Associating Subledger Accounting Methods and Ledgers ............................................................................7-56
Post-Accounting Programs ............................................................................................................................7-57
Cross-Entity Balancing Rules........................................................................................................................7-59
Oracle Subledger Accounting Inquiries.........................................................................................................7-60
Audit Reports.................................................................................................................................................7-61
Summary........................................................................................................................................................7-62
Implementing Burden Costing .......................................................................................................................10-1

Implementing Burden Costing.......................................................................................................................10-3
Objectives ......................................................................................................................................................10-4
Agenda...........................................................................................................................................................10-5
Overview of Burdening .................................................................................................................................10-6
Burden Costing Terminology ........................................................................................................................10-7
Storing Burden Cost Calculations .................................................................................................................10-8
Accounting for Burden Costs ........................................................................................................................10-9
Project Types and Burdening.........................................................................................................................10-11
Quiz ...............................................................................................................................................................10-13
Agenda...........................................................................................................................................................10-14
Burden Costing Implementation Steps ..........................................................................................................10-15
Cost Bases and Cost Base Types ...................................................................................................................10-16
Burden Cost Codes ........................................................................................................................................10-17
Burden Structures ..........................................................................................................................................10-18
Burden Schedule Types and Burden Schedules.............................................................................................10-22
Assigning Burden Multipliers........................................................................................................................10-23
Defining Burden Schedules ...........................................................................................................................10-25
Assigning Burden Schedules .........................................................................................................................10-27
Burden Costing Extension .............................................................................................................................10-28
Reporting Separate Burden Transactions with Source Resources .................................................................10-29
Accounting for Cost Adjustments Resulting from Burden Schedule Revisions............................................10-31
Accounting for Cost Adjustments Example 1: Total Burdened Costs without Incremental Transactions ....10-32
Accounting for Cost Adjustments Example 2: Total Burdened Costs with Incremental Transactions .........10-34
Accounting for Cost Adjustments Example 3: Summarized Burden Cost Components without Incremental
Transactions...................................................................................................................................................10-36
Accounting for Cost Adjustments Example 4: Summarized Burden Cost Components with Incremental
Transactions...................................................................................................................................................10-38
Quiz ...............................................................................................................................................................10-40
Agenda...........................................................................................................................................................10-43
Burden Calculation in Costing Programs ......................................................................................................10-44
Concurrent Programs: Total Burdened Cost Accounting ..............................................................................10-47
Concurrent Programs: Account for Summarized Burden Cost Components.................................................10-48
Maintenance Concurrent Programs ...............................................................................................................10-49
Quiz ...............................................................................................................................................................10-50
Summary........................................................................................................................................................10-51
Performing Cost Adjustments ........................................................................................................................11-1
Performing Cost Adjustments........................................................................................................................11-3
Objectives ......................................................................................................................................................11-4
Agenda...........................................................................................................................................................11-5
Adjusting Expenditure Items .........................................................................................................................11-6
Adjustments to Imported Transactions ..........................................................................................................11-7
Project Status and Adjustments .....................................................................................................................11-9
Recalculate Burden Cost................................................................................................................................11-10
Recalculate Raw Cost....................................................................................................................................11-11
Change Work Type........................................................................................................................................11-12
Change Comment ..........................................................................................................................................11-13
Split Item .......................................................................................................................................................11-14

vi

Labor Costing Extension ...............................................................................................................................9-17

Labor Transaction Extension.........................................................................................................................9-18
Implement Overtime Processing....................................................................................................................9-20
Overtime Calculation Extension....................................................................................................................9-22
Quiz ...............................................................................................................................................................9-23
Agenda...........................................................................................................................................................9-24
Listings ..........................................................................................................................................................9-25
Summary........................................................................................................................................................9-26
Integration with Oracle Purchasing and Oracle Payables...........................................................................12-1

Integration with Oracle Purchasing and Oracle Payables..............................................................................12-3
Objectives ......................................................................................................................................................12-4
Agenda...........................................................................................................................................................12-5
Overview of Supplier Costs...........................................................................................................................12-6
Oracle Purchasing and Oracle Payables (Accrual) ........................................................................................12-7
Oracle Purchasing and Oracle Payables (Cash).............................................................................................12-9
Quiz ...............................................................................................................................................................12-11
Agenda...........................................................................................................................................................12-12
Entering Project-Related Information............................................................................................................12-13
Validating Project Information ......................................................................................................................12-15
Budgetary Control Activation........................................................................................................................12-16
Commitment Reporting .................................................................................................................................12-17
Accounting Transactions ...............................................................................................................................12-19
Quiz ...............................................................................................................................................................12-21
Agenda...........................................................................................................................................................12-22
Integration with Oracle Purchasing ...............................................................................................................12-23
Documents in Oracle Purchasing...................................................................................................................12-25
Agenda...........................................................................................................................................................12-26
Supplier Costs and Accounting Methods.......................................................................................................12-27
Integration with Oracle Payables (Accrual)...................................................................................................12-28
Integration with Oracle Payables (Cash) .......................................................................................................12-30
Invoices in Oracle Payables...........................................................................................................................12-31
Quiz ...............................................................................................................................................................12-32
Agenda...........................................................................................................................................................12-33
Interfacing Supplier Costs .............................................................................................................................12-34
Payment Control............................................................................................................................................12-36
Predefined Transaction Sources ....................................................................................................................12-37
Predefined Transaction Sources (continued) .................................................................................................12-38
Supplier Cost Audit Report ...........................................................................................................................12-39
Expenditure Inquiry.......................................................................................................................................12-40
Viewing Project Adjustments from the Invoice Workbench .........................................................................12-41
Agenda...........................................................................................................................................................12-43
Managing Subcontractor Payments ...............................................................................................................12-44
Managing Financing and Advances...............................................................................................................12-46
Managing Retainage ......................................................................................................................................12-47
Quiz ...............................................................................................................................................................12-49
Agenda...........................................................................................................................................................12-50
Supplier Cost Adjustments Overview............................................................................................................12-51
Restrictions to Supplier Cost Adjustments in Oracle Project Costing ...........................................................12-53
Adjusting Project-Related Documents in Oracle Purchasing ........................................................................12-55
Writing Off Receipt Accruals in Oracle Purchasing......................................................................................12-57
Adjusting Project-Related Documents in Oracle Payables............................................................................12-58
Adjusting Supplier Costs for Non-Capital Assets .........................................................................................12-60

vii

Transfer Item .................................................................................................................................................11-15

Change Currency Attributes ..........................................................................................................................11-16
Adjustments to Multi-Currency Transactions................................................................................................11-17
Adjustments to Supplier Costs.......................................................................................................................11-18
Mass Adjustments..........................................................................................................................................11-20
Correct Approved Expenditure Items ............................................................................................................11-22
Processing Adjustments.................................................................................................................................11-24
Results of Adjustment Processing .................................................................................................................11-26
Quiz ...............................................................................................................................................................11-28
Agenda...........................................................................................................................................................11-32
Audit Reporting for Expenditure Adjustments ..............................................................................................11-33
Summary........................................................................................................................................................11-35
Integration with Oracle Internet Expenses ...................................................................................................13-1

Integration with Oracle Internet Expenses.....................................................................................................13-3
Objectives ......................................................................................................................................................13-4
Agenda...........................................................................................................................................................13-5
Oracle Internet Expenses ...............................................................................................................................13-6
Expense Report Flow.....................................................................................................................................13-7
Deriving Project Data from Expense Reports................................................................................................13-9
Disconnected Expense Reporting Process.....................................................................................................13-10
Adjusting Expense Reports............................................................................................................................13-11
Quiz ...............................................................................................................................................................13-13
Agenda...........................................................................................................................................................13-15
Integration with Oracle Internet Expenses Implementation Steps.................................................................13-16
Install and Implement Oracle Internet Expenses ...........................................................................................13-17
Set Profile Options for Project-Related Expense Report Entry .....................................................................13-18
Set Profile Options for Project-Related Expense Report Approval ...............................................................13-19
Define the Project Expense Report Account Generator.................................................................................13-21
Define a Project-Related Expense Report Template .....................................................................................13-22
Quiz ...............................................................................................................................................................13-23
Summary........................................................................................................................................................13-25
Integration with Oracle Time & Labor .........................................................................................................14-1
Integration with Oracle Time & Labor ..........................................................................................................14-3
Objectives ......................................................................................................................................................14-4
Agenda...........................................................................................................................................................14-5
Oracle Time & Labor Overview....................................................................................................................14-6
Disconnected Time Entry ..............................................................................................................................14-7
Collecting and Processing Project-Related Timecards ..................................................................................14-8
Editing Timecards in Oracle Time & Labor ..................................................................................................14-10
Contingent Worker Timecards with PO Integration ......................................................................................14-11
Quiz ...............................................................................................................................................................14-13
Agenda...........................................................................................................................................................14-15
Integration with Oracle Time & Labor Implementation Steps ......................................................................14-16
Install and Implement Oracle Time & Labor.................................................................................................14-17
Set Profile Options for Project-Related Timecards .......................................................................................14-18
Implement Client Extensions to Route and Approve Timecards...................................................................14-19
Quiz ...............................................................................................................................................................14-20
Summary........................................................................................................................................................14-21
Allocations and AutoAllocations ....................................................................................................................15-1
Allocations and AutoAllocations...................................................................................................................15-3
Objectives ......................................................................................................................................................15-4
Agenda...........................................................................................................................................................15-5

viii

Manually Adjusting Unmatched Reversing Expenditure Items.....................................................................12-61

Processing Adjustments.................................................................................................................................12-62
Prioritizing Supplier Costs Adjustments........................................................................................................12-64
Accounting for Supplier Cost Adjustments ...................................................................................................12-69
Quiz ...............................................................................................................................................................12-74
Agenda...........................................................................................................................................................12-76
Oracle Purchasing and Oracle Payables Integration Implementation Steps ..................................................12-77
Implementing Oracle Purchasing and Oracle Payables Integration...............................................................12-79
Set Profile Options for Project-Related Documents ......................................................................................12-80
Define the Supplier Invoice Account Generator............................................................................................12-82
Defining a Project-Related Purchasing Transactions Account Generator .....................................................12-83
Specify a Default Supplier Cost Credit Account ...........................................................................................12-84
Define Project-Related Distribution Sets.......................................................................................................12-85
Define Oracle Payables Descriptive Flexfields and Related Profiles ............................................................12-86
Summary........................................................................................................................................................12-87
Asset Capitalization.........................................................................................................................................16-1
Asset Capitalization.......................................................................................................................................16-3
Objectives ......................................................................................................................................................16-4
Agenda...........................................................................................................................................................16-5
Overview of Asset Capitalization..................................................................................................................16-6
Project-Related Asset Processing Flow .........................................................................................................16-9
Accounting Example .....................................................................................................................................16-10
Quiz ...............................................................................................................................................................16-16
Agenda...........................................................................................................................................................16-18
Project Types for Asset Capitalization ..........................................................................................................16-19
Quiz ...............................................................................................................................................................16-21
Agenda...........................................................................................................................................................16-22
Asset Processing Flow...................................................................................................................................16-23
Specifying Costs ............................................................................................................................................16-25
Defining Assets for Capital Projects..............................................................................................................16-27
Streamlining Asset Creation ..........................................................................................................................16-29
Asset Grouping Levels ..................................................................................................................................16-30
Asset Cost Allocation Methods .....................................................................................................................16-31
Specifying an Actual Date in Service or a Retirement Date..........................................................................16-32

ix

Overview of Allocations................................................................................................................................15-6
Allocation Terminology ................................................................................................................................15-7
Difference between Allocation and Burdening..............................................................................................15-9
Allocation Rules Implementation Steps ........................................................................................................15-10
Allocation Rules ............................................................................................................................................15-11
Basis Method .................................................................................................................................................15-12
Basis Method - Spread Evenly ......................................................................................................................15-13
Basis Method - Target Percent and Spread Evenly .......................................................................................15-14
Basis Method - Prorate ..................................................................................................................................15-15
Basis Method - Target Percentage and Prorate..............................................................................................15-16
Allocation Rule Definition ............................................................................................................................15-17
Source Definition...........................................................................................................................................15-19
Target Definition ...........................................................................................................................................15-21
Offset Definition............................................................................................................................................15-23
Prorated Basis Method Definition .................................................................................................................15-25
Copy Allocation Rules...................................................................................................................................15-26
Deleting or Modifying Allocation Rules .......................................................................................................15-27
Client Extensions for Allocations..................................................................................................................15-28
Quiz ...............................................................................................................................................................15-30
Agenda...........................................................................................................................................................15-34
Allocating Costs ............................................................................................................................................15-35
Creating Allocation Runs ..............................................................................................................................15-36
Allocation Run Statuses.................................................................................................................................15-37
Deleting Allocation Runs ..............................................................................................................................15-38
Releasing Allocation Runs ............................................................................................................................15-39
Reversing Allocation Runs ............................................................................................................................15-40
Quiz ...............................................................................................................................................................15-41
Agenda...........................................................................................................................................................15-42
Overview of AutoAllocations........................................................................................................................15-43
AutoAllocation Rules Implementation Steps.................................................................................................15-46
AutoAllocation Set Definition.......................................................................................................................15-47
Implementing Workflow and Client Extensions for AutoAllocations...........................................................15-49
Quiz ...............................................................................................................................................................15-50
Agenda...........................................................................................................................................................15-51
Submitting an AutoAllocation Set.................................................................................................................15-52
Viewing the Status of AutoAllocation Sets ...................................................................................................15-53
Summary........................................................................................................................................................15-54
Cross Charge....................................................................................................................................................17-1
Cross Charge .................................................................................................................................................17-3
Objectives ......................................................................................................................................................17-4
Agenda...........................................................................................................................................................17-5
Overview of Cross Charge.............................................................................................................................17-6
Cross Charge Terminology............................................................................................................................17-7
Cross Charge Types Example........................................................................................................................17-9
Processing Methods.......................................................................................................................................17-10
Quiz ...............................................................................................................................................................17-11
Agenda...........................................................................................................................................................17-12
Borrowed and Lent Processing......................................................................................................................17-13
Project and Task Setup ..................................................................................................................................17-14
Subledger Accounting Process Flow: Cross Charge .....................................................................................17-16
Borrowed and Lent Accounting.....................................................................................................................17-18
Cross Charge Adjustments ............................................................................................................................17-19
Processing Cross Charge Adjustments ..........................................................................................................17-21
Quiz ...............................................................................................................................................................17-23
Agenda...........................................................................................................................................................17-25
Borrowed and Lent Cross Charge Processing Implementation Steps............................................................17-26
Transfer Price Rules ......................................................................................................................................17-27
Transfer Price Schedule.................................................................................................................................17-29
Cross Charge Implementation Options..........................................................................................................17-31
Provider and Receiver Controls for Borrowed and Lent Accounting............................................................17-32
AutoAccounting Rules for Borrowed and Lent Transactions........................................................................17-33
Implement Cross Charge Extensions.............................................................................................................17-34
Quiz ...............................................................................................................................................................17-35
Summary........................................................................................................................................................17-36
Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking ..............18-1
Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking .....................18-3
Objectives ......................................................................................................................................................18-4
Agenda...........................................................................................................................................................18-5
Integration with Oracle Inventory..................................................................................................................18-6
Integration with Oracle Inventory Flow ........................................................................................................18-7
Miscellaneous Transactions...........................................................................................................................18-8
Launching Transaction Managers..................................................................................................................18-9
Transfer and Import .......................................................................................................................................18-10
Quiz ...............................................................................................................................................................18-11
Agenda...........................................................................................................................................................18-12
Oracle Inventory Integration Implementation Steps......................................................................................18-13
Install and Implement Oracle Inventory ........................................................................................................18-14

x

Capital Events................................................................................................................................................16-33
Generating Summary Asset Lines .................................................................................................................16-35
Assigning Asset Lines ...................................................................................................................................16-37
Sending Asset Lines to Oracle Assets ...........................................................................................................16-38
Quiz ...............................................................................................................................................................16-40
Agenda...........................................................................................................................................................16-41
Adjusting Capital Project Costs.....................................................................................................................16-42
Reversing Capitalization of Assets in Oracle Project Costing.......................................................................16-43
Abandoning a Capital Asset in Oracle Project Costing .................................................................................16-45
Agenda...........................................................................................................................................................16-46
Asset Capitalization Implementation Steps ...................................................................................................16-47
Implement Asset Extensions..........................................................................................................................16-48
Define Standard Unit Costs for Asset Cost Allocations ................................................................................16-50
Enable Retirement Cost Processing...............................................................................................................16-51
Define Proceeds of Sale Expenditure Types..................................................................................................16-52
Summary........................................................................................................................................................16-53
Appendix B: Budgetary Controls and Budget Integration ..........................................................................19-1

Appendix B: Budgetary Controls and Budget Integration.............................................................................19-3
Objectives ......................................................................................................................................................19-4
Agenda...........................................................................................................................................................19-5
Budgeting Implementation Steps...................................................................................................................19-6
Define Budget Change Reasons ....................................................................................................................19-7
Define Additional Budget Types ...................................................................................................................19-8
Define Additional Budget Entry Methods .....................................................................................................19-10
Budget Calculation Extensions......................................................................................................................19-12
Budget Verification Extension ......................................................................................................................19-14
Budget Workflow and Budget Workflow Extension.....................................................................................19-15
Quiz ...............................................................................................................................................................19-16
Agenda...........................................................................................................................................................19-18
Implementing Budgetary Controls ................................................................................................................19-19
Defining Profile Options for Budgetary Controls..........................................................................................19-20
Defining Control Levels and the Time Interval.............................................................................................19-21
Creating an Initial Budget..............................................................................................................................19-23
Adjusting Default Control Levels..................................................................................................................19-25
Quiz ...............................................................................................................................................................19-26
Agenda...........................................................................................................................................................19-27
Implementing Budget Integration..................................................................................................................19-28
Implementing BottomUp Integration...........................................................................................................19-29
Implementing Top-Down Integration............................................................................................................19-31
Summary........................................................................................................................................................19-33
Appendix C: Asset Capitalization: Capitalizing Interest.............................................................................20-1
Appendix C: Asset Capitalization: Capitalizing Interest ...............................................................................20-3
Objectives ......................................................................................................................................................20-4
Agenda...........................................................................................................................................................20-5
Overview of Capitalized Interest ...................................................................................................................20-6
Setting Up Capital Projects for Capitalized Interest ......................................................................................20-8
Generating Capitalized Interest Expenditure Batches ...................................................................................20-9
Reviewing Capitalized Interest Expenditure Batches....................................................................................20-10
Inactive Capital Projects Report ....................................................................................................................20-11
Quiz ...............................................................................................................................................................20-12
Agenda...........................................................................................................................................................20-14
Capitalized Interest Implementation Steps ....................................................................................................20-15
Defining Capitalized Interest Rate Names.....................................................................................................20-16
Defining Capitalized Interest Rate Schedules................................................................................................20-19
Specifying Capitalized Interest Rate Schedules for Project Types................................................................20-21
Setting Project Status Controls for Capitalized Interest.................................................................................20-22

xi

Enable Project Cost Collection......................................................................................................................18-15

Create a Project-Enabled Transaction Type ..................................................................................................18-16
Create an Inventory Expenditure Type..........................................................................................................18-18
Set Expenditure Type Profile Option.............................................................................................................18-19
Quiz ...............................................................................................................................................................18-21
Agenda...........................................................................................................................................................18-22
Integration with Oracle Project Manufacturing .............................................................................................18-23
Importing Project Manufacturing Costs ........................................................................................................18-24
Transaction Sources.......................................................................................................................................18-25
Transaction Sources (continued) ...................................................................................................................18-26
Quiz ...............................................................................................................................................................18-27
Agenda...........................................................................................................................................................18-28
Integration with Oracle Asset Tracking.........................................................................................................18-29
How Purchase Order Receipts Flow into Project-Related Transactions........................................................18-31
Importing Oracle Asset Tracking Cost ..........................................................................................................18-33
Summary........................................................................................................................................................18-34
Summary of R12.x Project Costing Fundamentals.......................................................................................21-1

Summary of R12.x Project Costing Fundamentals........................................................................................21-3
Objectives ......................................................................................................................................................21-4
Agenda...........................................................................................................................................................21-5
Defining Projects for Costing ........................................................................................................................21-6
Expenditures ..................................................................................................................................................21-7
Performing Cost Processing ..........................................................................................................................21-8
Accounting for Costs .....................................................................................................................................21-11
Burden Costing..............................................................................................................................................21-12
Integration with Oracle Purchasing and Oracle Payables..............................................................................21-13
Integration with Oracle Internet Expenses.....................................................................................................21-14
Integration with Oracle Time & Labor ..........................................................................................................21-15
Integration with Other Applications ..............................................................................................................21-16
Allocations and AutoAllocations...................................................................................................................21-17
Asset Capitalization.......................................................................................................................................21-18
Asset Capitalization: Capitalized Interest......................................................................................................21-19
Cross Charge .................................................................................................................................................21-20
Budgetary Controls and Budget Integration ..................................................................................................21-21
Agenda...........................................................................................................................................................21-22
Oracle Projects Fundamentals Learning Path ................................................................................................21-23
Summary........................................................................................................................................................21-24

xii

Implementing the Capitalized Interest Extension ..........................................................................................20-23

Quiz ...............................................................................................................................................................20-24
Summary........................................................................................................................................................20-26
Preface
Profile
Before You Begin This Course
Working experience with project management and project accounting
R12.x Oracle E-Business Suite Essentials for Implementers
R12.x Project Foundation Fundamentals
How This Course Is Organized

This is an instructor-led course featuring lecture and hands-on exercises. Online demonstrations
and written practice sessions reinforce the concepts and skills introduced.

xiii

Prerequisites
Related Publications
Oracle Publications
Part Number
Oracle Project Costing User Guide
E13438-03
Oracle Projects Implementation Guide
E13582-03
Oracle Projects Fundamentals
E13581-03
Additional Publications
System release bulletins
Installation and users guides
Read-me files
International Oracle Users Group (IOUG) articles
Oracle Magazine

xiv

Title
Typographic Conventions
Typographic Conventions in Text
Caps and
lowercase
Courier new,
case sensitive
(default is
lowercase)
Initial cap
Element
Glossary term (if
there is a glossary)
Buttons,
check boxes,
triggers,
windows
Code output,
directory names,
filenames,
passwords,
pathnames,
URLs,
user input,
usernames
Arrow
Brackets
Commas
Graphics labels
(unless the term is a
proper noun)
Emphasized words
and phrases,
titles of books and
courses,
variables
Interface elements
with long names
that have only
initial caps;
lesson and chapter
titles in crossreferences
SQL column
names, commands,
functions, schemas,
table names
Menu paths
Key names
Key sequences
Plus signs
Key combinations
Italic
Quotation
marks
Uppercase
Example
The algorithm inserts the new key.
Click the Executable button.
Select the Cant Delete Card check box.
Assign a When-Validate-Item trigger to the ORD block.
Open the Master Schedule window.
Code output: debug.set (I, 300);
Directory: bin (DOS), $FMHOME (UNIX)
Filename: Locate the init.ora file.
Password: User tiger as your password.
Pathname: Open c:\my_docs\projects
URL: Go to http://www.oracle.com
User input: Enter 300
Username: Log on as scott
Customer address (but Oracle Payables)
Do not save changes to the database.

For further information, see Oracle7 Server SQL Language
Reference Manual.
Enter user_id@us.oracle.com, where user_id is the
name of the user.
Select Include a reusable module component and click Finish.
This subject is covered in Unit II, Lesson 3, Working with
Objects.
Use the SELECT command to view information stored in the

LAST_NAME
column of the EMP table.
Select File > Save.
Press [Enter].
Press and release keys one at a time:
[Alternate], [F], [D]
Press and hold these keys simultaneously: [Ctrl]+[Alt]+[Del]

xv

Convention
Bold italic
Typographic Conventions in Code

Element
Oracle Forms
triggers
Column names,
table names
Example
When-Validate-Item
Passwords
DROP USER scott

IDENTIFIED BY tiger;
OG_ACTIVATE_LAYER
(OG_GET_LAYER (prod_pie_layer))
SELECT last_name
FROM s_emp;
PL/SQL objects
Lowercase
italic
Uppercase
CREATE ROLE role
Syntax variables
SQL commands and SELECT userid

FROM emp;
functions
Typographic Conventions in Oracle Application Navigation Paths

This course uses simplified navigation paths, such as the following example, to direct you
through Oracle Applications.
(N) Invoice > Entry > Invoice Batches Summary (M) Query > Find (B) Approve
This simplified path translates to the following:
1.
(N) From the Navigator window, select Invoice then Entry then Invoice Batches
Summary.
2.
(M) From the menu, select Query then Find.
3.
(B) Click the Approve button.
Notations:
(N) = Navigator
(M) = Menu
(T) = Tab
(B) = Button
(I) = Icon
(H) = Hyperlink
(ST) = Sub Tab

xvi

Convention
Caps and
lowercase
Lowercase
Typographical Conventions in Oracle Application Help System Paths

This course uses a navigation path convention to represent actions you perform to find
pertinent information in the Oracle Applications Help System.
The following help navigation path, for example
(Help) General Ledger > Journals > Enter Journals
1.
In the navigation frame of the help system window, expand the General Ledger entry.
2.
Under the General Ledger entry, expand Journals.
3.
Under Journals, select Enter Journals.
4.
Review the Enter Journals topic that appears in the document frame of the help system
window.

xvii

represents the following sequence of actions:


xviii
Chapter 1
Copyright Oracle, 2010. All rights reserved.
Overview of Oracle Project Costing
Chapter 1 - Page 1

Overview of Oracle Project

Costing

Chapter 1 - Page 2

Chapter 1 - Page 3

Objectives
Chapter 1 - Page 4

Agenda
Chapter 1 - Page 5
Oracle Enterprise Project Management Solution

You can use Oracle Project Costing to collect, process, and track costs against projects and
tasks. You can enact cost controls and report on costs for all project activities. Oracle Project
Costing is part of the Oracle Enterprise Project Management solution. Oracle Enterprise
Project Management provides a set of applications that help companies deliver global projects
by integrating and managing project information. It enables all persons at all levels of the
enterprise to participate in and collaborate on the projects at appropriate levels in a centralized
environment. Information is available to the project team through personalized and secure rolebased views.
Chapter 1 - Page 6

Oracle Enterprise Project Management Solution
Oracle Project Costing and Integration

Oracle Project Costing imports data from these applications:
Oracle Asset Tracking - Oracle Asset Tracking enables you to provide users with access
to tracking information, without allowing them access to sensitive processes related to
assets and purchasing. You can also track inventory items after you have installed them
and link financial transactions to the physical movement of equipment. Oracle Asset
Tracking enables you to create assets upon receipt in Oracle Purchasing. After you create
the asset, Oracle Asset Tracking performs the changes in the background for any further
physical movement. For example, if you move the asset from one location to the other,
then Oracle Asset Tracking performs the asset cost, distribution, and unit changes without
manual intervention. Oracle Asset Tracking integrates with Oracle Inventory, Oracle
Purchasing, Oracle Project Costing, Oracle Assets, and Oracle Payables, and stores
information collected from them.
Oracle Internet Expenses - Oracle Internet Expenses enables you to enter projectrelated expense reports. Once approved, the expense reports are imported into Oracle
Payables. Oracle Payables creates invoices from the expense reports, maintains
payments, and creates subledger accounting entries. In Oracle Project Costing, expense
reports are interfaced as actual costs from Oracle Payables.
Chapter 1 - Page 7

Oracle Inventory - You can implement Oracle Inventory to Oracle Project Costing
integration, enabling you to interface costs from Oracle Inventory to Oracle Project
Costing, without installing Oracle Project Manufacturing. When you enter projectrelated
transactions in Oracle Inventory, you enter the project information on the source
transaction. Oracle Inventory and Oracle Project Costing carry the project information
through from the Issue To or Receipt From transaction in Oracle Inventory to the project
expenditure in Oracle Project Costing.
Oracle iProcurement - You can enter project-related purchase requisitions using Oracle
iProcurement. After requisition approval, you can AutoCreate a purchase order in Oracle
Purchasing. Oracle Purchasing copies the project information to the purchase order.
Oracle Payables - In Oracle Payables, you can match a supplier invoice to an existing
purchase order or receiving transaction. Oracle Payables automatically copies the project
information from the purchase order distribution lines when you perform the match. You
can also create non-matched supplier invoices in Oracle Payables and enter invoice
distributions to charge invoice costs to projects. You can use both Oracle Purchasing and
Oracle Payables, or just Oracle Payables. You can set up Oracle Payables to apply
discounts to payments. After you enter a payment with discounts, you interface the
discounts to Oracle Project Costing. Oracle Payables creates subledger accounting entries
for project-related supplier costs.
Oracle Purchasing - When you enter project-related transactions in Oracle Purchasing,
you only need to enter project information on the source document; either the requisition
or the purchase order. The Account Generator automatically creates the account
information, based on the project-related information you enter. You can also use the
Buyer WorkCenter in Oracle Purchasing to enter project-related purchase orders. When a
purchase order shipment is flagged to accrue at receipt and the purchased goods are
delivered to an expense destination, you enter a receiving transaction for the purchase
order in Oracle Purchasing and create subledger accounting for the receiving transaction
in final mode. Next, you interface receipt accruals to Oracle Project Costing.
Oracle Project Manufacturing - Oracle Project Costing acts as a cost repository for
manufacturing-related activities from other products in the Oracle Project Manufacturing
suite. Oracle Project Manufacturing is a type of manufacturing environment where large
projects drive production requirements. You define the Work Breakdown Structure for a
manufacturing project in Oracle Project Costing. You track manufacturing costs by
project and task and use Transaction Import to import them into Oracle Project Costing.
Oracle Time & Labor - Oracle Time & Labor integrates with Oracle Project Costing to
enable employees and contingent workers to enter and submit project-related timecards.
Employees and contingent workers enter their own time, which you can subject to an
approval process according to your business rules. You can transfer approved timecards
to Oracle Project Costing, Oracle Payroll, and Oracle Human Resources. After you
import the timecards into Oracle Project Costing, you cost the timecards and derive the
default accounting using AutoAccounting. During cost processing, the raw cost and any
additional burden cost is calculated. Finally, you generate cost accounting events and
create accounting for the timecards in Oracle Subledger Accounting.
Chapter 1 - Page 8


Oracle Project Costing sends data to these applications:
Oracle Assets - Using asset capitalization functionality, you can define capital assets and
capture constructioninprocess (CIP) and expense costs for assets you are creating.
When you are ready to place assets in service, you can generate asset lines from the CIP
costs and send the lines to Oracle Assets for posting as fixed assets. You can also define
retirement adjustment assets and capture cost of removal and proceeds of sale amounts
(collectively referred to as retirement costs, retirement workinprocess, or RWIP) for
assets you are retiring that are part of a group asset in Oracle Assets. When your
retirement activities are complete, you can generate asset lines for the RWIP amounts and
send the lines to Oracle Assets for posting as adjustments to the accumulated depreciation
accounts for the group asset that corresponds to each asset.
Oracle General Ledger - Oracle Project Costing integrates with Oracle General Ledger
via Oracle Subledger Accounting so that you can update your general ledger with Oracle
Project Costing activity. You use Oracle Project Costing to collect project cost detail
transactions, and then to generate accounting events that Oracle Subledger Accounting
uses to create the accounting. Oracle Subledger Accounting transfers the final accounting
entries to Oracle General Ledger.
Chapter 1 - Page 9

Chapter 1 - Page 10

Oracle Subledger Accounting - Oracle Subledger Accounting is an intermediate step

between each of the subledger applications and Oracle General Ledger. Oracle Subledger
Accounting stores a complete and balanced subledger journal entry in a common data
model. Oracle Project Costing uses AutoAccounting, or the Project Budget Account
Generation workflow for integrated budgets, to derive default accounts for transactions.
You submit concurrent programs in Oracle Project Costing to generate accounting events
and create accounting entries in Oracle Subledger Accounting. Oracle Project Costing
predefines setup in Oracle Subledger Accounting so that it accepts the default accounts
that Oracle Project Costing derives without change. Oracle Subledger Accounting
transfers the final accounting to Oracle General Ledger. If you define your own detailed
accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting
overwrites default accounts, or individual segments of accounts, that Oracle Project
Costing derives using AutoAccounting.

Agenda
Chapter 1 - Page 11
Oracle Project Costing and Project Classes

You can use Oracle Project Costing to collect costs associated with all of your project
activities.
For example, you can use indirect projects to track costs associated with research and
development, non-billable sales proposal activities, or general overhead operational costs for
departments such as purchasing or human resources. Capital projects enable you to capture
construction-in-process (CIP) costs for assets you are creating. You can also use capital
projects to capture the cost of removal and proceeds of sale amounts (RWIP) for assets you are
retiring. You also can track costs associated with contract projects. In conjunction with Oracle
Project Billing, you can generate revenue and customer invoices for contract projects. This
enables you to report on both project costs and revenue.
For additional discussion regarding contract projects, see the course titled R12.x Project
Billing Fundamentals.
Chapter 1 - Page 12

Oracle Project Costing and Project Classes
Overview of Resources in Oracle Projects

Oracle Projects provides a centralized resource pool as part of the core foundation in which
employees and contingent workers are identified as resources. Each of the applications in the
Oracle Projects suite utilizes this resource pool differently:
Oracle Project Costing: Collects project-related timecard and expense report costs for
resources. Provides resource cost controls and cross-charging for shared resources.
Oracle Project Billing: Generates revenue and invoices by billing labor hours on a
project.
Oracle Project Management: Creates a budget for labor costs to plan and manage the
financial performance of projects throughout the project lifecycle.
Oracle Project Collaboration: Allows resources to participate as team members for
communicating progress against assigned tasks by directly accessing the published
workplan, and assigns actions to fellow team members so that the ownership and steps to
resolution are communicated clearly and consistently.
Oracle Project Resource Management: Locates the appropriate resources to staff project
requirements based on competencies and availability. As a resource, you can also search
for requirements that match your particular skills.
Chapter 1 - Page 13

Overview of Resources In Oracle Projects
Chapter 1 - Page 14

Collecting Resource Costs

Resources can charge time to projects. For labor costs, you can:
Associate each labor expenditure item with a scheduled work assignment and a work type.
Maintain labor cost rate schedules by employee or by job.
Calculate costs based on labor.
Override labor cost rates for individuals.
Define a method for calculating overtime cost.
Maintain burden schedules to calculate additional costs of doing business that support the
raw costs.
Report on actual resource utilization based on actual hours from timecards.
Query expenditure items for specific resources.
Oracle Project Costing integrates with Oracle Time & Labor to capture project-related
timecards for resources.
Resources can also charge expenses to projects. Oracle Project Costing integrates with Oracle
Internet Expenses and Oracle Payables to capture project-related expense reports.
Note: Employees and contingent workers do not have to be schedulable project resources to
charge time and expenses to projects. Optionally, you can use transaction controls to control
charges to tasks based on the resources assigned to the workplan tasks.
Cross Charge
When projects share resources within an enterprise, it is common to see those resources shared
across organization and country boundaries. Further, project managers can also divide the work
into multiple projects for easier execution and management. Oracle Project Costing provides
cross charge features to enable project managers to view the current total costs of the project,
regardless of who performs the work or where it is performed.
Project Allocations
You can use the allocations feature to distribute cost amounts between and within projects and
tasks, or to projects in other organizational units. You can select resources groups and
resources when you define allocation sources and proration basis methods.
Costing Flow
Oracle Project Costing enables you to track and account for all project costs. You can enter
transactions directly into Oracle Project Costing using expenditure batches, import transactions
from other Oracle Applications, such as Oracle Time & Labor, or import transactions from
external systems.
Costing Flow Example (Labor Cost)
1. Enter or import expenditures - You can enter pre-approved expenditure batches or
import transactions from other Oracle applications or external applications.
2. PRC: Distribute Labor Costs - Calculates the raw and burden cost amounts for labor cost
expenditure items and uses AutoAccounting to determine the default debit account for
each expenditure item.
3. PRC: Generate Cost Accounting Events - Uses AutoAccounting to determine the
default credit account for expenditure items and generates accounting events for
distributed transactions.
4. PRC: Create Accounting - Creates subledger journal entries for eligible accounting
events. You can run the program in either draft or final mode. Optionally, the program
can post journal entries in Oracle General Ledger.
Chapter 1 - Page 15

Costing Flow

5. PRC: Transfer Journal Entries to GL - When you run the program PRC: Create
Accounting, if you select No for the parameter Transfer to GL, then you run must the
program PRC: Transfer Journal Entries to GL to send journal entries to Oracle General
Ledger.
6. Journal Import (in Oracle General Ledger - Imports the final accounting entries from
Oracle Subledger Accounting into Oracle General Ledger.
Chapter 1 - Page 16
Collect and Manage All Costs

Oracle Project Costing is an integrated cost management solution for all projects and activities
within an enterprise. With Oracle Project Costing you can manage costs across currency and
organizational boundaries. Oracle Project Costing also acts as a central repository of project
transactions, processes project costs, and creates corresponding accounting.
Methods of Entering Expenditures
You can use pre-approved batches to enter expenditures directly into Oracle Project Costing
and Transaction Import to import expenditures into Oracle Project Costing from external
sources. In addition, you can use Microsoft Excel Integration to enter expenditures and then
import the expenditures into Oracle Project Costing. Oracle Project Costing also integrates
with other Oracle applications. You can collect project-related costs in applications such as
Oracle Time & Labor, Oracle Purchasing, Oracle Payables, Oracle iProcurement, Oracle
Inventory, Oracle Project Manufacturing, Oracle Asset Tracking, and Oracle Internet
Expenses.
Chapter 1 - Page 17

Collect and Manage All Costs
Manage Costs
After you collect costs, you can perform adjustments as needed. You can also use features such
as cross charge, burdening, project allocations, and asset capitalization to further process the
costs. The adjustment functionality in Oracle Project Costing gives you control over your
project costs. You can adjust your project costs online, create accounting for the adjustments,
and provide a historical audit trail of all activities. You can perform a wide variety of
adjustments - including correcting approved expenditures, changing the capitalizable or
billable status of expenditure items, recalculating raw or burdened costs, splitting expenditure
items, and transferring expenditures to another project.
Cross Charge
A cross charge takes place when the expenditure organization of an expenditure item is
different from task owning organization of the task being charged. These organizations are
called the provider and receiver organizations. The organizations can be within the same
operating unit or belong to different operating units. You may perform additional cross charge
processing to pass costs or share revenues between the provider and receiver organizations.
This processing includes creating borrowed and lent accounting entries or generating
intercompany invoices.
Chapter 1 - Page 18

Manage Costs
Chapter 1 - Page 19

Burdening
Burden costs are costs of doing business that support raw costs. For example, you can define a
burden cost code of G&A to burden specific raw costs with general and administrative
overhead costs. You can create subledger accounting for burden cost and post the accounting to
Oracle General Ledger.
Project Allocations
The allocations feature in Oracle Project Costing can distribute amounts between and within
projects and tasks, or to projects in other organizational units. For example, you can allocate
amounts such as salaries or administrative overhead across several projects and tasks.
Your allocations can be as simple or elaborate as you like. You identify the amounts you want
to allocate (source) and then define the targets, the projects and tasks to which you want to
allocate the source amounts. Optionally, you can offset the allocations with reversing
transactions. The system gathers source amounts into a source pool, and then allocates to the
targets using the basis method that you specify in the allocation rule. You can use a basis
method of Spread Evenly to divide the source pool amount equally among all the chargeable
target tasks included in the rule. Alternatively, you could select Prorate as the basis method to
use the attributes set in the Basis window.
When you allocate amounts, you create expenditure items whose amounts are derived from one
or more of the following sources:
Existing summarized expenditure items in Oracle Project Costing
A fixed amount
Amounts in an Oracle General Ledger account balance
Asset Capitalization
Using asset capitalization functionality, you can define capital assets and capture construction
inprocess (CIP) and expense costs for assets you are creating. When you are ready to place
assets in service, you can generate asset lines from the CIP costs and send the lines to Oracle
Assets for posting as fixed assets. You use capital projects to capture the costs of capital assets
you are building, installing, or acquiring.
You can also define retirement adjustment assets and capture cost of removal and proceeds of
sale amounts (collectively referred to as retirement costs, retirement workinprocess, or
RWIP) for assets you are retiring that are part of a group asset in Oracle Assets. When your
retirement activities are complete, you can generate asset lines for the RWIP amounts and send
the lines to Oracle Assets for posting as adjustments to the accumulated depreciation accounts
for the group asset that corresponds to each asset.
You can also calculate and record capitalized interest for capital projects. Capitalized interest
(also referred to as Allowance for Funds Used During Construction) is an estimate of the
interest cost that enterprises incur when they invest in longterm capital projects. Subject to
accounting rules and regulatory guidelines, enterprises can capitalize interest as part of the total
cost of acquiring and constructing assets that require an extended amount of time to prepare for
their intended use.
View Accounting: Transaction Details

From Oracle General Ledger, you can drill down to subledger details from the Account
Inquiry, Enter Journals, or View Journals windows for journals that have specific journal
sources assigned to them. For example, you can select a labor cost journal entry line with the
source Projects and select the Line Drilldown button to view the details in Oracle Subledger
Accounting. Next you can choose to either view the subledger journal entry or to view the
transaction. When you choose to view the transaction, the system drills down to Oracle Project
Costing and queries the individual expenditure items that make up the subledger journal entry
in expenditure inquiry.
You can also perform inquiries directly in Oracle Subledger Accounting to view transaction
details for accounting events. When you view a transaction for a cost accounting event, Oracle
Subledger Accounting drills down to Oracle Project Costing and automatically opens and
queries information in expenditure inquiry. Similarly, you can drill down to other subledger
applications to view transaction information for the accounting events that originated in those
applications. In Oracle Subledger Accounting, you can query accounting events, journal
entries, and journal entry lines based on multiple selection criteria.
Chapter 1 - Page 20

View Accounting: Transaction Details
View Accounting: Final Subledger Accounting Entries

You can use expenditure inquiry in Oracle Project Costing to view final subledger accounting
entries for expenditure items. Use the View Accounting option from the Tools menu to review
accounting entries. You must create accounting in final mode for the accounting events
associated with the expenditure item to view accounting entries.
Note: For both historical (prior to Release 12) expenditure items not migrated to Oracle
Subledger Accounting, and transactions accounted in an external system and interfaced into
Oracle Project Costing, the View Accounting option displays accounts from the cost
distributions table in Oracle Project Costing.
Chapter 1 - Page 21

View Accounting: Final Subledger Accounting Entries
View Expenditure Item Details

You can also use expenditure inquiry to view detailed information for each expenditure item.
Depending on the expenditure item, you can:
View cost distribution line information for each expenditure item, including the default
accounting entries that Oracle Project Costing derived using AutoAccounting, the PA
and GL period, and the accounting event generation status.
View the revenue distribution lines for billable expenditure items (contract projects).
Drill down to Oracle Payables if the supplier cost expenditure item was interfaced to
Oracle Project Costing from Oracle Payables.
Drill down to the Receipt Transaction Summary window in Oracle Purchasing for
receipt accrual expenditure items.
Drill down to view purchase order details in Oracle Purchasing for contingent worker
labor cost expenditure items that are associated with a purchase order.
Chapter 1 - Page 22

View Expenditure Item Details

Summary
Chapter 1 - Page 23

Quiz
Answer: a, d
Chapter 1 - Page 24

Quiz
Answer: b, c
Chapter 1 - Page 25

Quiz
Answer: b
Chapter 1 - Page 26

Quiz
Answer: a
Chapter 1 - Page 27

Chapter 1 - Page 28
Chapter 2
Defining Projects for Costing
Chapter 2 - Page 1


Chapter 2 - Page 2

Chapter 2 - Page 3

Objectives
Chapter 2 - Page 4

Agenda
Chapter 2 - Page 5
Overview of Projects and Tasks

You can create a project with one structure defined for workplan management purposes and
another defined for financial management purposes, or you can use one structure for both
purposes:
Workplan Management
- The workplan management functionality helps project managers and team members
deliver projects on time.
Financial Management
- Financial management functionality helps project and financial administrators and
managers track billing, costs, budgets, and other financial information for projects.
You can use three predefined project classes that track the following types of information:
Indirect projects - Track overhead activities and costs.
Capital projects - Track asset development activities and costs, and costs are capitalized
as one or more assets.
Contract projects - Contract projects track cost, revenue, and billing.
Chapter 2 - Page 6

Overview of Projects and Tasks
Project Classes and Project Types

Oracle Project Foundation predefines project classes, but you define project types as part of
your implementation. 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.
Chapter 2 - Page 7

Project Classes and Project Types
Overview of Project Templates

You use project templates to create new projects. When you create a project from a project
template or an existing project, Oracle Project Foundation copies the financial structure from
the source project or template. Project templates belong to only one operating unit. You can
maintain and copy project templates within an operating unit. However, project template
numbers are unique across operating units. A project template number cannot duplicate any
project or project template number within the installation.
For additional information, see the course titled "R12.x Project Foundation Fundamentals."
Chapter 2 - Page 8

Overview of Project Templates
Organizing a Project Structure

A project financial structure is a task tree showing the organization of project work. It can be
as simple or detailed as you want it to be. There are no limits in width or levels. The position of
the task in the hierarchy determines what you can do with it:
Top Task
- A task whose parent is the project.
- For example, use top tasks for budgeting and rollup reporting.
Middle Task
- A task that is not a top task or a lowest task.
- For example, use middle tasks for rollup reporting.
Lowest Task
- A task that is at the bottom of the structure, without any child tasks. A top task can
also be considered a lowest task, if the task does not have any child tasks.
- For example, use lowest tasks for transaction entry, budgeting, and override entry.
Expenditures are always charged to a lowest task.
Chapter 2 - Page 9

Organizing a Project Structure
Basic Project Information

Project Name - A short and descriptive name of a project. Use this name to find and
identify a project.
Long Name - A longer, unique descriptive name for the project. It can be up to 240
characters long. The default value is the short name (Name).
Project Number- A unique identification number of a project. You use this number to
find and identify the project. You can manually enter a project number, or let the system
automatically generate one for you. For audit trail purposes, you cannot modify a project
number after you charge expenditure items, requisitions, purchase orders, or supplier
invoices to the project. If project numbering is automatic, then you cannot modify the
number at any point.
Project Organization - The managing or owning organization of a project. Use the
organization for reporting and AutoAccounting purposes.
Project Type - The project type determines how Oracle Project Costing processes costs
(expenditure items) for a project and provides defaults and controls for project entry and
processing. For audit trail purposes, you cannot change a project type after you charge
expenditure items, requisitions, purchase orders, or supplier invoices to the project.
Chapter 2 - Page 10

Basic Project Information
Chapter 2 - Page 11

Project Status - Indicates the current status of a project.

Description - A description of the project.
Public Sector - Use the Public Sector check box to indicate whether a project is a private
or public sector project. Use this for reporting and AutoAccounting purposes.
Access Level - Access levels control who can search for and view a project. You can
specify one of the following access level values for a project:
- Secured
- Enterprise
Location - Use project location information to match resource location to work site
location (the location of the project). Location includes three attributes:
- City
- Region
- Country

Quiz
Answer: a
Chapter 2 - Page 12

Quiz
Answer: b
Chapter 2 - Page 13

Agenda
Chapter 2 - Page 14
Burden Schedules for Costing

Costing Burden Schedules
The default costing burden schedule for a project comes from its project type. You can enter
the following information in the Costing Burden Schedules window:
Burden Schedule
- Enter the burden schedule you want to use for this project or task.
Burden Hierarchy
- Enter the burden hierarchy you want to default to each burden schedule version.
Fixed Date
- Enter a fixed date for the burden schedule if you want all expenditure items to be
burdened with the multipliers in effect as of that date.
For additional discussion regarding burden schedules, see the lesson titled Implementing
Burden Costing.
Chapter 2 - Page 15

Burden Schedules for Costing
Organization Overrides
You can reassign an employees or an entire organizations costs and revenue to a different
organization for a particular project. When you enter an organization distribution override, the
new organization you enter overrides the expenditure organization Oracle Project Costing uses
in AutoAccounting and in burdening. For AutoAccounting processing, if an organization
distribution override exists, the destination organization of the override is substituted for the
actual expenditure organization. You can enter the following information in the Organization
Overrides window:
Source Organization - Enter the source organization whose costs and revenue you want
to assign to a different organization.
Employee Name/Number - Enter the name and number of the employee for this project
whose costs and revenue you want to assign to a different organization.
Expenditure Category - The expenditure category for the costs you want to assign to a
different organization.
Destination Organization - The new organization to which you want to reassign costs
and revenue.
Chapter 2 - Page 16

Organization Overrides
Project Currency
You define a project currency for each project. This currency can differ from the functional
currency of the operating unit that owns the project. You can select any active currency defined
in Oracle General Ledger.
In a multinational business environment, employees from locations across the world can report
to one operating unit. Therefore, an operating unit can own projects being managed and
implemented from various remote sites. The project managers of these projects need the ability
to report project costs and revenues in the local currencies of the countries where the work is
being performed. To accomplish this, you have the ability to define a project currency that
differs from the functional currency of the operating unit owning the project.
Chapter 2 - Page 17

Project Currency
Currencies and Expenditures

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.
Chapter 2 - Page 18

Currencies and Expenditures
Costing Currency Options

When you create a new project, the system copies the default value for the project currency
code from the functional currency defined in the Implementation Options for the projectowning operating unit. You can override the default currency code and enter default
conversion attributes for the project in the Costing tab of the Currency window. Oracle Project
Costing displays the attributes you select as the default values during expenditure entry, and
also uses the values for imported transactions.
Project Currency Attribute Hierarchy
To convert transaction currencies to functional and project currencies, Oracle Project Costing
must first determine the exchange rate type and exchange rate date. Each attribute is
determined separately. If Oracle Project Costing finds a rate type in step one, but no rate date is
present at that level, then it uses the rate type and then follows the logic to the next level to
determine the rate date. During project and task setup, Oracle Project Costing copies the values
you enter to all the underlying tasks in the financial structure.
Chapter 2 - Page 19

Costing Currency Options

Quiz
Answer: b
Chapter 2 - Page 20

Agenda
Chapter 2 - Page 21
Controlling Expenditures Overview

Oracle Project Costing provides you with many levels of charge controls:
Project Status - You can use the project status to control whether any charges are allowed
for the project.
Task Chargeable Status - You can specify a lowest task as chargeable or nonchargeable
to control whether any charges are allowed for the task.
Transaction Dates -You can specify the transaction dates of a lowest task to record the
date range for which charges are allowed for the task. You can also specify transaction
dates at the project-level.
Transaction Controls - You can define transaction controls to specify the types of
transactions that are chargeable or nonchargeable for the project and tasks.
Chapter 2 - Page 22

Controlling Expenditures Overview
Project Statuses
When you define a status, the Status Controls region contains a list of actions that are allowed
or restricted for each status. To allow charges on a project, you must assign the project a status
with the status control Create New Transactions enabled. To allow users to adjust transaction
on a project, you must assign the project a status with the status control Adjust Transactions
enabled. For additional discussion regarding defining project statuses, see the course titled
R12.x Project Foundation Fundamentals.
Note: The Create New Transactions status control only affects new transactions. It does not
prevent reversals that Oracle Project Costing creates when you adjust transactions. In addition,
it does not prevent you from splitting transactions. For example, if you change the project
status to a status that does not allow new transactions and transfer an existing expenditure item
to another project, then Oracle Project Costing still creates the reversing expenditure item on
the original project and task.
Chapter 2 - Page 23

Project Statuses
Task Chargeable Status

The Allow Charges check box controls whether or not you can charge new expenditure items
to a task. The default setting is to allow charges for all new tasks. Disable the Allow Charges
check box if you want to prevent new charges to a task.
Note: This task-level control only affects new transactions. It does not prevent reversals. For
example, if you disable the option for a task and transfer an existing expenditure item from that
task to a new task, then Oracle Project Costing still creates the reversing expenditure item on
the original task.
Chapter 2 - Page 24

Task Chargeable Status
Transaction Dates
Project Transaction Dates
The transaction start date and finish date control which transactions you can charge to the
project. You cannot charge an expenditure item to a project if the expenditure item date falls
outside the project-level transaction dates. You must enter a start date to enter a finish date.
Task Transaction Dates
Task transaction dates must be within the corresponding project dates and within the dates of
the parent task. The transaction start and finish dates control the transactions that can be
charged to the task. You cannot charge an expenditure item to a task if the expenditure item
date falls outside the task dates. Default values for task transaction dates are the project
transaction dates (for top tasks) or the parent tasks transaction dates (for subtasks).
Chapter 2 - Page 25

Transaction Dates
Transaction Controls
Use transaction controls to configure your projects and tasks to allow only charges that you
expect or plan. You can also define which items are billable and non-billable on your contract
projects. For capital projects, you can define which items are capitalizable and noncapitalizable. This proactive means to control charges to projects enables you to better manage
your projects. You enter transaction controls in the Project Options and Task Options windows.
You must specify either an employee or an expenditure category for each record. You can
specify a non-labor resource for usage expenditure types.
Employee Transaction Controls
Transaction controls that you define for people (employees and contingent workers) do not
apply to transactions that are not associated with people. This includes supplier cost
transactions entered for a supplier not associated with a person, and usage items incurred by an
organization and not a person. If you define transaction controls to list people who can charge
to your project, then Oracle Project Costing allows transactions incurred by those people. It
also allows any supplier cost transactions and usage items incurred by an organization, and any
other transactions that do not require an employee number.
Chapter 2 - Page 26

Transaction Controls
Chapter 2 - Page 27

When you enter expense reports in Oracle Payables using suppliers associated with employees,
Oracle Project Costing validates the transaction using the person associated with the supplier.
For example, if you specify that Donald Gray cannot charge to the project, and you enter an
expense report item for the supplier GRAY, DONALD who is associated with the person
Donald Gray, Oracle Project Costing does not allow you to charge the item to the project,
because it validates the transaction controls that you have defined.
Scheduled Expenditures Only Controls
When Oracle Project Resource Management is installed, you can specify that only employees
with scheduled work assignments are allowed to charge labor and expense report transactions.
Specifying Billable and Capitalizable Transactions
You can control what transactions for contract projects are non-billable and what transactions
for capital projects are non-capitalizable when you set the Billable/Capitalizable field. You can
choose between the options of No or Task Level. Select No if you want the charges to be nonbillable or non-capitalizable. Select Task Level if you want the billable or capitalizable status to
default from the task to which the item is charged.
Workplan Resources Only Controls
You can control charges to tasks based on the people assigned to the workplan tasks. For
information about the validation rules for timecards and expense reports when the Workplan
Resources Only control is set with the other transaction control attributes, see the Oracle
Project Costing User Guide.
Person Type Control
You can select no value, Employee Only, or Contractor Only from the list in the Person Type
field. You can use this control to specify whether transactions incurred by only employees,
only contractors (contingent workers), or both are chargeable. For additional information, see
the Oracle Project Costing User Guide.
Specifying Effective Dates for Transaction Controls
You can enter an Effective From and Effective To date for each transaction control record to
define transactions as chargeable for a given date range. You must specify an Effective From
date. The default Effective From date is the start date of the project or task. The Effective To
date is optional.
Validating Expenditures Against Transaction Controls
Oracle Project Costing checks all levels of transaction controls when you try to charge a
transaction to a project. Oracle Project Costing checks the control when you:
Enter an online or pre-approved expenditure item
Copy a pre-approved timecard item
Transfer an expenditure item to a new project or task
Enter a project-related requisition or purchase order distribution in Oracle Purchasing
Enter a project-related requisition distribution in Oracle iProcurement
Enter a project-related invoice distribution in Oracle Payables
Enter a project-related expense report in Oracle Internet Expenses
Run the concurrent program PRC: Transaction Import to import expenditures
Exclusive and Inclusive Transaction Controls

Exclusive Transaction Controls
Exclusive transaction controls allow all expenditures except those that are specified as non
chargeable in the transaction controls. Exclusive transaction controls is the default setting.
When you use exclusive transaction controls, you specify the non-chargeable criteria. Disable
the Limit to check box on the Transaction Controls window to make your transaction controls
exclusive.
Inclusive Transaction Controls
Inclusive transaction controls limit charges to only those expenditures that meet the specified
transaction control criteria. Oracle Project Costing rejects any expenditure that are not listed as
chargeable in the transaction controls. When you use inclusive transaction controls, by default,
nothing is chargeable. You must specify the chargeable criteria. Enable the Limit to check box
on the Transaction Controls window to make your transaction controls inclusive.
Chapter 2 - Page 28

Exclusive and Inclusive Transaction Controls
Allowable Charges for Each Transaction Control

You can use transaction controls to specify whether to allow charges, further controlling the
allowable charges. You usually select Chargeable when you use inclusive transaction controls.
Transaction Control Extension
To define more complex rules for implementing company-specific expenditure entry policies,
you can use the transaction control extension. Some examples of rules that you may define are:
You cannot charge new transactions to projects for which the work is complete. You can
only transfer items to these projects.
All entertainment expenses are non-billable.
Chapter 2 - Page 29

Allowable Charges for Each Transaction Control
Determining if an Item is Chargeable

Oracle Project Costing checks all levels of chargeability control when you try to charge a
transaction to a project. If the expenditure item passes the first three chargeability controls,
then Oracle Project Costing checks the transaction controls.
Chapter 2 - Page 30

Determining if an Item is Chargeable

Quiz
Answer: c
Chapter 2 - Page 31

Summary
Chapter 2 - Page 32
Chapter 3
Overview of Budgetary Controls, Budget Integration and Core Budgeting

Chapter 3 - Page 1

Overview of Budgetary
Controls, Budget Integration
and Core Budgeting


Chapter 3 - Page 2

Overview of Budgetary Controls, Budget Integration and Core

Budgeting

Chapter 3 - Page 3
Instructor Note
This lesson discusses budgeting in the context of budgetary controls and budget integration.
Other approaches to budgeting and forecasting are available as features of Oracle Project
Management and are covered in the course titled R12.x Project Management Fundamentals.
In Practice Create a Bottom-Up Integrated Budget, at Step 19, please note that to add budget
amounts, the Encumbrance Year for the Vision Services Ledger must be opened to the current
year. (Responsibility: General Ledger, Vision Services (N) Setup > Open/Close)

Chapter 3 - Page 4

Objectives

Agenda

Chapter 3 - Page 5
Overview of Budgetary Controls

You can enforce budgetary controls against a GL budget and a project cost budget. Budgetary
controls enable you to monitor and control expense commitment transactions. Expense
commitment transactions are transactions for non-inventory items. Oracle Project Costing
enforces budgetary controls for:
Project-related purchase requisitions and purchase orders entered in Oracle Purchasing
Contingent worker purchase orders entered in Oracle Purchasing
Supplier invoices entered in Oracle Payables
Project-related prepayments not matched to a purchase order and the application of
unmatched prepayments to supplier invoices
Note: Budgetary controls are not enforced for project-related expense reports entered in Oracle
Payables because you generally enter expense reports after costs are already incurred.
Therefore, you should ensure that your procedures for approving expense report expenditures
include verification of available funds according to your business requirements.

Chapter 3 - Page 6

Overview of Budgetary Controls
Budgetary Control Settings: Time Intervals

A time interval defines the budget amounts and the transactions included in the available funds
calculation. Time interval settings identify the beginning and the ending periods included in the
calculation. The amount type identifies the beginning period and a boundary code identifies the
ending period. The budgetary control process determines available funds by summing the
budget amounts and subtracting actual and committed transaction amounts for a time interval.
If the budget is time-phased by GL period, then the GL period is used. Alternatively, if the
budget is time-phased by PA period, then the PA period is used.
The Amount Type defines the start of a time interval to determine funds availability:
Period To Date - From the start of the period in which the expenditure item date falls
Year To Date - From the start of the year in which the expenditure item date falls
Project To Date - From the start of the project
The Boundary Code determines the end of a time interval to determine funds availability:
Period - To the end of the period that includes the expenditure item date
Year - To the end of the year in which the expenditure item date falls
Project - To the end of the project

Chapter 3 - Page 7


Only certain combinations of amount type and boundary code are valid.

Chapter 3 - Page 8

Budgetary Control Settings: Control Levels

You use budgetary control levels to set the degree of control the system imposes on project
commitment transactions. You can enter default control levels at the project type, project
template, and project levels. You can also define default values for resource lists. Select from
the following control levels:
Absolute - The transaction is rejected if sufficient funds are not available.
Advisory - The transaction is accepted when sufficient funds are not available, but the
system issues a warning notification that available funds are exceeded.
None - The transaction is accepted without budgetary control validation.
When control levels are either Absolute or Advisory, the budgetary control process first tests
the lowest budget level to determine the availability of funds. If funds are available for a
transaction at the lowest level, then the validation tests the next level in the budgetary control
hierarchy. The process continues until the transaction passes all levels or fails at any level. If a
transaction fails budgetary control at a level with a control level of Absolute, the process is
discontinued. However, if the control level is Advisory, an insufficient funds warning
notification is generated and the budgetary control process continues to the next level.

Chapter 3 - Page 9

Budgetary Control Settings: Control Levels
Example: Budgetary Control Rollup

The diagram illustrates an example of a budgetary control rollup that reflects budget amounts
at all budget levels, including resource, resource group, lowest task, top task, and project.
At the resource level, the available funds for resources roll up into the available funds for the
resource groups. The available funds for the resource groups roll up into the available funds for
the lowest tasks. The available funds for the lowest tasks then roll up into the available funds
for the top tasks. Finally, the available funds for the top tasks roll up into the available funds
for the project.
For example, as illustrated for Top Task 2, Resource B1 and Resource B2 each have total
available funds of $10. Combined, the total funds of Resource B1 and B2 roll up into the
available funds of $20 for Resource Group B. The total available funds of Resource Group B
and Resource Group C roll up into the available funds for Lowest Task 2.1, which equals $40.
The total available funds for top task 2.1 roll up into the available funds for Top Task 2, which
equals $40. The total available funds of Top Task 2, $40, plus the total available funds of Top
Task 1, $20, roll up into the available funds for Project 1, which equals $60.

Chapter 3 - Page 10

Example: Budgetary Control Rollup
Entering Budget Amounts for Controlled Budgets

Budget Amounts for Resources
If the budgetary control level for resources or resource groups is Absolute or Advisory, and no
budget amount is entered for a resource or resource group, then Oracle Project Costing treats
the budget amount as zero. Transactions that map to resources with no budget amounts fail
budgetary control at an Absolute level and pass budgetary control with a warning at an
Advisory level.
A budget entry category called Unclassified is available at the resource list level. This category
enables you to enter one budget amount for a group of resources. You can selectively control
costs for some resources within a resource group by entering specific budget amounts for those
resources. You can then use the Unclassified category to budget for the remaining resources
within the resource group. The Unclassified category serves as a budget line for any resource
for which a specific budget line does not exist.
Burden Cost Amounts
If burdening is enabled for a project, then all budgetary control is performed using the
transaction burdened cost. Oracle Project Costing provides the following methods of
accounting for burden costs:

Chapter 3 - Page 11

Entering Budget Amounts for Controlled Budgets
Same Expenditure Item

- When you account for burden cost on the same expenditure item as raw costs, the
budgetary control process calculates the burden cost amounts for a transaction and
adds them to the raw cost amount. The process then maps the burdened transaction
amount to a budget line and performs the necessary budgetary control validation.
- When you use the Same Expenditure Item method of accounting for burden costs,
enter budget amounts for the burdened transaction costs.
Separate Expenditure Item
- When you account for burden costs as separate expenditure items, the budgetary
control process calculates the burden cost amounts for each burden cost component
and separately maps each burden amount and the raw cost amount to a budget line.
Individual budgetary control validations are performed for each component. If any
component fails validation, then the entire transaction is rejected.
- When you use the Separate Expenditure Item method of accounting for burden
costs and you are not using a resource list for budget entry, enter budget amounts
for the burdened transaction costs. The burden costs and the raw cost are mapped to
budget lines using the same mapping rules and are therefore mapped to the same
line.
- When you use this burden accounting method and you are budgeting using a
resource list, the burden costs are not mapped using the resource for the raw cost.
You must ensure that each burden cost component maps to a budget line with the
desired budgetary control setting. To do this, define your burden cost components
as resources on your resource list and then use these resources to enter budget
amounts for burden costs. This enables you to enter a budgetary control setting for
each burden cost component and a control setting for budget lines defined for raw
costs. If you do not want to impose budgetary controls on burden cost amounts,
then you can assign a control setting of None for all budget lines for burden
component resources.
- An alternative to defining resources on your resource list for burden cost
components is to use the Unclassified budget entry category to budget for burden
cost amounts. If a budget line cannot be found for the burden cost components and
an Unclassified budget line exists, then the budgetary control process maps the
burden costs to the Unclassified line.

Chapter 3 - Page 12

Budget Definition Strategies

Oracle Project Costing budgetary controls only apply to expense commitment transactions.
Budgetary controls do not apply to other project-related transactions such as timecards,
expense reports, or inventory item purchases. Therefore, when you enable budgetary controls
for a project, it is recommended that you use one of the following strategies for defining cost
budget amounts:
Strategy 1: Define Two Budgets - Define an overall project cost budget. The overall cost
budget tracks all project costs. Do not enable budgetary controls for the Approved Cost
Budget type. Define a separate budget for expense commitment transactions. It is
recommended that you create a user-defined budget type for the commitment budget.
Enable budgetary controls for this budge type.
Strategy 2: Define One Cost Budget - The second approach uses one cost budget for all
anticipated project costs. The budget includes separate budget lines for expense
commitment transactions and all other project costs. When you define a project, enable
budgetary controls using this budget type. It is recommended that a control setting of
None be entered for all other budget lines.

Chapter 3 - Page 13

Budget Definition Strategies
Transaction Processing with Controlled Budgets

Initiating Budgetary Control Validation in Oracle Purchasing and Oracle Payables
In Oracle Purchasing and Oracle Payables, budgetary control processes are activated when you
select the Check Funds option for a transaction, and also during the transaction approval.
Funds Check Activation in Oracle Project Costing
In Oracle Project Costing, budgetary controls only apply to expense commitment transactions.
You interface project-related expense commitment transactions from Oracle Purchasing and
Oracle Payables to Oracle Project Costing as supplier costs. After you interface supplier costs
to Oracle Project Costing, you can adjust the expenditure items in Oracle Project Costing.
You run the program PRC: Distribute Supplier Cost Adjustments to process the adjusted
supplier cost expenditure items. This program uses AutoAccounting in Oracle Project Costing
to determine the default expense account for the adjustments. This program also performs a
budgetary control validation for transactions meeting all of the following criteria:
The supplier cost originated in Oracle Purchasing or Oracle Payables
The transaction is charged to a project with budgetary controls enabled
The transaction is an expense item

Chapter 3 - Page 14

Transaction Processing with Controlled Budgets

Chapter 3 - Page 15

When you change a burden multiplier, you must run one of the following programs to initiate
budgetary control validation for the changed burden amounts. The program you run depends
on the burdening method for the project.
PRC: Distribute Total Burdened Costs - Run this program if the project is set up to
account for total burdened costs.
PRC: Create and Distribute Burden Transactions - Run this program if the project is
set up to account for burden costs by burden cost component.
If funds are available for the adjusted expenditure amounts, then the adjustment item is cost
distributed. If funds are not available for an item, then the item is not distributed and an
exception is reported.
Oracle Project Costing also performs budgetary control validation for contingent worker labor
costs related to a purchase order when you run the program PRC: Distribute Labor Costs or
PRC: Distribute Labor Costs for a Range of Projects.
If an item is not cost distributed as a result of a budgetary control failure, then you must
perform one of the following actions and rerun the distribution program:
Increase budget amounts so funds are available for the expenditure item.
Decrease the budgetary control level from Absolute to Advisory or None for the budget
level causing the budgetary control failure.
For an adjusted item, undo the change that increased the expenditure item amount. For
example, if you increased a burden cost rate, then set the rate back to its original value.
For a transferred item, transfer the item to a task within the same project, or to another
project or project task that has sufficient funds available or that does not have budgetary
controls enabled.
Overview of the Budgetary Control Process Flow

The following activities take place during budgetary control validation:
1. Source subledger applications generate accounting events. For example, both Oracle
Purchasing and Oracle Project Costing generate accounting events when you check funds
for a purchase order when top-down budgeting and burdening is enabled for the project.
2. Source subledger application calls the budgetary control API.
3. Budgetary control API calls the Oracle Subledger Accounting Online Process.
4. Oracle Subledger Accounting Online Process processes the accounting events to create
accounting entries and calls the Oracle Subledger Accounting Validation Routine.
5. Oracle Subledger Accounting Validation Routine populates the GL_BC_PACKETS table
with the accounting entries and calls the PSA/GL funds check API.
6. PSA/GL funds check API first calls the Projects funds check API.
7. If a project-related transaction is being validated, then Projects funds check API checks
for funds availability and returns status to PSA/GL funds check API.
8. If Projects funds check API returns a success value, then PSA/GL funds check API
processes the transaction for GL funds availability.

Chapter 3 - Page 16

Overview of the Budgetary Control Process Flow

9. PSA/GL funds check API and Projects funds check API coordinate status information.
10. Success and failure statuses are updated in GL_BC_PACKETS table.
11. The accounting entries are committed as final or draft, depending on the status returned
from the Oracle Subledger Accounting Validation Routine and on whether reserve funds
(final) or check funds (draft) was invoked.

Chapter 3 - Page 17
Viewing Budgetary Control Results

After the transaction is validated against the project budget, you can view the results from the
Funds Check Results window. The window displays budgetary control results for transactions.
Note: You can also view the budgetary control results from the source application after the
funds validation action is performed. The results are displayed in an XDO report format.
Funds Check Results Window
To review transaction budgetary control results, perform the following steps:
1. Navigate to the Find Funds Check Details window.
2. Enter selection criteria.
3. Choose the Find button to display the Funds Check Results window.
4. Select a budget level tab to view information for a specified budget level.
For a list of budgetary control results messages, see the Oracle Project Management User
Guide.

Chapter 3 - Page 18

Viewing Budgetary Control Results
Maintaining Budgetary Control Balances

Oracle Project Costing maintains budgetary control balances for all projects that use budgetary
controls. For each budget line, the budget amount, the commitment transactions total, and the
total actuals related to commitment transactions are maintained. The system also calculates
available funds for each budget category and budget period.
When you create a baseline from the original budget version, the system creates initial
balances. When you run PRC: Maintain Budgetary Control Balances, the program updates the
balances. The updated balances are displayed in the Budget Funds Check Results window. To
determine how often to schedule the program, consider the number of project-related
commitments your business creates each day as well as your online inquiry business needs.
The Budget Funds Check Results window displays budget, actuals, commitments, and
available funds balances for each budget level. The window includes a tabbed region for each
project budget level. The levels can include the following: project, top task, task, resource
group, and resource. You can use the window to review project-to-date transactions and to plan
future expenditures. You can also use the information in this window, along with the
Transaction Funds Check Results window, to troubleshoot budgetary control failures.

Chapter 3 - Page 19

Maintaining Budgetary Control Balances
Budgetary Controls Cross Charge Restriction

A transaction is subject to the budgetary controls defined for only the ledger in which the
transaction originates. Therefore, when you enable budgetary controls for a project, you cannot
enter cross charge transactions that cross ledgers.
The following scenario illustrates the need for this restriction:
Two ledgers are defined in an installation of Oracle Applications.
In Ledger One (L1), budgetary controls are enabled in Oracle General Ledger and Oracle
Payables.
In Ledger Two (L2), budgetary controls are not enabled in any application.
Project A is defined in L1 and budgetary controls are enabled for the project. If you enter a
commitment transaction in L2 for Project A, the transaction does not undergo budgetary
control validation, because budgetary controls are not enabled in L2.

Chapter 3 - Page 20

Budgetary Controls Cross Charge Restriction

Quiz
Answer: a

Chapter 3 - Page 21

Quiz
Answer: d

Chapter 3 - Page 22

Quiz
Answer: b

Chapter 3 - Page 23

Agenda

Chapter 3 - Page 24
Overview of Budget Integration

Top-Down budget integration enables financial managers to maintain centralized control of
organization spending while still granting project managers flexibility in managing their
individual projects. An organization-level budget defines overall spending limitations. Project
budgets consume funds from the organization-level budget and are used to control spending for
individual projects.
Bottom-Up budget integration enables you to create centralized organization-level budgets
from defined project budgets. The organization-level budget amounts are an accumulation of
project budget amounts and may also include budget amounts from other sources. Financial
managers use the organization-level budgets to view budgeted figures for the organization as a
whole, while project managers maintain independent budgets to monitor spending and revenue
generation for each project.
Non-integrated budgets with budgetary controls enable you to control spending against your
project budget without sending budget-related accounting entries to Oracle General Ledger.

Chapter 3 - Page 25

Overview of Budget Integration
Generating Accounting for Integrated Budgets

Oracle Project Costing uses the Project Budget Account Generation workflow to generate
default accounts for budget lines. The budgets that you define in Oracle General Ledger are
account-level budgets (by account and GL period). Therefore, when you enter project budget
amounts for integrated budget types, you must use a budget entry method that is time-phased
by GL period, and you must assign an account to each project budget line.
If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle
Subledger Accounting overwrites default accounts, or individual segments of accounts, that
Oracle Project Costing generates using the Project Budget Account Workflow. You run the
program PRC: Transfer Journal Entries to GL to transfer the final subledger journal entries
from Oracle Subledger Accounting to Oracle General Ledger.
Important: If you update account derivation rules for budgets in Oracle Subledger
Accounting, then you must carefully consider the affect of the updates on existing integrated
budgets. The baseline process fails if a revised account derivation rule overwrites accounts for
budget lines that are associated with transactions.
For top-down budget integration, Oracle Project Costing generates accounting events to create
project budget encumbrance accounting entries. Oracle Project Costing generates the

Chapter 3 - Page 26

Generating Accounting for Integrated Budgets

Chapter 3 - Page 27

accounting events and initiates the process to create accounting in final mode in Oracle
Subledger Accounting in the following circumstances:
When you run the process PRC: Year End Budget Rollover to transfer year-end balances
for top-down integrated project budgets to the next fiscal year
When you create a baseline version for a top-down integrated project budget
For bottom-up budget integration, Oracle Project Costing generates accounting events to create
budget accounting entries. Oracle Project Costing generates the accounting events and initiates
the process to create the subledger accounting in final mode when you create a baseline version
for a bottom-up integrated project budget.
In addition, when you initiate the Check Funds action for an integrated budget, Oracle Project
Costing creates accounting in draft mode in Oracle Subledger Accounting.
Accounting Event Model Overview

Oracle Project Costing predefines the Budgets event entity to use for integrated budgets. An
event entity enables Oracle Subledger Accounting to handle the accounting for similar business
events in a consistent manner.
In addition, Oracle Project Costing predefines the Budget event class and two event types
Budget Year End Rollover and Budget Baseline, for the Budgets accounting event entity. An
event class represents a category of business events for a particular transaction type or
document. An event type represents a business operation that you can perform for an event
class. Oracle Projects generates accounting events for the Budget event class when you enable
either top-down or bottom-up budget integration for a project budget.

Chapter 3 - Page 28


Oracle Project Costing also predefines event classes and event types for the Requisition,
Purchase Order, and Release accounting event entities in Oracle Purchasing, and for the AP
Invoices accounting event entity in Oracle Payables. These event classes and event types are
for encumbrance accounting for burden cost on project-related commitments in Oracle
Purchasing and Oracle Payables.
Oracle Project Costing creates project encumbrance entries when you enable top-down budget
integration for a project. Oracle Project Costing provides this setup in Oracle Purchasing and
Oracle Payables so that these applications can create encumbrance for burden costs.
Oracle Purchasing and Oracle Payables create encumbrance journals whenever any funds
related action is performed for a document. For example, when you perform a Check Funds
action for document, the encumbrance accounting events are processed to create the
encumbrance journals in draft mode. When you perform a Reserve Funds action for a
document, the encumbrance accounting events are processed to create the encumbrance
journals in final mode and the funds balances are updated. After processing is complete, you
can review the updated funds balances.

Chapter 3 - Page 29


Oracle Purchasing or Oracle Payables derives using the Account Generator.
For a list of the predefined event classes and event types, see the Oracle Projects
Implementation Guide.

Chapter 3 - Page 30
Budget Check Funds Processing Overview

You can choose to perform a budget check funds before you submit the budget for baseline
processing. The following processing occurs during a budget check funds:
1. Oracle Project Costing determines the default accounts using the Project Budget Account
Generation Workflow.
2. Oracle Project Costing validates funds.
- For top-down integrated budgets, Oracle Project Costing validates existing approved
transaction amounts (at resource, resource group, task, top task and project levels)
against the project budget.
3. Oracle Project Costing generates accounting events.
4. Oracle Subledger Accounting creates accounting entries in draft mode for the accounting
events.
5. Oracle Project Costing validates funds.
- For bottom-up budget integration, Oracle Project Costing validates the budget
amounts against an organization-level Oracle General Ledger budget.

Chapter 3 - Page 31

Budget Check Funds Processing Overview

- For top-down integrated budgets, Oracle Project Costing validates budget amounts
against the General Ledger Funding Budget and then validates existing approved
transaction amounts (at account level) against the project budget.
6. Oracle Project Costing updates the budget lines with the accounting information from
Oracle Subledger Accounting and the budget check funds result status.

Chapter 3 - Page 32
Creating a Baseline for an Integrated Budget

When you create a baseline version for an integrated project budget, the baseline process
performs the following activities:
1. Validates the submitted budget version.
2. Creates a baseline for the new budget version.
3. Validates funds.
- For top-down integrated budgets, the baseline process validates existing approved
transaction amounts (at resource, resource group, task, top task and project levels)
against the project budget.
- Note: When you use the PA: Budget Workflow to control budget status changes,
Oracle Project Costing performs funds validation only after the budget is approved.
4. Generates accounting events to reverse the accounting for the most recent baseline
version, if one exists, and to create accounting for the new baseline version.
- For bottom-up budget integration, the baseline process generates accounting events to
create budget journal entries.

Chapter 3 - Page 33

Creating a Baseline for an Integrated Budget

Chapter 3 - Page 34

- For top-down integrated budgets, the baseline process generates accounting events to
create encumbrance journal entries.
5. Creates accounting in final mode for the accounting events in Oracle Subledger
Accounting.
6. Validates funds.
- For bottom-up budget integration, the baseline process validates the budget amounts
against an organization-level Oracle General Ledger budget.
- For top-down integrated budgets, the baseline process validates budget amounts
against the General Ledger Funding Budget and then validates existing approved
transaction amounts (at account level) against the project budget.
- Note: If the budget fails funds validation, then the baseline process removes the
accounting entries it created from Oracle Subledger Accounting and updates the
submitted budget version to Rejected status.
You run the program PRC: Transfer Journal Entries to GL to transfer the journal entries to
Oracle General Ledger. When you submit the program PRC: Transfer Journal Entries to GL,
you can optionally choose to have the program post the journal entries. Otherwise, you can
manually post the journal entries in Oracle General Ledger. The baseline program updates
funds balances in Oracle General Ledger. The program PRC: Transfer Journal Entries to GL
does not affect funds balances.
For non-integrated budgets with budgetary controls, the baseline process validates the
submitted budget version, creates baseline version, and validates existing transaction amounts
against the project budget. The baseline process does not generate and process accounting
events for non-integrated budgets.
Budget Integration Workflow

When a project uses budgetary controls, the budget baseline process launches the PA: Budget
Integration workflow to perform the baseline processing tasks.

Chapter 3 - Page 35

Budget Integration Workflow
Reviewing and Overriding Budget Account Details

You can review and optionally override default accounts, or an account segment, generated by
the Project Budget Account Generation workflow.
Note: Do not update the account for the budget line if the budget line is associated with
transactions. Updating the account causes the baseline process to fail.
Oracle Project Costing generates using the Project Budget Account Generation workflow. If no
transactions exist for a budget line, then Oracle Project Costing updates the budget line with
the new account when you manually update accounts on the Budget Accounts Details window
and when you define account derivation rules in Oracle Subledger Accounting to overwrite
accounts.

Chapter 3 - Page 36

Reviewing and Overriding Budget Account Details
Viewing Encumbrance and Budget Subledger Accounting

You can use the subledger accounting events drill-down and inquiry menu options in Oracle
Project Costing, Oracle Payables, and Oracle Purchasing to view information about budget and
encumbrance journal entries. You can:
Perform an inquiry on accounting events, journal entries and journal entry lines based on
multiple selection criteria.
View information about an accounting event or journal entry error.
View detailed information about the subledger journal entry headers for a given
accounting event.
Compare subledger journal entry information for any two journal entries.
View subledger journal entry lines for a number of different documents or transactions.
View subledger journal entry in T-account format.

Chapter 3 - Page 37

Viewing Encumbrance and Budget Subledger Accounting

Quiz
Answer: a

Chapter 3 - Page 38

Agenda

Chapter 3 - Page 39
Top-Down Budget Integration

When enterprises use top-down budgeting, top management defines spending limits for each
organization. Budgetary controls are set to enforce the limits, and encumbrance accounting
creates reservations for planned expenditures.
The reservations ensure that funds will be available when project costs are incurred, and
provide a complete picture of funds available for future use.

Chapter 3 - Page 40

Top-Down Budget Integration
Top-Down Budget Integration Procedures

Defining General Ledger Funding Budgets
Before you can define budget integration, you must define an organization-level funding
budget or budgets in Oracle General Ledger. To set an organization's spending limits, you enter
funding budget balances for the accounts assigned to each budget organization.
Defining Budget Integration
To reserve funds in General Ledger funding budgets for anticipated project costs, define
budget integration using the Budgetary Controls option from the Projects, Templates window.
When you define integration for your project, use the budget type you plan to use for your
commitment budget and select the Encumbrance balance type. You must define Integration
before you create a baseline version for the project budget and before you enter any project
transactions. See the section of this lesson titled "Implementation Steps."
Entering Budget Amounts and Generating Accounts
When you define a commitment budget for controlling expense-type commitment transactions
and create a baseline version, the system generates encumbrance entries to create a project
encumbrance against the funding budget. The project encumbrance reserves funds for the

Chapter 3 - Page 41

Top-Down Budget Integration Procedures

Chapter 3 - Page 42

anticipated project commitment costs. When project-related expense commitment transactions

are approved, the project encumbrance is reduced and new commitment encumbrances created.
When you define integration using the Encumbrance balance type, the system automatically
enables budgetary controls for the project. The Project control level is automatically set at
Absolute and cannot be changed. Oracle Project Costing uses budgetary controls to ensure that
the project commitment total for expense transactions never exceeds the project commitment
budget and the amounts reserved in the General Ledger funding budget.
Creating a Baseline Budget Version
When a project is set up to use top-down integration, the process to create a baseline version
varies depending on whether you use workflow to control budget status changes.
If you do not use workflow to control budget status changes, then Oracle Project Costing
calls the PA: Budget Integration Workflow.
If you use workflow to control budget status changes, then Oracle Project Costing changes
the budget version status to In Progress and calls the budget approval workflow. After the
budget is approved, baseline processing continues for the budget version. Oracle Project
Costing displays any rejections encountered during baseline processing in the budget
approval notification.
When you submit a top-down integrated budget, Oracle Project Costing:
Validates the submitted budget version.
Creates a baseline version
Validates existing approved transaction amounts (at resource, resource group, task, top
task and project levels) against the project budget.
Generates accounting events
Creates encumbrance journal entries in final mode for the accounting events in Oracle
Subledger Accounting
Validates budget amounts against the General Ledger Funding Budget
Validates existing approved transaction amounts (at account level) against the project
budget.
If the baseline version is the initial baseline version for the budget, then Oracle Project Costing
creates and validates encumbrance journal entries for this budget version. If a prior baseline
version exists, then Oracle Project Costing creates and validates reversal encumbrance journal
entries for the most recent baseline version and new encumbrance journal entries for the new
baseline version.
Transferring Budget Journals to Oracle General Ledger
You run the program PRC: Transfer Journal Entries to GL to transfer encumbrance journal
entries from Oracle Subledger Accounting to Oracle General Ledger.
Posting Encumbrance Journals
When you submit the program PRC: Transfer Journal Entries to GL, you can optionally choose
to have the program post the journal entries. Otherwise, you can manually post the journal
entries in Oracle General Ledger. The baseline process updates funds balances in Oracle
General Ledger. The program PRC: Transfer Journal Entries to GL does not affect funds
balances.
Encumbrance Accounting Example

You enter a top-down integrated budget for a project. The budget entry method must use GL
periods for budgeting. In this example, the budget entry method uses a resource list that is
grouped into resource groups (expenditure organizations in this example). Each resource group
is broken down into resources (expenditure categories in this example).

Chapter 3 - Page 43


The Account Generator creates GL accounts for each budget line. The baseline process
validates the submitted budget version, creates a baseline version, validates existing approved
transaction amounts (at resource, resource group, task, top task and project levels) against the
project budget, generates accounting events, creates encumbrance journal entries in final mode
for the accounting events in Oracle Subledger Accounting, validates budget amounts against
the General Ledger Funding Budget, and validates existing approved transaction amounts (at
account level) against the project budget.

Chapter 3 - Page 44


The Finance Department submits the program PRC: Transfer Journal Entries to GL and selects
Yes for the parameter Post in General Ledger. The program transfers encumbrance journal
entries from Oracle Subledger Accounting to Oracle General Ledger and posts the journal
entries in Oracle General Ledger.
Note: The account 01-000-1280-000 is defined as the Reserve for Encumbrance Account in
Oracle General Ledger.

Chapter 3 - Page 45

Creating Project Budgets for TopDown Budget Integration

When you define top-down budget integration for a project, it is recommended that you create
a commitment budget for tracking and controlling the project's expense commitment
transactions. Keep in mind the following considerations:
Budgetary Controls are automatically enabled when top-down integration is defined.
General Ledger accounts must be assigned to all budget lines for integrated budget types.
When you create a budget for an integrated budget type, you must use a budget entry
method that is time phased by GL period.
You must create a budget line for each budget category and budget period for which
commitment transactions are expected.
The process to create a baseline version varies depending on whether you use workflow to
control budget status changes.
Additional validations occur when you create a baseline for an integrated project budget.
Note: For top-down budget integration, you also need to enable encumbrance accounting in
Oracle Purchasing and Oracle Payables and budgetary control in Oracle General Ledger. See
the section of this lesson titled "Implementation Steps."

Chapter 3 - Page 46

Creating Project Budgets for Top-Down Budget Integration
Maintaining the Project Budget

When you modify a top-down integrated budget, the baseline process performs the following
tasks for the new budget version:
Validates the budgetary controls defined for the project budget
Validates the budgetary controls defined for the funding budget
Validates the General Ledger period statuses
Updates the project encumbrance against the funding budget
Project Budgetary Controls
The system validates budgetary controls when budget amounts are deleted or decreased or
when the budget entry method is changed. When budget amounts are reduced, the baseline
process performs budgetary control validations to ensure that existing transaction totals do not
exceed available funds calculated using the new budget amounts. When the budget entry
method is changed and a budget version is created using new budget categories, the baseline
process maps all existing transactions in open GL periods to a budget line in the new budget
version. Budgetary control validations are then performed for each transaction that uses
budgetary controls defined for the new budget lines. If any transaction generates a budgetary
control failure, the baseline process fails. If the baseline process fails, you can troubleshoot by

Chapter 3 - Page 47

Maintaining the Project Budget

Chapter 3 - Page 48

viewing the rejected budget version in the Budget Funds Check Results window. You can also
use the Funds Check Results window to view the rejection reason for the particular transaction
that failed during the baseline process.
Funding Budget Controls and GL Period Statuses
When budget amounts are increased or new budget lines are entered, additional funds must be
reserved in the funding budget. Therefore, the baseline process performs a budgetary control
validation against the funding budget to ensure that funds are available for the additional
project budget amounts. If any budgetary control failures are returned, the baseline process
fails.
Project Encumbrance Maintenance
When a baseline is successfully created for a revised budget, the project encumbrance against
the funding budget is adjusted. If new budget lines are added or existing budget line amounts
are increased, then additional funds are reserved in the funding budget. If budget lines are
decreased or deleted, then project encumbrances are liquidated, reducing the project
reservation. The Accounted Amount column on the By Account tab of the Budget Accounts
Details window displays the encumbrance adjustment amounts. Positive values reserve
additional funds and negative values reduce the current reservation.
Year-End Processing
When budgeted funds for a fiscal year are not used by the end of the year, many businesses
move the available amounts to the next year. Organizations that operate under budget do not
lose the budgeted amounts. Instead, their spending limits for the next year are increased.
The PRC: Year End Budget Rollover program transfers year-end balances for top-down
integrated project budgets to the next fiscal year. The program performs budget rollover
functions for all selected top-down integrated budgets. The program calculates transfer amount
for each project budget line by subtracting the total actual and commitment balances from the
budgeted amounts. The program then adds the transfer amount for each project budget line to
the budget amount for the first period of the next fiscal year.
When the program PRC: Year End Budget Rollover is complete, you run the program PRC:
Transfer Journal Entries to GL to transfer the encumbrance journal entries to Oracle General
Ledger. When you submit the program PRC: Transfer Journal Entries to GL, you can
optionally choose to have the program post the journal entries. Otherwise, you can manually
post the journal entries in Oracle General Ledger.

Chapter 3 - Page 49

Year-End Processing

Agenda

Chapter 3 - Page 50
Bottom-Up Budget Integration

When enterprises use bottom-up budgeting, they build organization-level budgets by
consolidating budget amounts from lower-level sources. When you define budget integration
for a project, the project budget can be consolidated automatically.

Chapter 3 - Page 51

Bottom-Up Budget Integration
Bottom-Up Budget Integration Procedures

Defining an Organization-Level Budget
You must define your organization-level budget or budgets in Oracle General Ledger. In
Oracle General Ledger, budgets contain estimated cost or revenue amounts for a range of
accounting periods. Budget organizations define the departments, cost centers, divisions, or
other groups for which budget data is maintained. You assign accounts to each budget
organization. You create organization budget balances by entering budget amounts for the
assigned accounts.
Defining Budget Integration
You define budget integration using the Budgetary Control option from the Projects,
Templates window. You can use any project budget type to define bottom-up budget
integration. You must define Integration before you create a baseline version for the project
budget and before you enter any project transactions. See the section of this lesson titled
"Implementation Steps."
Entering Budget Amounts and Generating Accounts
Next, you enter your budget and generate accounts in Oracle Project Costing.

Chapter 3 - Page 52

Bottom-Up Budget Integration Procedures

Chapter 3 - Page 53


When a project is set up to use bottom-up integration, the process to create a baseline version
varies depending on whether you use workflow to control budget status changes.
If you do not use workflow to control budget status changes, then Oracle Project Costing
calls the PA: Budget Integration Workflow.
If you use workflow to control budget status changes, then Oracle Project Costing changes
the budget version status to In Progress and calls the budget approval workflow. After the
budget is approved, baseline processing continues for the budget version. Oracle Project
Costing displays any rejections encountered during baseline processing in the budget
approval notification.
The budget baseline process validates the submitted budget version, creates a baseline version,
generates accounting events, creates budget journal entries for the accounting events in Oracle
Subledger Accounting, and validates the budget amounts against an organization-level Oracle
General Ledger budget. If the baseline version is the initial baseline version for the budget,
then the baseline process creates and validates budget journal entries for this budget version. If
a prior baseline version exists, the baseline process creates and validates reversal budget
journal entries for the most recent baseline version and new budget journal entries for the new
baseline version.
Transferring Budget Journals to Oracle General Ledger
After you create a baseline version for an integrated project budget, you run the program PRC:
Transfer Journal Entries to GL to transfer the journal entries to Oracle General Ledger and
initiate the program Journal Import in Oracle General Ledger. If the baseline version is the
initial baseline version for the budget, then the program transfers the budget journal entries it
creates for this version. If a prior baseline version exists, then the program transfers reversal
budget journal entries for the most recent baseline version and new budget journal entries for
the new baseline version. The baseline process updates funds balances in Oracle General
Ledger. The program PRC: Transfer Journal Entries to GL does not affect funds balances.
Posting Budget Journals
When you submit the program PRC: Transfer Journal Entries to GL, you can optionally choose
to have the program post the journal entries. Otherwise, you can manually post the journal
entries in Oracle General Ledger. You can review and post the entries using the General
Ledger Post Journals window.

Agenda

Chapter 3 - Page 54
Non-Integrated Budgets with Budgetary Controls Procedures

You can set up your project to use budgetary controls with a non-integrated budget. Oracle
Project Costing does not generate and process accounting events for non-integrated budgets.
Defining Non-Integrated Budgets with Budgetary Control
You define budget integration using the Budgetary Control option from the Projects,
Templates window. See the budgetary control discussion in the section of this lesson titled
"Implementation Steps."
When you create the baseline budget version, the baseline process:
1. Validates the submitted budget version.
2. Creates baseline version.
3. Validates existing approved transaction amounts against the project budget.
Note: A project-related document in Oracle Purchasing or Oracle Payables is independently
validated against the GL budget and the project budget.

Chapter 3 - Page 55

Non-Integrated Budgets with Budgetary Controls Procedures

Agenda

Chapter 3 - Page 56

Budgeting Implementation Steps

Chapter 3 - Page 57
Define Additional Core Budgeting Setup

You can define additional core budgeting setup as needed. This setup includes budget change
reasons, budget types, and budget entry methods.
Budget Change Reasons - You can select a budget change reason for budget versions and
for individual budget lines. You can define your own change reasons.
Budget Types - Budget types define the different types of budgets that you plan for when
you want to create budgets that use budgetary controls and budget integration features.
Budget Entry Methods - Budget entry methods specify and control the following
options:
- The level of the work breakdown structure at which you enter a budget.
- The time phase that you use to enter budget amounts, if any.
- Whether you enter amounts that are categorized by resources.
- The amounts that you can enter.
For additional information, see the "Implementing Oracle Project Management" section of the
Oracle Projects Implementation Guide.

Chapter 3 - Page 58

Define Additional Core Budgeting Setup

Implementing Budgetary Controls

Chapter 3 - Page 59
Budgetary Controls: Enable Budgetary Controls and Encumbrance Accounting

To use budgetary controls, you must enable budgetary control for the ledger in Oracle General
Ledger and enable encumbrance accounting in Oracle Payables or Oracle Purchasing.
Encumbrance accounting automatically creates encumbrances for requisitions, purchase orders,
and invoices. For additional details, see information about encumbrance financials options in
the Oracle Payables Implementation Guide.
Note: The budgetary control process uses the following predefined encumbrance types:
Projects for top-down integrated budgets in Oracle Project Costing
Commitment for requisitions
Obligation for purchase orders
Invoices for Oracle Payables documents
Important: After you enable budgetary control for the ledger in Oracle General Ledger and
encumbrance accounting in Oracle Payables or Oracle Purchasing, you must not disable it.
Modifying these options can result in data corruption in funds-related tables and cause failures
during funds validation processing.

Chapter 3 - Page 60

Budgetary Controls: Enable Budgetary Controls and

Encumbrance Accounting
Budgetary Controls: Define Profile Options

PA: Enable Budget Integration and Budgetary Control Feature - To enable
budgetary control for your projects, you must set this profile option to Y (Yes).
PA: Days to Maintain BC Packets - Specify the number of days budgetary control
results are maintained. The default value is 3. Increasing this value may slow the
performance of the budgetary control process. Use the Funds Check Results window to
view budgetary control results for transactions that are not older than the number of days
that you specify. The budgetary control results for transactions that pass budgetary
control are available for online viewing in the Funds Check Results window only until
any of the following events occurs:
- You run the concurrent program PRC: Maintain Budgetary Control Balances.
- You create a baseline version for any project with budget integration.
- The transaction is older than the number of days specified for profile option.
PSA: Budgetary Control Report Template You can set this profile option at the site,
application, responsibility, and user levels. You must select Budgetary Control Results
Template to view budgetary control results from Oracle Purchasing and Oracle Payables.

Chapter 3 - Page 61

Budgetary Controls: Define Profile Options
Budgetary Controls: Define Control Levels and the Time Interval

Define budgetary controls for non-integrated budgets and for top-down integrated budgets.
You can define budgetary controls for project types, project templates, and projects. Values
that you define for a project type are the default values for project templates. Values that you
define for project templates are the default values for projects. When you define a project type,
indicate whether or not the default values for budgetary controls can be changed at the project
level.
Non-Integrated Budgets: Defining Budgetary Controls for Project Types
1. Navigate to the Budgetary Control tab for a project type.
2. Allow Override at Project Level - Check this box to allow users to modify the settings at
the project level.
3. Budget Type - Select a project cost budget type.
4. Control Flag - Enable the Control Flag check box.
5. Balance Type - Leave blank.
6. Non-Project Budget - Leave blank.
7. Levels - Select a default control level for each budget level.

Chapter 3 - Page 62

Budgetary Controls: Define Control Levels and the Time Interval

Chapter 3 - Page 63

8. Time Phase - Select an Amount Type and Boundary Code to be used when the system
calculates available funds.
Non-Integrated Budgets: Defining Budgetary Controls for Project Templates and
Projects
1. Navigate to the Budgetary Control option of the Projects, Templates window.
2. Budget Type - Select a project cost budget type.
3. Balance Type - Leave blank.
4. Non-Project Budget - Leave blank.
5. Levels - Select a default control level for each budget level.
For information about defining budgetary control setup for top-down integrated budgets, see
the information in this section about implementing top-down integration.
Budgetary Controls: Create an Initial Budget

When you enable budgetary controls for a project, you must create a baseline version for your
project cost budget before you enter commitment transactions. If a baseline version does not
exist when you approve a commitment transaction, then the transaction fails and you receive an
error message: No baseline budget version exists for this project.
For a project that uses burdening, use a budget entry method that enables you to enter burdened
cost amounts. Oracle Project Costing uses burdened cost amounts to enforce budgetary
controls. If you enter only raw cost amounts for a project budget with a budget entry method
that allows the entry of burdened cost amounts, then Oracle Project Costing automatically
copies the raw cost amounts to the burdened cost fields. These amounts are then used to
enforce budgetary controls for your project.

Chapter 3 - Page 64

Budgetary Controls: Create an Initial Budget
Budgetary Controls: Adjust Default Control Levels

When you create a baseline for a project budget for the first time, Oracle Project Costing
creates default budgetary control level settings for each budget level based on the values in the
Budgetary Controls option. You can override the default control level values for the baseline
budget version. When you create subsequent baselines for the project budget, Oracle Project
Costing uses the revised budgetary control level settings and not the default settings. For
example, if you override the budgetary control level for a task, Oracle Project Costing does not
reset the task to the default value the next time that you create a baseline for the budget.
If you add new tasks to the project or new resource groups or resources to the resource list
assigned to the budget, the next time you create a baseline for the budget, Oracle Project
Costing automatically creates default budgetary control settings for the new tasks, resource
groups, or resources. You can override the default control level values for the baseline budget
version.
To adjust budgetary control levels, perform the following steps:
1. Navigate to the Budgets window.
2. Query your project cost budget.
3. Choose the History button to view the budget version history.

Chapter 3 - Page 65

Budgetary Controls: Adjust Default Control Levels

Chapter 3 - Page 66

4. Select Budgetary Controls from the Tools menu.

5. Change control level values as required.
6. If you are budgeting using a resource list, then choose the Resources button on the
Budgetary Control window to override the default values for resource groups and
resources.
7. Save your work.
Important: You can select the Reset Defaults button on the Budgetary Control window to
restore the default budgetary control settings for the project. When you select the Reset
Defaults button, Oracle Projects resets all budgetary control settings to the default values,
including any settings that you have manually overridden.
Default Budgetary Controls and Changing the Budget Entry Method
You can change the budget entry method for a budget after you create a baseline version. If the
budget entry level for the new budget entry method is different from the budget entry level for
the current budget entry method, Oracle Project Costing resets to the budgetary controls to the
default budgetary control level settings when you create the next budget baseline.
For example, if the budget entry level of the current budget entry method is Top Tasks and the
budget entry level for the new budget entry method is Lowest Tasks, Oracle Project Costing
resets the budgetary controls to the default budgetary control level settings when you create the
next budget baseline.
Implementing Budget Integration

When you integrate project budgets with non-project budgets, you use either top-down
integration or bottom-up integration.

Chapter 3 - Page 67

Implementing Budget Integration
Budget Integration: Define the Project Budget Account Generation Workflow

Oracle Project Costing uses the Project Budget Account Generation workflow process to
generate default accounts when a project budget is integrated with a non-project budget. You
must customize the Project Budget Account Generation workflow process to generate accounts
according to your business needs.
This workflow runs when one of the following events occurs:
You manually select the Generate Budget Accounting option from the Tools menu of the
Budgets window.
You submit an integrated budget and it creates a baseline version.
You run the year-end rollover program for a top-down integrated budget to carry forward
the unspent project budget encumbrance amount from the year that is ending into the next
year.
When you activate the workflow from the Tools menu, an account is generated or regenerated
for all the defined budget lines. When the workflow is activated during budget submission,
accounts are only generated for budget lines that do not already have an assigned account.

Chapter 3 - Page 68

Budget Integration: Define the Project Budget Account Generation

Workflow

Chapter 3 - Page 69

Note: Do not update the account for the budget line if the budget line is associated with
transactions. Updating the account causes the baseline process to fail.
You must customize the Project Budget Account Generation workflow to generate accounts
based on your business needs. Oracle Project Costing provides predefined parameters to
simplify the customization process. You can use the predefined parameters to derive accounts
based on project organizations, expenditure organizations, and tasks, or based on the resource
groups and resources used for budget entry.
Oracle Project Costing predefines setup in Oracle Subledger Accounting to accept default
accounts from Oracle Project Costing without change. If you define your own detailed
overwrites default accounts, or individual segments of accounts, that Oracle Project Costing
derives using the Project Budget Account Generation workflow.
For additional details, see the Oracle Projects Implementation Guide.
Budget Integration: Define Profile Options

PA: Allow Override of Budget Accounts - This profile option enables you to control
whether you can manually override accounts generated by the Project Budget Account
Generation workflow process.
PA: Enable Budget Integration and Budgetary Control Feature - To enable budget
integration for your projects, you must set this profile option to Y (Yes).
PA: Days to Maintain BC Packets - This profile option specifies the number of days
budgetary control results are maintained. For more information, see the discussion in this
section about implementing budgetary controls.
PSA: Budgetary Control Report Template You can set this profile option at the site,
application, responsibility, and user levels. You must select Budgetary Control Results
Template to view budgetary control results from Oracle Purchasing and Oracle Payables.

Chapter 3 - Page 70

Budget Integration: Define Profile Options
Budget Integration: Implement Top-Down Integration

Defining Top-Down Budget Integration for Project Types:
2. Allow Override at Project Level - Enable this box to allow users to modify the default
budget integration settings at the project level.
3. Budget Type - Select a project cost budget type to be integrated. You can enable top-down
integration for cost budget types only.
4. Control Flag - Enable the Control Flag check box. Budgetary controls must be enabled for
top-down integration.
5. Balance Type - For top-down integration, the Balance Type must be Encumbrance.
6. Non-Project Budget - Select General Ledger Funding Budget.
7. Levels - Select a default control level for each budget level. For top-down budget
integration, the system imposes absolute control at the project level for all encumbered
accounts.

Chapter 3 - Page 71

Budget Integration: Implement Top-Down Integration

Chapter 3 - Page 72

Note: The project budget controls you set must be compatible with the funding budget
controls. The project budget controls must not allow a transaction to pass budgetary control if
the transaction will fail budgetary control validation against the funding budget. In general, the
project budget controls must be equal to or more restrictive than the funding budget controls.
Defining Top-Down Budget Integration for Project Templates and Projects:
2. Budget Type - Select a project cost budget type to be integrated.
3. Balance Type - Select Encumbrance.
4. Non-Project Budget - Select General Ledger Funding Budget.
5. Levels - Select a default control level for each budget level. For top-down budget
integration, the system imposes absolute control at the project level for all encumbered
accounts.
Budget Integration: Implement Bottom-Up Integration

Defining Bottom-Up Budget Integration for Project Types:
2. Allow Override at Project Level - Check this check box to allow users to modify the
default budget integration settings at the project level.
3. Budget Type - Select a project budget type to be integrated.
4. Balance Type - For bottom-up integration, the Balance Type must be Budget.
5. Non-Project Budget - Select a General Ledger budget from the list of values.
For Bottom-Up Budgeting, all other budgetary control fields must be blank.
Defining Bottom-Up Budget Integration for Project Templates and Projects:
2. Budget Type - Select a project budget type to be integrated.
3. Balance Type - For bottom-up integration, the Balance Type must be Budget.
4. Non-Project Budget - Select a General Ledger budget from the list of values.
For Bottom-Up Budgeting, all other budgetary control fields must be blank.

Chapter 3 - Page 73

Budget Integration: Implement Bottom-Up Integration

Quiz
Answer: a

Chapter 3 - Page 74

Summary

Chapter 3 - Page 75


Chapter 3 - Page 76
Chapter 4
Entering Expenditures
Chapter 4 - Page 1


Chapter 4 - Page 2

Chapter 4 - Page 3

Objectives
Chapter 4 - Page 4

Agenda
Chapter 4 - Page 5
Costing Flow: Enter Expenditures

You can use pre-approved batches to enter project-related expenditures directly into Oracle
Project Costing.
Chapter 4 - Page 6

Costing Flow: Enter Expenditures
Expenditures Overview
An expenditure is a group of expenditure items, or transactions, that an employee or an
organization incurs for an expenditure period. You charge expenditures to a project to record
actual work performed or cost incurred. Oracle Project Costing uses these terms for
expenditures:
Expenditure batch
- A user-defined name used to track a batch of pre-approved expenditures, such as
timecards and expense reports.
- You can enter the following classes of pre-approved expenditure batches in Oracle
Project Costing: Timecards, Usages, Miscellaneous Transaction, Inventory, Work in
Process, and Burden Transaction.
Expenditure
- A group of expenditure items incurred by an employee or organization for an
expenditure period.
Expenditure item
- The individual transactions charged to a specific project and task combination.
Chapter 4 - Page 7

Multiple Organization Access Control

The multiple organization access control (MOAC) feature allows you to enter and process preapproved batches in two or more operating units without switching responsibilities.
Chapter 4 - Page 8

Multiple Organization Access Control (MOAC)
You enter:
Expenditure Item Date - The date on which work is performed or a cost is incurred and
is charged to a project and task.
Project Number - A unit of work that requires resources to produce measurable results. A
project can be broken down into one or more tasks. You can charge costs to a project.
Task Number - A subdivision of project work. You can charge costs to lowest-level
tasks.
Assignment Name - When Oracle Project Resource Management is installed, you can
associate labor and expense report expenditures to scheduled work assignments.
Work Type - A classification of work. You use work types to classify both actual and
scheduled work. You can also use work types to classify work to determine the billability
of expenditure items, classify cross charge amounts into cost, and revenue for crosscharged work, and assign attributes for utilization reporting. Work types roll up to
resource and organization utilization categories. This field is required when the PA:
Require Work Type Entry for Expenditures profile option has a value of Yes.
Chapter 4 - Page 9

Chapter 4 - Page 10

Expenditure Type - A classification of cost that you assign to each expenditure item. You
can choose any expenditure type within the expenditure type class that you select for the
expenditure batch.
Non-Labor Resource and Non-Labor Organization - If the expenditure type class for
the batch is Usages, enter the non-labor resource and its owning organization. This enables
you to track use of company-owned assets.
Currency Fields - You can optionally display and enter the currency fields. You can use
folder tools to display to display currency fields. When your cursor is positioned in the
Expenditure Items regions of the Expenditures window, select Show Field from the Folder
menu and then select the field that you want to display.
Quantity - The quantity of units. The expenditure type determines the unit of measure.
For example, on a timecard, you enter the quantity for professional labor in hours.
Comment - Optionally, enter a free text Comment.
Currency Fields for Expenditures

The currency fields include:
Functional Currency - The functional currency of the expenditure operating unit.
Project Currency - The common currency into which all transactions for a particular
project are converted.
Transaction Currency - The currency in which a cost transaction is incurred.
Note: You must use folder tools to display additional currency fields.
Chapter 4 - Page 11

Currency Fields for Expenditures
Pre-Approved Batch Expenditure Entry Flow Overview

To enter a pre-approved expenditure batch:
1. Enter batch-level information.
2. Enter an expenditure.
3. Enter expenditure items.
4. Enter additional expenditures and expenditure items as needed.
5. Submit the batch for review.
6. As needed, rework the batch.
7. Release the batch for processing.
Chapter 4 - Page 12

Pre-Approved Batch Expenditure Entry Flow Overview
Statuses for Pre-Approved Expenditure Batches

Pre-approved expenditure batches can have one of three statuses:
Working - The expenditure batch is not ready for review. You can enter transactions and
modify their expenditures and expenditure items.
Submitted - The batch is awaiting review. You can return the batch to Working status
(rework) to make corrections.
Released - The expenditure batch is released for cost distribution. You can reverse
incorrectly entered expenditure items within the batch.
Chapter 4 - Page 13

Statuses for Pre-Approved Expenditure Batches
Enter Pre-Approved Batches

1. Navigate to the Expenditure Batches window.
2. Select the operating unit the operating unit that incurred the cost.
3. Enter a unique batch name to identify this set of expenditures.
4. Enter the expenditure ending date for the batch. If you enter a date that is not the last day
of an expenditure week, the system automatically updates the date to the next valid week
ending date.
5. Choose the expenditure type class for this batch.
6. Optionally, enter a description.
7. Optionally, enable the Reverse Expenditures in a Future Period check box to
automatically reverse the batch. The expenditure type class must be Miscellaneous
Transaction to create an automatically reversing expenditure batch. For more information
regarding this feature, see the section in this lesson titled Automatically Reversing
Expenditure Batches.
Chapter 4 - Page 14

Enter Pre-Approved Batches
Chapter 4 - Page 15

8. Optionally, enter a control total and control count in the Amounts region. Use the
Running Totals and Counts and the Difference columns to verify actual versus entered
totals.
9. Select the Expenditures button to enter the batch. The status of a new batch is always
Working.
10. In the Expenditures window, enter the employee or organization that incurred the cost.
11. Optionally enter the total units of measure in the Control Total field. When you have
entered all the expenditure items, you can compare the Control Total with the Running
Total, to verify your entries.
12. Enter the expenditure items in the Expenditure Items region.
13. When you have completed the expenditure batch, submit the batch for review.
Submitting an Expenditure Batch

Verifying Control Totals and Control Counts
Oracle Project Costing verifies control totals and control counts when you submit a batch. If
the running total or running count does not equal your control totals, then you cannot submit
the expenditure batch until your totals match. If you do not enter control totals, then Oracle
Project Costing does not validate control totals.
Reviewing and Releasing Expenditure Batches
Releasing a batch is a second level of review after entry. You can use function security to
remove the release capability from the entry persons Oracle Project Costing responsibility.
You can edit expenditure batches before release. The status must be Working to make changes.
Release makes expenditures ready for cost distribution. Release is synonymous with Approval.
Releasing a batch automatically releases all the expenditures and expenditure items in the
batch.
Chapter 4 - Page 16

Submitting an Expenditure Batch
Reversing an Expenditure Batch

The Reverse button is enabled only if the current batch is released. You can reverse imported
expenditure batches only if the transaction source of the batch allows reversals. When you
reverse an expenditure batch, Oracle Project Costing reverses all the expenditure items except
for:
Related items
Expenditure items that are already reversed
Reversing items (net zero adjusted items)
Expenditure items created as a result of a transfer adjustment
Chapter 4 - Page 17

Reversing an Expenditure Batch
Correcting Expenditure Batches

After you submit a batch, you can rework the batch to add, delete, and revise expenditures and
expenditure items. You also must correct a batch if your supervisor rejects and returns a
submitted batch to you. If the batch has a status of Submitted, locate the batch, click the
Rework button to return its status to Working, and change the expenditure or expenditure item
before resubmitting the batch.
If the batch has a status of Released, you can correct individual expenditure items by reversing
the full amount of the original item and then entering the correct information. For example, if
you entered six hours on a timecard expenditure item when the correct number of hours is four,
then you can create a reversing item equal to a negative six hours and add a new expenditure
item of four hours.
To correct a released expenditure item:
1. Create a new batch for the correction items.
- The Expenditure Ending date must match the week that includes the expenditure item
you are reversing.
Chapter 4 - Page 18

Correcting Expenditure Batches
3.
4.
5.
Chapter 4 - Page 19

2.
- Optionally check the All Negative Transactions Entered As Unmatched check box if
you want to enter transactions with negative amounts and do not want Oracle Project
Costing to search for corresponding existing transactions.
In the Expenditure Items window, select the Reverse Original button.
- Instead of choosing the Reverse Original button, you can enter a negative amount in
the Quantity field. Precede negative amounts with a minus () sign. If the All
Negative Transactions Entered as Unmatched check box is not enabled, then Oracle
Project Costing searches for a matching expenditure item and alerts you if it is unable
to find a match.
In the Reverse Expenditure Items window, specify the items that you want to reverse.
Select the Reversal button.
- Oracle Project Costing inserts a reversing (negative) expenditure item into the batch.
Finish entering the batch and submit the batch as usual.
- Expenditure batches can contain both positive and negative expenditure items.
Copying an Expenditure Batch

If you frequently enter similar groups of expenditures, you can copy data from one week to the
next. The Copy function copies all expenditures and, optionally, all expenditure items from a
specified source batch. You need to revise only the items that are different in the new batch.
Copying your expenditure batches can reduce your manual data entry requirements when you
enter similar groups of expenditures.
Note: You cannot copy expenditure items from a reversed expenditure batch.
Chapter 4 - Page 20

Copying an Expenditure Batch
Reviewing Project Expenditures

Two expenditure inquiry modes are available in Oracle Project Costing:
Project - You can view expenditure items for a single project across operating units. If
your system uses project security, then you can select only projects that you are allowed to
see. The expenditure items that you view can cross operating units, but you must have
security access to an operating unit to view those expenditure items. For example, a
project has expenditure items associated with operating units A, B, C, and D. If your
responsibility only gives you access to operating units B and C, then you can view and
adjust only the expenditure items from operating units B and C.
All - You can view expenditure items across projects and structure your query to retrieve
information across projects within a single operating unit. If you have access to more than
one operating unit, then you must select the operating unit that you want to query. If you
have access to only one operating unit, then that operating is the default value. No project
security is enforced. Oracle Project Costing shows only the expenditure items that
correspond to the current operating unit. If a project has expenditure items that are
charged across operating units, then you cannot view these expenditure items. In this case,
use the Find Project Expenditure Items window to query these expenditure items.
Chapter 4 - Page 21


To view expenditure items (perform an expenditure inquiry):
1. Navigate to the Find Project Expenditure Items or Find Expenditure Items window.
2. Enter your search criteria. You can enter search criteria for a large number of attributes
and on multiple tabs at the same time to limit the results of the query.
Note: For a detailed discussion of the available search criteria, see the Oracle
Project Costing User Guide.
3. Choose Find to execute the search, or choose Mass Adjust to process mass adjustment of
expenditures. For information about mass adjustments, see the lesson titled "Performing
Cost Adjustments."
4. From the Expenditure Items window, you can:
Select the Run Request button and then select which set of predefined programs to
run.
Select the Totals button to view the totals for the expenditure items returned based
on your search criteria.
Chapter 4 - Page 22

Chapter 4 - Page 23

Note: This window does not display events. If your project uses event-based or costto-cost revenue accrual or invoice generation, use the Events window to view the
total project revenue and bill amounts.
Select the Item Details button to review the details of this expenditure item. You can
then choose one of the following options:
- Cost Distribution Lines - View individual transactions and the default debit and
credit GL accounts for each expenditure item that Oracle Project Costing derived
using AutoAccounting. You can also view other information about the cost
distribution lines, such as PA and GL period, accounting event generation status,
and the rejection reason if the generation of the accounting event was not
successful. The Cost Distribution Lines window does not display the credit
account for supplier invoice expenditure items interfaced from Oracle Payables.
- Revenue Distribution Lines - View the revenue transactions generated for a
specific expenditure item. The window displays the default revenue account that
Oracle Project Billing derived using AutoAccounting. You can also see the GL
and PA posting period for the revenue, accounting event generation status, and
the rejection reason if the generation of the accounting event was not successful.
- AP Invoice - Drill down to the Invoice Overview window in Oracle Payables. If
the invoice is matched to a purchase order, then you can drill down to the
purchase order from the Invoice Workbench. This option is enabled for
expenditure items whose expenditure type class is either Supplier Invoices or
Expense Reports.
- PO Receipt -- Drill down to the Receipt Transaction Summary window in
Oracle Purchasing. You can also drill down to the related purchase order from
the Receipt Transaction Summary window. This option is enabled for
expenditure items for receipt accrual transactions in Oracle Purchasing.
- Purchase Order Details - Drill down to the purchase order details for
contingent worker labor costs. This option is enabled for expenditure items for
contingent worker labor costs that are associated with a purchase order.
Important: If you define your own detailed accounting rules in Oracle Subledger
Accounting, then Oracle Subledger Accounting overwrites default accounts, or
individual segments of accounts, that Oracle Project Costing derives using
AutoAccounting. In this case, the default accounts displayed on the Cost
Distribution Lines and Revenue Distribution Lines windows may not be the same as
final accounts that Oracle Subledger Accounting transfers to Oracle General Ledger.
To view the final subledger accounting, use the View Accounting option from the
Tools menu.
Viewing Accounting Lines

You can use the View Accounting option from the Tools menu to review accounting entries for
expenditure items. You must create accounting in final mode for the accounting events
associated with the expenditure item to view accounting entries. If an expenditure item has
multiple cost distribution lines, then you can view accounting for each cost distribution line
that is accounted in Oracle Subledger Accounting. Similarly, if you adjust an expenditure item
and do not create accounting for the adjustments in Oracle Subledger Accounting, then the
View Accounting window only shows the accounted cost distribution lines. If you create
accounting in draft mode, then you can either review the output from the create accounting
program or use Subledger Accounting Inquiry to view the draft accounting.
Note: The View Expenditure Accounting window displays final accounting entries from
Oracle Subledger Accounting. It does not display default accounts that Oracle Project Costing
derives using AutoAccounting.
Note: For both historical (prior to Release 12) expenditure items not migrated to Oracle
Subledger Accounting, and transactions accounted in an external system and interfaced into
Oracle Project Costing, the View Accounting option displays accounts from the cost
distributions table in Oracle Project Costing.
Chapter 4 - Page 24

Viewing Accounting Lines

Quiz
Answer: a
Chapter 4 - Page 25

Quiz
Answer: b
Chapter 4 - Page 26

Agenda
Chapter 4 - Page 27
Automatically Reversing Expenditure Batches

You can create automatically reversing expenditure batches to record cost accruals in Oracle
Project Costing. Frequently, you receive items and services in one accounting period, which
are then invoiced in another period. You can use automatically reversing expenditure batches
to accrue cost in the period in which it is incurred.
To enter an automatically reversing batch, you must use the Miscellaneous Transactions
expenditure type class. When you release the batch, Oracle Project Costing creates reversing
entries that are accounted in the next General Ledger period.
As you add expenditure items and save the batch, Oracle Project Costing determines the GL
date for each transaction and stores it as an expenditure item attribute called Accrual Date.
Oracle Project Costing determines the accrual date as follows:
If Expenditure Item Date Accounting is used, then the accrual date is the expenditure item
date.
If Period-End Date Accounting is used, then the accrual date is the period ending date of
the General Ledger period that includes the expenditure item date.
Chapter 4 - Page 28

Automatically Reversing Expenditure Batches
Releasing the Batch

When you release an expenditure batch with the Reverse Expenditures In a Future Period
checkbox enabled, Oracle Project Costing automatically reverses each expenditure item
included in the batch. Oracle Project Costing determines the GL date for the reversing
expenditure items when it creates the reversing entries and it stores the date in the Accrual
Date attribute.
Oracle Project Costing determines the GL date as follows:
If Expenditure Item Date Accounting is used, then the accrual date of the reversing item is
the first day of the GL period that follows the GL period that includes the accrual date of
the original expenditure item.
If Period-End Date Accounting is used, then the accrual date of the reversing item is the
last day of the GL period that follows the GL period that includes the accrual date of the
original expenditure item.
If the accrual dates for the reversing items fall in a period with a closed status in Oracle
General Ledger, then the release process fails and an error message appears.
Chapter 4 - Page 29

Releasing the Batch
GL Periods for the Expenditure Items

Oracle Project Costing assigns the original expenditure items to the current GL period and the
reversing expenditure items to the next GL period.
Chapter 4 - Page 30

GL Periods for the Expenditure Items

Agenda
Chapter 4 - Page 31
Upload Expenditure Batches from Microsoft Excel

You can enter and upload pre-approved expenditure batches using Microsoft Excel
spreadsheets. You can connect to the database to validate records during entry, or you can
create the spreadsheet offline and allow validation to occur during the transaction upload.
Note: If you choose to create the spreadsheet offline, then only mandatory fields associated
with a list of values are validated during transaction upload. The transaction upload calls the
Transaction Import program, where additional transaction validations take place.
Download an Entry Template
You must first download an entry template from Oracle Project Costing. All fields marked with
an asterisk are mandatory. If List-Text appears under the column name, then a list of values is
available. To access the list of values, double-click in the column or select List of Values from
the Oracle menu located at the top of the spreadsheet template.
Chapter 4 - Page 32


Once the batch is ready, you can upload the data to the Oracle Project Costing transaction
import interface table. From here, the concurrent program PRC: Transaction Import brings the
expenditure batch into Oracle Project Costing.
Upload Batch
Select Upload from the Oracle menu located at the top of the spreadsheet template. Optionally,
select the Parameters button to select upload options. After viewing the Parameters window,
you must select Close or Proceed to Upload to return to the Upload window. Select Upload to
launch the upload process. The upload process updates the message column for each record in
the spreadsheet to indicate whether the upload was successful.
Transaction Import
The upload process populates the transaction import table. Run the PRC: Transaction Import
program to import the transactions into the Expenditure Items table. You can optionally use the
upload parameter to run the transaction import program automatically.
Chapter 4 - Page 33

Upload Contingent Worker Timecards

You can enter contingent worker timecard batches in Microsoft Excel and upload the batches
to Oracle Project Costing:
Each timecard line is related to a project and purchase order line.
A amount check is performed against the purchase order during transaction import.
Oracle Project Costing uses the cost rates stored on the purchase order to calculate
contingent worker labor costs.
The supplier must submit an invoice. You match the invoice to the purchase order to
reduce outstanding balances.
You interface additional cost, such as non-recoverable tax or invoice price variances, to
Oracle Project Costing from the supplier invoice in Oracle Payables.
You can bill contingent worker costs as labor.
To use this integration, you must enable the Import Contingent Worker Timecards with
Purchase Order Integration implementation option. You can optionally set up AutoAccounting
function transactions to determine default credit and debit accounts for contingent worker labor
costs that are different from the default accounts for employee labor costs.
Chapter 4 - Page 34

Upload Contingent Worker Timecards
Chapter 4 - Page 35

Note: When contingent workers are allowed to enter timecards that are not related to a
purchase order, you must ensure that the purchase order is not related to a project. Otherwise,
the cost for the contingent work will be recorded in Oracle Project Costing twice, once as labor
and once as supplier cost.
Entering Contingent Worker Timecards with Oracle Purchasing Integration
1. Enter a project-related purchase order for the contingent worker labor in Oracle
Purchasing. Associate the purchase order and purchase order line to the contingent worker
assignment in Oracle HRMS.
2. Consolidate contingent worker project-related timecards and enter a timecard batch in
Microsoft Excel. Assign a purchase order and purchase order line to each timecard line.
3. Upload the timecards and run the program PRC: Transaction Import to import the
timecards into Oracle Project Costing. An amount check takes place against the purchase
order during import.
4. Process contingent worker timecards in Oracle Project Costing:
a. Run PRC: Distribute Labor Costs. The program retrieves cost rates from purchase
order.
b. Run PRC: Generate Cost Accounting Events (for the process category Labor Cost).
c. Run PRC: Create Accounting (for the process category Labor Cost).
5. Process in Oracle Payables:
a. Supplier submits an invoice.
b. Match supplier invoice to the purchase order to reduce outstanding balances.
c. Process and pay supplier invoice in Oracle Payables.
d. Run PRC: Interface Supplier Costs in Oracle Project Costing to interface any
additional costs, such as non-recoverable tax or invoice price variances.
For information about entering contingent worker in Oracle Time & Labor, see the lesson titled
"Integration with Oracle Time & Labor."

Quiz
Answer: a
Chapter 4 - Page 36

Agenda
Chapter 4 - Page 37
Expenditure Batch Reports

This slide describes the concurrent programs used to generate expenditure batch reports.
AUD: Expenditure Batch Status - With this report you can identify expenditure batches
that are ready for release. Use this report to ensure that none of your expenditure batches
go unprocessed.
AUD: Pre-Approved Expenditures Entry Audit - Use the AUD: Pre-Approved
Expenditures Entry Audit report to review pre-approved expenditures. After you enter all
expenditures for an expenditure batch, submit this report and use it to verify that the
entered data is correct before you submit your expenditure batch. This report provides a
summary for each expenditure batch that displays the total amounts for each expenditure
type in the expenditure batch.
Chapter 4 - Page 38

Expenditure Batch Reports

Quiz
Answer: b, c
Chapter 4 - Page 39

Agenda
Chapter 4 - Page 40
Costing Flow: Import Transactions

Oracle Project Costing provides a single open interface, called Transaction Import, to enable
you to load transactions from external cost collection systems into Oracle Project Costing.
Transaction Import creates pre-approved expenditure items from transaction data entered in
external cost collection systems. Examples of external cost collection systems are:
Timecard entry systems
Supplier invoice entry systems
Electronic data collection systems for asset usage (computer, printer, phone, etc.)
Payroll systems
You can use the Review Transactions window to view and correct transactions that were
rejected during import.
Note: You can use Transaction Import to import project-related expense reports into Oracle
Project Costing from third-party systems. Expense reports that you import into Oracle Project
Costing must be fully accounted. Oracle Project Costing does not generate accounting events
to create accounting in Oracle Subledger Accounting for these imported costs.
Chapter 4 - Page 41

Costing Flow: Import Transactions
Overview of Transaction Sources

When you submit Transaction Import, you must identify the source of the transactions that you
want to import.
To import 3rd party transactions, use your import utility to enter this transaction source in the
TRANSACTION_SOURCE column of the PA_TRANSACTION_ INTERFACE_ALL table.
You then select the transaction source name in the Submit Request window when you want to
import transactions from this source.
For additional information about transaction sources, see the lesson titled "Implementing
Expenditures."
Chapter 4 - Page 42

Overview of Transaction Sources
Overview of Transaction Import

When you import transaction information from external cost collection systems, Oracle Project
Costing records the transaction details and the source of the imported transactions during
transaction import. The PRC: Transaction Import program (also referred to as Transaction
Import) validates the transaction information, reports any exceptions, and creates transactions
for all of the valid transactions.
To import transactions, you first must load transactions for external systems into the PA
Transaction Interface Table. Your implementation team must determine the method for
populating the table.
After you populate the interface table, you use the Submit Request window to run PRC:
Transaction Import to import transactions into Oracle Project Costing. The program selects all
pending transactions that satisfy the selection criteria of the request and validates each
transaction. If a transaction is valid, the program creates expenditure records in Oracle Project
Costing.
For additional information, see the online course titled "R12 Oracle Projects Advanced Transaction Import."
Chapter 4 - Page 43

Overview of Transaction Import
Resolving Import Exceptions

If any one expenditure item in an expenditure fails validation, then Oracle Project Costing
rejects the entire expenditure and updates each expenditure item in the expenditure with a
status of R (Rejected). However, only the expenditure item that was rejected appears on the
exception report. Other expenditure items attached to the rejected expenditure do not appear on
the report. The remainder of the expenditures in the batch interface to Oracle Project Costing.
Note: The transaction import validation logic is different when you run the program PRC:
Interface Supplier Costs to import transactions from Oracle Purchasing and Oracle Payables.
The program uses predefined supplier cost transaction sources to import expenditure items and
it rejects only the expenditure items that fail validation. The program imports the valid
expenditure items in the expenditure.
Chapter 4 - Page 44

Resolving Import Exceptions

Quiz
Answer: d
Chapter 4 - Page 45
Correcting Rejected Transactions within Oracle Project Costing

To make changes to the source information because of invalid data, you can delete the rejected
rows from the interface table, correct the rejected transactions in the feeder system, and reload
them from the feeder system. You can also correct the transaction in the interface table using
the Review Transactions window. Oracle Project Costing automatically updates the status of
corrected items and all other transactions in the same expenditure to P (Pending). The original
and updated values for corrected transactions are stored in the audit table.
You can also use the Review Transactions window to create one or more new transactions
without loading them from the feeder system. This window was designed to expedite minor
additions to expenditure batches.
Review Transactions Window: Currency-Related Fields
The Review Transactions window is a folder-type window. Many of the currency fields are not
displayed in the default folder. You can create folders that display these fields.
Review Transactions Window: Expenditure Item Dates for Supplier Costs
The program PRC: Interface Supplier Costs validates expenditure item dates for supplier costs
that you interface from Oracle Purchasing and Oracle Payables. If the expenditure item date for
an expenditure item fails validation, then the program rejects the transaction and leaves it in the
Chapter 4 - Page 46

Correcting Rejected Transactions within Oracle Project Costing

interface table. You must either change the date setup in Oracle Project Costing or change the
date for the expenditure item. You can use the Review Transactions window to change the date
for a rejected expenditure item. Oracle Project Costing picks up the revised date for the
rejected transaction the next time that you run the program PRC: Interface Supplier Costs. To
update the expenditure item date in the Review Transactions window, the Allow Interface
Modifications option must be enabled for the transaction source.
Chapter 4 - Page 47

Summary
Chapter 4 - Page 48
Chapter 5
Implementing Expenditures
Chapter 5 - Page 1


Chapter 5 - Page 2

Chapter 5 - Page 3

Objectives
Chapter 5 - Page 4

Expenditures Implementation Steps
Chapter 5 - Page 5

Agenda
Chapter 5 - Page 6
Expenditure Categories
Oracle Project Costing uses expenditure categories to group expenditure types for costing. An
expenditure category describes the source of your organizations costs. For example, an
expenditure category with a name such as Labor refers to the cost of labor. You use
expenditure categories when you define organization overrides, for budgeting, and for
transaction controls. In addition, you can use expenditure categories in your AutoAccounting
rules and for reporting.
Use the Expenditure Categories window to define an expenditure category. For each
expenditure category, enter a unique name for the expenditure category and a description.
Chapter 5 - Page 7

Expenditure Categories
Define Revenue Categories

A revenue category describes a source of your organizations revenue. For example, a revenue
category with a name such as Labor refers to labor revenue.
Use the Revenue Category Lookups window to define new revenue categories. Revenue
categories are used for grouping expenditure types and event types for revenue and billing.
You can use revenue categories for budgeting, for reporting purposes, and in your
AutoAccounting rules.
For additional discussion regarding event types, see the course R12.x Project Billing
Fundamentals.
Chapter 5 - Page 8

Define Revenue Categories
Define Units
A unit of measure records quantities or amounts of an expenditure item. You assign a unit to
each expenditure type. For example, to calculate the cost of computer services using the
amount of time a user uses a computer, you can define an expenditure type for computer
services and assign it the unit Hours.
Use the Unit Lookups window to define units.
Chapter 5 - Page 9

Define Units
Expenditure Type Classes

An expenditure type class tells Oracle Project Costing how to process an expenditure item.
Oracle Project Costing predefines all expenditure type classes.
Oracle Project Costing uses the following expenditure type classes to process labor costs:
Straight Time - Labor cost calculated using a base cost rate multiplied by hours
Overtime - Labor cost calculated using a premium cost rate multiplied by hours.
Oracle Project Costing uses the following expenditure type classes to process 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.
Chapter 5 - Page 10

Expenditure Type Classes
Chapter 5 - Page 11

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 pre-approved 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.
- You can also use this expenditure type class when you import other manufacturing
costs via Transaction Import or when you enter transactions via pre-approved batch
entry.
Define Expenditure Types

An expenditure type is a classification of cost that you assign to each expenditure item you
enter in Oracle Project Costing. Defining expenditure types is a key aspect of your
implementation of Oracle Project Costing. Enter the following information to define an
expenditure type:
Name - A unique name for the expenditure type.
Expenditure Category - The expenditure category you want to associate with this
expenditure type.
Revenue Category - The revenue category you want to associate with this expenditure
type.
Unit of Measure (UOM) - The unit of measure to use when Oracle Project Costing
calculates the cost for this expenditure type. You must enter Hours for labor expenditure
types.
Tax Classification Code - Optionally, click Tax Classification Code and select the tax
classification code for customer invoice lines for this expenditure type and operating unit.
Oracle Project Costing uses this code as the default tax classification code based on the
Application Tax Options hierarchy that you define in Oracle E-Business Tax for the
Chapter 5 - Page 12

Define Expenditure Types
Chapter 5 - Page 13

combination of Oracle Project Costing and the specified operating unit. For more
information on setting up taxes and the hierarchy of tax options for an application and
operating unit, see the Oracle E-Business Tax User Guide.
Rate Required - If this expenditure type requires a cost rate, then enable the Rate
Required check box. Select the Cost Rate button to navigate to the Expenditure Cost Rates
window, select an operating unit, and then enter a cost rate and its effective dates. If this
expenditure type does not require a cost rate, then do not enable the Rate Required check
box. If you create a non-labor expenditure type without checking the Rate Required check
box, you cannot subsequently require and enter a cost rate for that expenditure type.
Instead, you must disable the expenditure type and create a new one that requires a cost
rate and has a unique name. If you enable the Rate Required check box when you create a
non-labor expenditure type, then you can change the cost rate at any time.
For supplier invoice expenditure types, if you specify that a rate is required, Oracle Project
Costing requires you to enter a quantity in Oracle Payables for invoice distributions using
that expenditure type. When you interface the invoice distribution to Oracle Project
Costing, Oracle Project Costing copies the quantity and amount to the expenditure item
and calculates the rate. If you define a supplier invoice expenditure type with the Rate
Required option disabled, then the quantity of the expenditure item is set to the amount
you enter in Oracle Payables.
Description and Dates - On the Description, Dates tab, enter a description and an
effective from date for the expenditure type. You can optionally enter an effective to date
for the expenditure type.
Expenditure Type Classes - In the Expenditure Type Class region, select the expenditure
type class or classes for this expenditure type.
Attention: After you create and save an expenditure type, you cannot subsequently update the
following attributes for the expenditure type:
Name
Expenditure Category
Revenue Category
Unit of Measure
Rate Required check box
Instead, you must enter an end date for the expenditure type and create a new one that has a
unique name. When you enter an end date for an expenditure type, the end date has no affect
on existing transactions. Oracle Project Costing uses the old expenditure type to report on and
process existing transactions. You cannot use the old expenditure type for new transactions that
have an expenditure item date after the end date.
Multiple Expenditure Type Classes Per Expenditure Type

You can assign multiple expenditure type classes to an expenditure type. This feature allows
you to use a single expenditure type to classify as many different costs as you require. You can
use the same expenditure type for expenditures that have different origins (and therefore
different accounting), but which should otherwise be grouped together for costing, budgeting,
or summarization purposes.
For example, an expenditure item with the expenditure type Materials can have the
expenditure type class Supplier Invoice if it originated in Oracle Payables, and the expenditure
type class Inventory if it originated in Oracle Inventory. This ability enables you to easily
group these costs together for reporting and budgeting purposes, because the cost rolls up into
the same expenditure type, regardless of the source of the individual transaction.
Chapter 5 - Page 14

Multiple Expenditure Type Classes Per Expenditure Type

Quiz
Answer: b
Chapter 5 - Page 15

Quiz
Answer: c
Chapter 5 - Page 16

Agenda
Chapter 5 - Page 17

The transaction control extension enables you to define your own rules to implement companyspecific expenditure entry policies. You can validate any transaction entered into Oracle
Project Costing, including transactions from other Oracle Applications and from external
systems. The transaction control extension is called during expenditure entry. In addition, the
program PRC: Transaction Import calls the transaction control extension to validate
transactions before they are loaded into Oracle Project Costing.
Some examples of rules that you may define are:
You cannot charge new transactions to projects for which the work is complete. You can
only transfer items to these projects.
You can charge labor hours for a future date.
The transaction control extension validates expenditure items one at a time. All validation is
done for each expenditure item. Oracle Project Costing checks each expenditure item during
data entry and the transaction is validated before it commits the transaction to the database.
Oracle Project Costing processes the transaction control extension after the standard validation
performed for expenditure entry, and after validating any transaction controls entered at the
project or task level.
Chapter 5 - Page 18


Quiz
Answer: a
Chapter 5 - Page 19
AutoApproval Extension
Use the AutoApproval Extension to define conditions under which expense reports in Oracle
Internet Expenses or timecards in Oracle Time & Labor are approved automatically. You can
configure this extension to meet your needs. For additional information, see the Oracle
Projects API's, Client Extensions, and Open Interfaces Reference.
Chapter 5 - Page 20

AutoApproval Extension

Agenda
Chapter 5 - Page 21
Define Transaction Sources

Transaction sources identify the source of transactions imported into Oracle Project Costing
using Transaction Import. The transaction source determines how Transaction Import
processes transactions. The transaction source is used to identify transactions in the
PA_TRANSACTION_INTERFACE_ALL table. When you run the concurrent program PRC:
Transaction Import, you must enter the transaction source for the transactions that you want to
import into Oracle Project Costing. The Transaction Import program selects all eligible
pending transactions in the PA_TRANSACTION_INTERFACE_ALL table that satisfy the
selection criteria of the program request and determines the validity of each transaction.
Oracle Project Costing predefines some transaction sources, and you can create others to fit
your business needs. When you create a transaction source, you select the transaction source
options to control the Transaction Import processing. For details about each of the transaction
source options, see the Oracle Projects Implementation Guide and the online course titled
"R12 Oracle Projects Advanced - Transaction Import."
Chapter 5 - Page 22

Define Transaction Sources
Example Predefined Transaction Sources

Oracle Projects predefines a set of transaction sources to import cost from Oracle sources. Do
not use these transaction sources to import transactions from non-Oracle sources. For a
complete list of predefined transaction sources, see the Oracle Projects implementation Guide.
Chapter 5 - Page 23

Example Predefined Transaction Sources
Example Predefined Transaction Sources: Manufacturing and Inventory

Oracle Project Costing predefines transaction sources to import transactions from Oracle
Project Manufacturing and Oracle Inventory. Do not use these transaction sources to import
transactions from non-Oracle sources. For a complete list of predefined transaction sources, see
the Oracle Projects implementation Guide.
For the transaction sources for Inventory, WIP, and WIP Straight Time transactions, the GL
Posting Option in the Project Manufacturing Parameters window determines whether Oracle
Project Manufacturing or Oracle Project Costing generates accounting events and creates
accounting for the transactions in Oracle Subledger Accounting as follows:
If the posting option is Manufacturing, then Oracle Project Manufacturing creates
accounting for the transactions in Oracle Subledger Accounting.
If the posting option is Projects, then Oracle Project Costing creates accounting for the
transactions in Oracle Subledger Accounting. The value that you select for the Account
Option determines the source of the default accounting as follows:
Chapter 5 - Page 24

Example Predefined Transaction Sources: Manufacturing and

Inventory

- If the option is set to Use AutoAccounting, then Oracle Project Costing uses the
transaction sources with No Accounts to import the transactions with no accounts.
Oracle Project Costing then uses AutoAccounting to derive the default accounts.
- If the option is set to Send Accounts to PA, then Oracle Project Costing uses the
transaction sources with Accounts to import the transactions and the default
accounting from Oracle Project Manufacturing.
Chapter 5 - Page 25

Quiz
Answer: a
Chapter 5 - Page 26

Agenda
Chapter 5 - Page 27
Listings
Use the following concurrent programs to document expenditure setup information:
IMP: Expenditure Types Definition - Use IMP: Expenditure Types Definition Listing to
review expenditure types. You can print a listing for one or all expenditure categories and
for a specified effective date. If an effective date is specified for the report, then the report
lists only expenditure types that are active as of the date you enter.
IMP: Revenue Categories - Use the IMP: Revenue Categories Listing to review revenue
categories. For each revenue category listed, this report prints all the associated
expenditure types and their corresponding expenditure categories. To limit the report to
only one revenue category, enter the revenue category. Otherwise, leave this field blank.
IMP: Units Definition - Use the IMP: Units Definition Listing to review all units of
measure.
Chapter 5 - Page 28

Listings

Summary
Chapter 5 - Page 29

Chapter 5 - Page 30
Chapter 6
Performing Cost Processing
Chapter 6 - Page 1


Chapter 6 - Page 2

Chapter 6 - Page 3

Objectives
Chapter 6 - Page 4

Agenda
Chapter 6 - Page 5
Overview of Costing
Costing includes the following major steps:
1. Enter and approve expenditures through the Oracle Project Costing user interface, or
import transactions. You can use Transaction Import to import unaccounted and
accounted transactions. If you import unaccounted transaction, then you must run the
costing programs for the transactions. If you import accounted transactions, then no
additional processing is needed.
2. Distribute costs and derive default accounting. Cost distribution is the act of calculating
the cost and determining the cost accounting for an expenditure item. Oracle Project
Costing has a set of cost distribution programs that you run, depending upon the type of
expenditure. Some imported expenditures are already cost distributed when you import
them and do not require further cost distribution processing.
3. Generate cost accounting events. The program PRC: Generate Cost Accounting Events
collects cost distribution lines in Oracle Project Costing and uses AutoAccounting to
determine the default liability accounts for raw and burden costs. It also generates cost
accounting events for Oracle Subledger Accounting.
Chapter 6 - Page 6

Overview of Costing
Overview of Costing
4. Create accounting in Oracle Subledger Accounting and transfer the accounting entries to
Oracle General Ledger. You run the concurrent program PRC: Create Accounting in
Oracle Project Costing to create accounting entries for accounting events. Depending on
the parameter values you select, the program performs the following tasks:
- Creates subledger accounting entries for unprocessed accounting events. If you
define your own detailed accounting rules in Oracle Subledger Accounting, then
Oracle Subledger Accounting overwrites default accounts, or individual segments of
accounts, that Oracle Project Costing derives using AutoAccounting.
- Transfers accounting entries to the Oracle General Ledger interface tables. In Oracle
Project Costing, you can optionally run a separate program named PRC: Transfer
Journal Entries to GL to transfer accounting entries to Oracle General Ledger.
- Initiates the journal import program in Oracle General Ledger.
- Initiates posting of journal entries in Oracle General Ledger.
Chapter 6 - Page 7

Overview of Costing
Overview of Costing
In Oracle General Ledger, the Journal Import program takes the summary interface
information stored in the Oracle General Ledger interface tables and automatically creates
journal entries for posting in Oracle General Ledger. Journal Import creates a journal entry
batch for your journal entry records in your ledger and accounting period. For each journal
entry category in a batch, Journal Import creates a journal entry header. For each header in a
journal entry batch, Journal Import creates one or more journal entry lines that correspond to
the journal entry records you transfer from Oracle Subledger Accounting to Oracle General
Ledger.
When you run the program PRC: Create Accounting and you select Yes for the parameter
Transfer to General Ledger, the create accounting program transfers the final accounting from
Oracle Subledger Accounting to Oracle General Ledger and runs the Journal Import program.
When you submit the program PRC: Create Accounting, and you choose to transfer to Oracle
General Ledger, or alternatively when you submit the program PRC: Transfer Journal Entries
to GL, you can optionally set the parameter Post in General Ledger to Yes to enable the
program to automatically post successfully imported journal entries in Oracle General Ledger.
Chapter 6 - Page 8

Overview of Costing
Costing Concepts
Raw Cost - Cost directly attributable to work performed. Examples of raw cost are salaries
and travel expenses.
Burden Cost - Cost of doing business that supports raw cost and cannot be directly
attributed to work performed. Examples of burden cost are fringe benefits, office space,
and general and administrative costs.
Total Burdened Cost - The total cost. It consists of raw cost plus any burden cost.
Chapter 6 - Page 9

Costing Concepts
Overview of Encumbrance Accounting

Budgetary controls are set to enforce limits, and encumbrance accounting creates reservations
for planned expenditures. The reservations ensure that funds will be available when project
costs are incurred, and provide a complete picture of funds available for future use. Oracle
Project Costing creates project encumbrance entries when you enable top-down budget
integration for a project.
Budgetary Controls
Budgetary controls enable you to monitor and control expense commitment transactions
entered for a project based on a project cost budget. Expense commitment transactions are
transactions for non-inventory items. Oracle Project Costing enforces budgetary controls for:
Project-related purchase requisitions and purchase orders entered in Oracle Purchasing
Contingent worker purchase orders entered in Oracle Purchasing
Supplier invoices entered in Oracle Payables
Project-related prepayments not matched to a purchase order and the application of
unmatched prepayments to supplier invoices
Chapter 6 - Page 10

Overview of Encumbrance Accounting
For additional information, see the lesson titled "Appendix B: Budgetary Controls And Budget
Integration."
Chapter 6 - Page 11

Note: Budgetary controls are not enforced for project-related expense reports entered in Oracle
Payables because you generally enter expense reports after costs are already incurred.
Therefore, you should ensure that your procedures for approving expense report expenditures
include verification of available funds according to your business requirements.
Budget Integration
Oracle Project Costing budget integration features enable you to integrate project budgets with
non-project budgets in Oracle General Ledger. Integration is defined in order to perform
bottom-up or top-down budgeting.

Quiz
Answer: b
Chapter 6 - Page 12

Agenda
Chapter 6 - Page 13
Costing Flow: Distribute Costs

After you enter or import expenditures, the next step is to distribute the costs.
Chapter 6 - Page 14

Costing Flow: Distribute Costs
Cost Distribution Processing Flow

Distribution programs perform the following tasks:
Calculate raw cost (quantity x rate) in transaction currency
Calculate burden and burdened cost
Create and distribute raw cost distribution lines
Convert all transaction currency amounts to functional currency and project cost currency
amounts
Create and distribute burden and burdened cost distribution lines
Determine default accounting using AutoAccounting (debit account for raw cost and
burden cost, debit and credit accounts for total burdened cost)
Note: If you are not performing burdening, then you can skip the programs that create and
distribute burden and burdened cost. See the lesson titled "Implementing Burden Costing."
Chapter 6 - Page 15

Cost Distribution Processing Flow
Determining Costs
Calculating labor cost:
Raw cost is the result of multiplying hours by a rate.
Burden cost is the result of multiplying raw cost by a burden multiplier.
Burdened cost is the sum of raw cost and burden cost.
For employees and contingent workers, you can maintain labor cost rate schedules by
employee (includes contingent workers) or by job. You also have the option of overriding
labor cost rates for individual employees and contingent workers. In addition, you can
define a unique labor costing algorithm using the Labor Costing Extension.
For contingent worker timecards with Oracle Purchasing integration, when you run the
program PRC: Distribute Labor Costs, Oracle Project Costing uses rates from the related
purchase order to calculate the costs.
Oracle Project Costing determines costs for labor transactions with the following
programs:
- PRC: Distribute Labor Costs
- PRC: Distribute Labor Costs for a Range of Projects
Chapter 6 - Page 16

Determining Costs
Chapter 6 - Page 17

Calculating cost for usages and miscellaneous transactions:

Raw cost is equal to quantity (if quantity is in currency, for example, a currency amount),
or alternatively, raw cost is the result of multiplying quantity by a rate (if quantity is not in
currency). You can define cost rates for usage and miscellaneous costs as follows:
- Cost rates by expenditure type
- Cost rates by non-labor resource and owning organization for usages to override the
expenditure type cost rate
Oracle Project Costing determines costs for usage and miscellaneous costs with the
following program:
- PRC: Distribute Usage and Miscellaneous Costs
Determining supplier cost:
For supplier cost interfaced from Oracle Payables, raw cost for each expenditure item is
equal to the supplier invoice distribution line amount (accrual basis accounting) or the
payment distribution amount (cash basis accounting) in Oracle Payables.
For receipt accrual cost interfaced from Oracle Purchasing, raw cost is equal to the receipt
transaction amount in Oracle Purchasing.
Oracle Project Costing determines costs for supplier invoice transactions with the
following programs:
- PRC: Interface Supplier Costs
- PRC: Distribute Supplier Cost Adjustments
- PRC: Distribute Supplier Costs Adjustments for a Range of Projects
Determining expense report cost:
Raw cost for each expenditure item is equal to the expense report invoice distribution line
amount (accrual basis accounting) or the payment distribution amount (cash basis
accounting) in Oracle Payables.
Receipt amount is the expenditure amount in the receipt currency.
Note: When you split a receipt in Oracle Payables across multiple expenditure items,
Oracle Project Costing does not divide the receipt amount among the expenditure items.
As a result, each expenditure item is associated with the full receipt amount.
Oracle Project Costing determines costs for expense reports with the following programs:
- PRC: Interface Expense Reports from Payables
- PRC: Distribute Expense Report Adjustments

Quiz
Answer: a, c
Chapter 6 - Page 18
Burden Cost Calculations

Oracle Project Costing calculates burden cost by multiplying raw cost by a burden multiplier.
This calculation is represented in the following formula:
Burden Cost = Raw Cost x Burden Multiplier
Oracle Project Costing calculates total burdened cost by adding burden cost to the raw cost
amount. This calculation is represented in the following formula:
Total Burdened Cost = Raw Cost + Burden Cost
You use the burden multiplier to derive the total amount of the burden cost. For additional
discussion regarding burdening, see the lesson titled Implementing Burden Costing.
Chapter 6 - Page 19

Burden Cost Calculations
AutoAccounting: Distribution Programs

You create rules in AutoAccounting to specify the default accounts that the distribution
programs generate. Oracle Project Costing creates many different accounting transactions
throughout its business cycle. You use AutoAccounting to specify how to determine the correct
account for each cost distribution line. See the lesson titled Accounting for Costs.
Chapter 6 - Page 20

AutoAccounting: Distribution Programs
Cost Distribution Concurrent Programs

Oracle Project Costing provides the following cost distribution concurrent programs
PRC: Create and Distribute Burden Transactions - Summarizes burden cost and
creates expenditure items for burden transactions. The program creates burden
transactions for projects, depending on the method you use to store burden costs. See the
lesson titled Implementing Burden Costing.
PRC: Distribute Borrowed and Lent Amounts - Distributes all transactions identified
for Borrowed and Lent accounting. The program determines the transfer price amount for
each transaction and generates the default borrowed and lent accounting entries. You run
this program in the provider operating unit. See the lesson titled "Cross Charge."
PRC: Distribute Expense Report Adjustments - Computes the burden costs associated
with adjusted expense report expenditure items and determines the account to which to
post the raw costs. The program also identifies if a transaction is cross-charged and, if so,
determines the processing it requires.
PRC: Distribute Labor Costs for a Range of Projects & PRC: Distribute Labor Costs
- Computes the labor costs for timecard hours and determines the default GL account to
Chapter 6 - Page 21

Cost Distribution Concurrent Programs
Chapter 6 - Page 22

which to post the cost. The program also identifies if a transaction is cross-charged and
determines the processing it requires.
PRC: Distribute Supplier Cost Adjustments & PRC: Distribute Supplier Cost
Adjustments for a Range of Projects - Processes adjustments made in Oracle Project
Costing to supplier costs, such as supplier invoices, receipt accruals, supplier payments,
and discounts. This program determines the default GL account for supplier cost
adjustments.
PRC: Distribute Total Burdened Costs - Creates total burdened cost distribution lines
for all transactions on a burdened project. The program also identifies and processes any
cross-charged transactions. The program creates default accounts for credit and debit
distribution lines for burdened cost. See the lesson titled see the lesson titled
Implementing Burden Costing.
PRC: Distribute Usage and Miscellaneous Costs - Computes the costs and determines
the default GL account to which to post cost for expenditure items with the following
expenditure type classes: Usages, Burden Transactions, Miscellaneous Transactions, and
Inventory and WIP transactions not already costed or accounted. The program also
identifies if a transaction is cross-charged and, if so, determines the processing it requires.

Agenda
Chapter 6 - Page 23
Costing Flow: Create Accounting

After you distribute costs, the next step is to create the accounting for the costs. Creating
accounting consists of four main steps:
1. Generating cost accounting events.
2. Creating accounting for accounting events in Oracle Subledger Accounting.
3. Transferring final subledger accounting to Oracle General Ledger.
4. Importing and posting the journal entries in Oracle General Ledger.
Chapter 6 - Page 24

Costing Flow: Create Accounting
Integration with Oracle Subledger Accounting

Oracle Project Costing fully integrates with Oracle Subledger Accounting so that you can
create accounting for your project-related transactions.
Oracle Project Costing generates accounting events and creates the subledger accounting
entries for the accounting events. Oracle Project Costing predefines setup for Oracle Subledger
Accounting so Oracle Subledger Accounting accepts the default accounting information from
Oracle Project Costing without change. Next, Oracle Subledger Accounting transfers the final
accounting to Oracle General Ledger. If you define your own detailed accounting rules in
Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts,
or individual segments of accounts, that Oracle Project Costing derives using AutoAccounting.
Chapter 6 - Page 25

Generating Cost Accounting Events

The program PRC: Generate Cost Accounting Events collects cost distribution lines in Oracle
Project Costing and uses AutoAccounting to determine the default liability account. The value
you select for the parameter Process Category determines the type of costs that the program
processes. The program also creates accounting events for the costs in Oracle Subledger
Accounting. If the program is able to successfully generate an accounting event, then it updates
the status of the cost distribution line to Accepted. If the program cannot successfully
determine a liability account or is unable to generate an accounting event, then it updates the
status of the cost distribution line to Rejected.
Chapter 6 - Page 26

Generating Cost Accounting Events
AutoAccounting: Generate Accounting Events

When you run program PRC: Generate Cost Accounting Events, Oracle Project Costing uses
AutoAccounting to determine the credit side of the accounting for each cost distribution line.
See the lesson titled Accounting for Costs.
Chapter 6 - Page 27

AutoAccounting: Generate Accounting Events
Creating and Transferring Accounting

The program PRC: Create Accounting creates draft or final accounting entries in Oracle
Subledger Accounting for unprocessed accounting events. If you define your own detailed
overwrites default accounts, or individual segments of accounts, that Oracle Project Costing
derives using AutoAccounting. You can run this program in either draft mode, if you want to
review the results before you create the final accounting, or final mode. You can optionally
choose to transfer final journal entries to Oracle General Ledger, initiate the Journal Import
program, and post the journal entries in Oracle General Ledger.
If you do not choose to have the program transfer final journal entries to Oracle General
Ledger, then you can run the program PRC: Transfer Journal Entries to GL to transfer final
journal entries from Oracle Subledger Accounting to Oracle General Ledger. This program
transfers final subledger accounting journal entries from Oracle Subledger Accounting to
Oracle General Ledger and initiates the program Journal Import in Oracle General Ledger.
Optionally, you can choose to have the program post journal entries in Oracle General Ledger.
Chapter 6 - Page 28

Creating and Transferring Accounting
Oracle General Ledger Journal Import

Use Journal Import to import accounting entries into Oracle General Ledger. Journal Import is
an Oracle General Ledger program that creates journal entries from transaction data stored in
the Oracle General Ledger GL_INTERFACE table. The program creates and stores journal
entries in the following tables: GL_JE_BATCHES, GL_JE_HEADERS, and GL_JE_LINES.
You post these journal entries in Oracle General Ledger to update your account balances.
Chapter 6 - Page 29

Oracle General Ledger Journal Import

Quiz
Answer: c
Chapter 6 - Page 30

Agenda
Chapter 6 - Page 31
Streamline Processes
Streamline processes submit and monitor a series of concurrent programs that must be run
sequentially to complete a function. For example, distributing labor costs, generating cost
accounting events, creating accounting in Oracle Subledger Accounting, and transferring the
costs to Oracle General Ledger requires that you submit several programs. Instead of running
the individual programs one at a time, you can choose to submit the program PRC: Submit
Interface Streamline Processes and select the streamline option DXL: Distribute and Interface
Labor Costs to GL. The streamline process then submits and monitors the progress of each
separate program in sequence until all programs complete. Oracle Project Costing provides
three streamline processes:
PRC: Submit Interface Streamline Processes - Combines programs that send
information from Oracle Project Costing to other Oracle applications.
PRC: Submit Project Streamline Processes - Combines programs that distribute costs,
interface supplier costs, generate revenue, and generate invoices for a single project.
Generally, you submit a project streamline request after you make expenditure or invoice
adjustments.
Chapter 6 - Page 32

Streamline Processes
Chapter 6 - Page 33

PRC: One-Step Interface Streamline Processes to GL - Generates accounting events

for transactions, creates accounting in Oracle Subledger Accounting, transfers subledger
journal entries to Oracle General Ledger, runs the program Journal Import, and posts the
journal entries in Oracle General Ledger. The streamline options for the program PRC:
One-Step Interface Streamline Processes to GL are similar to the streamline options for
the program PRC: Interface Streamline Processes. In addition, you can choose the
streamline option All Streamline Processes to GL to process all distributed cost
transactions and released revenue transactions.
Note: For the program PRC: Create Accounting, the interface streamline processes
automatically set the Mode parameter to Final, the Transfer to General Ledger parameter to
Yes, and the Post in General Ledger parameter to Yes.
Submitting Streamline Processes

To submit a streamline process:
1. Navigate to the Submit Request window.
2. For Name, choose one of the three streamline processes. For details about each of the
streamline options and the programs that each option initiates, see Oracle Projects
Fundamentals.
3. Choose the Streamline Option you want to submit.
4. (Optional) Enter the Reschedule Interval, Reschedule Time of Day, and Stop
Rescheduling Date.
5. Choose the Submit button. Oracle Project Costing submits your streamline request. The
Streamline Processing Report lists the name, the concurrent request ID, and the
completion status of each child programs monitored by the streamline process.
Chapter 6 - Page 34

Submitting Streamline Processes

Agenda
Chapter 6 - Page 35
Overview of Period Processing

Project Accounting Periods
A project accounting period is an implementation-defined period against which you can
measure project performance. Project accounting periods are also referred to as PA periods.
PA Periods and GL Periods
To report project information more frequently than your Oracle General Ledger accounting
periods (GL periods) allow, you can define PA periods that are shorter than your GL periods.
For example, you can define weekly PA periods and monthly GL periods. You can also create
PA periods that match existing GL periods. However, defining PA periods that overlap your
GL periods can create the need for numerous adjustments and journal entries if you wish to
reconcile Oracle Project Costing with Oracle General Ledger. For additional information, see
the course titled "R12.x Project Foundation Fundamentals."
Chapter 6 - Page 36

Overview of Period Processing
Control of GL Period Statuses for Project Transactions

You can control the status of GL periods for transaction processing in Oracle Project Costing,
without closing the period in Oracle General Ledger. This feature enables you to open and
close GL periods for project transactions independent of the closing processes for the other
subledgers. The status of a GL period for project transactions in Oracle Project Costing can
differ from the same GL periods status in Oracle General Ledger.
Enabling the Maintain Common PA and GL Periods Implementation Option
If your PA periods and GL periods are identical, you can enable the Maintain Common PA and
GL Periods implementation option. When this option is enabled, the system automatically
maintains PA period statuses as you maintain the GL period statuses. To use this method, you
must define identical PA periods and GL periods.
Chapter 6 - Page 37

Control of GL Period Statuses for Project Transactions
Transaction Accounting Methods

To give you greater control over when your transactions are accounted, you can enable the
profile option PA: Enable Enhanced Period Processing to use expenditure item date
accounting.
Chapter 6 - Page 38

Transaction Accounting Methods
Period End Date Accounting

With period end date accounting, you maintain PA periods in Oracle Project Costing and GL
periods in Oracle General Ledger. Oracle Project Costing derives the PA date for a transaction
from the expenditure item date and sets the PA date to the PA period ending date. The period
must be in either Open or Future status. Next, Oracle Project Costing derives GL dates from
PA dates and sets the accounting date to the end date of the corresponding GL accounting
period.
Period End Date Accounting Example
In the example on the slide, you enter a transaction with an expenditure item date of 08-SEP2010. This expenditure item date falls within the SEP-10 PA period and because the SEP-10
PA period is open, Oracle Project Costing sets the PA date to 30-SEP-10, the last day of the
period.
Next, Oracle Project Costing uses the PA date (30-SEP-10) to derive the GL date. The PA date
falls into the open SEP-10 GL period. The derived GL date is 30-SEP-2010, the end date of the
SEP-10 GL period.
Date Derivation
Project Accounting Date (PA Date)
Chapter 6 - Page 39

Period End Date Accounting
Chapter 6 - Page 40

Timecard, Usage, Miscellaneous, Supplier Cost Adjustments, and Expense Report

Adjustments
- The PA date is set to the end date of the earliest PA period that includes or follows
the transaction expenditure item date and has a status of Open or Future.
Supplier Costs Interfaced from Oracle Purchasing and Supplier Costs and Expense
Reports Interfaced from Oracle Payables
- The PA date is determined based on the relationship of the transaction expenditure
item date to the GL date entered in Oracle Purchasing or Oracle Payables.
- If the expenditure item date is less than or equal to the GL date, then the PA date
is set to the end date of the earliest PA period that includes or follows the GL
date and has a status of Open or Future.
- If the expenditure item date is greater than the GL date, then the PA date is set to
the end date of the earliest PA period that includes or follows the expenditure
item date and has a status of Open or Future.
Oracle General Ledger Accounting Date (GL Date)
Adjustments
- The GL date is set to the end date of the earliest GL period that includes or follows
the PA date of the cost distribution line and has a status of Open or Future according
to the period status in Oracle General Ledger.
- When you interface supplier costs from Oracle Purchasing and supplier costs and
expense reports from Oracle Payables, Oracle Project Costing copies the GL date for
each distribution line from the GL date entered for the distribution in Oracle
Purchasing or Oracle Payables.
Expenditure Item Date Accounting

With expenditure item date accounting, you maintain both PA periods and GL period statuses
for project transactions in Oracle Project Costing. Oracle Project Costing derives PA dates and
GL dates independently, and does not set the accounting dates to the end date of the
corresponding accounting period.
Expenditure Item Date Accounting Example
In the example on the slide, you enter a transaction with an expenditure item date of 08-SEP2010. The expenditure item date falls into the open SEP-10 PA period. The PA date is set to
the expenditure item date of 08-SEP-2010.
The GL period SEP-10 is also open for Oracle Project Costing. Oracle Project Costing sets the
GL date to expenditure item date of 08-SEP-2010.
Date Derivation
Adjustments
Chapter 6 - Page 41

Expenditure Item Date Accounting
Chapter 6 - Page 42

- The PA date is set to the transaction expenditure item date if that date falls in a PA
period with a status of Open or Future. If the expenditure item date falls in a closed
PA period, then the PA date is set to the start date of the earliest open or future
enterable PA period that follows the expenditure item date.
- The PA date is set to the transaction expenditure item date if that date falls in a PA
period with a status of Open or Future. If the expenditure item date falls in a closed
PA period, then the PA date is set to the start date of the earliest open or future
enterable PA period that follows the expenditure item date.
Adjustments
- The GL date is set to the transaction expenditure item date if that date falls in a GL
period with a status of Open or Future according to the period status in Oracle Project
Costing. If the expenditure item date falls in a closed GL period, then the GL date is
set to the start date of the earliest open or future enterable GL period that follows the
expenditure item date.
- When you interface supplier costs from Oracle Purchasing and supplier costs and
expense reports from Oracle Payables, Oracle Project Costing copies the GL date for
each cost distribution line from the GL date entered for the distribution line in Oracle
Purchasing or Oracle Payables.
Expenditure Item Date Accounting with Common Accounting Periods

This method uses expenditure item date accounting and date derivation features with the
Maintain Common PA and GL Periods implementation option. You maintain GL period
statuses for project transactions in Oracle Project Costing and the system automatically
maintains PA Periods. To use this method, you must define identical PA periods and GL
periods. Oracle Project Costing derives a GL date for each transaction and copies the value to
the PA date.
Expenditure Item Date Accounting with Common Accounting Periods Example
In the example on the slide, you enter a transaction with an expenditure item date of 08-SEP2010. The expenditure item date falls into the SEP-10 GL period. While SEP-10 is still open in
Oracle General Ledger, the GL period for project transactions status is Closed in Oracle Project
Costing. Because this GL period is closed for project transactions, Oracle Project Costing sets
the GL date to 01-OCT-2010, the start date of the OCT-10 GL period. OCT-10 is the earliest
open or future enterable GL period for project transactions that follows the expenditure item
date. It then copies the PA date from the GL date.
Chapter 6 - Page 43

Expenditure Item Date Accounting with Common Accounting

Periods

Date Derivation
Oracle Project Costing copies the PA date from the GL date.
Oracle Project Costing uses the Expenditure Item Date Accounting logic.
Chapter 6 - Page 44
Sweeping Transaction Accounting Events

During the period-end closing cycle, you can choose to close the period without accounting for
all accounting events. The program PRC: Sweep Transaction Accounting Events enables you to
move accounting events that are in a closed GL period, and have errors or are not fully
accounted, to the next open GL period so that you can complete closing without accounting for
these transactions. This program changes the date on unaccounted transaction accounting
events to the first day of the next open GL period without accounting for them.
After the program sweeps the transaction accounting events, it also changes the GL date on the
cost and revenue distribution lines associated with the accounting events to the first day of the
next open GL period.
When budgetary control is enabled for a project, this program also updates unaccounted
project-related commitment transaction accounting events for project-related documents in
Oracle Purchasing and Oracle Payables. The program updates the GL date that the system uses
when it creates the reversing encumbrance accounting entries.
The following conditions can cause a transaction to become eligible for sweeping:
The transaction has accounting events with errors.
Chapter 6 - Page 45

Sweeping Transaction Accounting Events
Chapter 6 - Page 46

The transaction has been accounted in draft mode but not in final mode in Oracle
Subledger Accounting.
The transaction has unprocessed accounting events.
When you submit the program, you can choose to run it in either review mode or update mode.
Use review mode to view all transactions with exceptions and the reasons for the exceptions.
At this point, you can address the exceptions and run the program PRC: Create Accounting in
final mode to complete the accounting for the transaction. Alternatively, if you do not want to
correct the exceptions at this time, run the sweep transaction accounting events program in
update mode to change the dates on the unaccounted accounting events to the first day of the
next open GL period.
Upon completion, the sweep transaction accounting events program generates an output report
that shows the results of the program.
Note: If you sweep revenue transactions, and you use Project Status Inquiry, Project
Performance Reporting, or Oracle Daily Business Intelligence for Projects, then you must run
the appropriate refresh or update programs so that reporting tool accurately reports the GL
period. For additional information, see Oracle Projects Fundamentals.
Note: Before you sweep transaction accounting events, consider the impact on other related
processing such as burden cost accounting, asset capitalization, allocations, and non-CIP
assets. For example, if the raw cost for a transaction is successfully accounted and the
transaction accounting event for the burden cost is in error, then when you sweep transaction
accounting events to the next period, you can end up with the raw cost posted to one period and
burden cost posted to the following period.

Quiz
Answer: a
Chapter 6 - Page 47

Summary
Chapter 6 - Page 48
Chapter 7
Accounting for Costs
Chapter 7 - Page 1


Chapter 7 - Page 2

Chapter 7 - Page 3

Objectives
Chapter 7 - Page 4

Agenda
Chapter 7 - Page 5
Overview of Accounting for Costs

Oracle Project Costing creates accounting transactions throughout its business cycle. You can
use AutoAccounting to specify how to determine the correct account for each transaction.
Oracle Project Costing generates accounting events and creates accounting for the accounting
events in Oracle Subledger Accounting. Oracle Project Costing predefines setup in Oracle
Subledger Accounting so that the create accounting program accepts default accounts from
AutoAccounting without change. If you define your own detailed accounting rules in Oracle
Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or
individual segments of accounts, that Oracle Project Costing derives using AutoAccounting.
The Account Generator uses Oracle Workflow to derive default account code combinations.
Oracle Payables and Oracle Purchasing use the Account Generator to determine the default
account code combinations for purchasing requisitions, purchase orders, supplier invoices, and
expense reports based on the project information entered. AutoAccounting, the Account
Generator, and Oracle Subledger Accounting each provide functionality to create accounting
for project-related supplier costs and expense reports. When you implement Oracle Purchasing
and Oracle Payables integration with Oracle Project Costing, carefully consider how to set up
the account derivation logic in each location.
Chapter 7 - Page 6

Overview of Accounting for Costs
AutoAccounting
When you implement AutoAccounting, you define the rules governing which general ledger
accounts Oracle Project Costing uses under which circumstances. Oracle Project Costing uses
the rules you define whenever it performs an accounting transaction.
The AutoAccounting feature requires that you allow dynamic insertion of new account
combinations. You must define your Accounting Flexfield structure with the Allow Dynamic
Inserts options enabled.
Note: If you set up your own rules in Oracle Subledger Accounting, then you still set up
AutoAccounting so that Oracle Project Costing can determine valid default accounts. The
AutoAccounting setup enables programs, such as programs that distribute costs and generate
cost accounting events, to determine the default accounts that Oracle Project Costing sends to
Oracle Subledger Accounting. For example, if use total burdened cost accounting and set up
your own rules in Oracle Subledger Accounting, then you also need to define AutoAccounting
for total burdened costs so Oracle Project Costing can minimally determine a default debit and
credit accounts.
Chapter 7 - Page 7

AutoAccounting
AutoAccounting Rules
AutoAccounting rules are formulas (or methods) that you use to derive each segment within
your account structure based on the type of transaction. Each rule can use one of three
intermediate value sources to derive the account segment:
Constant value
- Supply a single valid segment value.
Parameter
- Context-sensitive intermediate value that requires a lookup set.
SQL select statement
- Execute an SQL select statement to retrieve a value; make the rule dependent on
multiple values and conditional statements.
To implement AutoAccounting, you define AutoAccounting rules to generate account
combinations. You then assign a set of rules to each AutoAccounting transaction you want to
use for your company.
Chapter 7 - Page 8

AutoAccounting Rules
AutoAccounting Rule Mapping

Each AutoAccounting rule you define supplies one Accounting Flexfield segment value at a
time. Thus, you need to specify one AutoAccounting rule for each segment in your Accounting
Flexfield, for each AutoAccounting transaction you want to use. Some of the AutoAccounting
rules you define can be quite simple, such as always supplying a constant company code or
natural account. Others can draw upon context information (parameters), such as the
expenditure type of an expenditure item or the organization that owns a particular non-labor
resource. You can use multiple parameters to provide a segment value. You can reuse the same
AutoAccounting rules for many different functions and their transactions.
For each rule that you define, only one segment value within the entire account structure is
supplied at a time. Thus, you specify one AutoAccounting rule for each segment in your
account structure for each AutoAccounting transaction.
Chapter 7 - Page 9

AutoAccounting Rule Mapping
Constant Value
Use a constant value when you always supply a particular intermediate value (usually an
Accounting Flexfield segment code). If you specify Constant as the rule intermediate value
source, then enter the value that you want Oracle Project Costing to supply as the intermediate
value.
Chapter 7 - Page 10

Constant Value
Parameter Value
When you define an AutoAccounting rule, you can use a predefined parameter as an input
value. Examples of parameters that you can use as context information include the projectowning organization or the expenditure type of an expenditure item. Oracle Project Costing
predefines the available parameters.
AutoAccounting enables you to use the AutoAccounting parameters as inputs for your
AutoAccounting rules. Not all of the parameters are available for all functions. The Customer
ID and the Customer Name parameters are available for cross charge functions only.
Submit the AutoAccounting Functions Listing for a complete listing of all of the parameters
available for each function.
Chapter 7 - Page 11

Parameter Value
SQL Select Statement Value

A SQL select statement value enables you to execute a SQL select statement to retrieve an
intermediate value. You can make the rule dependent on multiple values and conditional
statements. SQL statements are intended to process rules that depend on more than one
parameter. You can define rules to read any value by using a SQL select statement. You should
consider the performance implications of using SQL statements. For example:
IF the project type is overhead,
THEN use the expenditure organization parameter.
ELSE use the project organization parameter.
Although many companies have implemented AutoAccounting SQL statement rules in a
production environment, you should tune your SQL statement and test the AutoAccounting
setup against volume data to check their performance quality before implementation.
AutoAccounting rules with SQL statements are intended to process rules that are dependent on
more than one parameter. They are not intended to derive additional parameters using SQL that
accesses application tables. This type of use can affect processing performance and may not be
supported based on the AutoAccounting function.
Chapter 7 - Page 12

SQL Select Statement Value
Lookup Sets
A lookup set is an implementation-defined list that corresponds to the account segments. To
define a lookup set, you specify pairs of values. For each intermediate value, you specify a
corresponding account segment value. One or more related pairs of intermediate values and
segment values form a lookup set. When you define lookup sets, lists of values are not
available.
You need to define a lookup set before you can use it in a rule. However, if you prefer to
define your rules before completing your lookup sets, you can define each lookup sets name
and description and then define the intermediate values and segment values later.
If AutoAccounting does not find a matching intermediate value in the lookup set, then it
provides an error message (Incomplete AutoAccounting Rules) to notify you that it could not
build an Accounting Flexfield combination. You must correct your AutoAccounting setup and
resubmit the program that triggered the AutoAccounting error. If AutoAccounting does not
find a matching segment value in the lookup set, then it provides an error message (Invalid
Accounting Flexfield) to notify you that it could not build a valid Accounting Flexfield
combination. You must correct your AutoAccounting setup and resubmit the program that
triggered the AutoAccounting error.
Chapter 7 - Page 13

Lookup Sets
Chapter 7 - Page 14

Descriptive Flexfields on Setup Entities

You can use the descriptive flexfield attributes to store values used in AutoAccounting instead
of maintaining lookup sets for entities. These entities include:
Agreement types
Budget entry methods and budget types
Class categories and class codes
Compensation rule sets
Event types
Expenditure categories and expenditure types
Burden cost codes
Lookup sets
Non-labor resources and non-labor resource organizations sources
Project role types
Transaction sources
Selecting a Segment Value Source

After you specify an intermediate value, you specify one of the following segment value
sources to indicate whether the intermediate value is already a valid segment value or whether
AutoAccounting needs to translate it into a segment value using a lookup set:
Intermediate Value
- Supply the intermediate value as a segment value; do not use a lookup set.
Segment Value Lookup Set
- Look up the intermediate value in a lookup set; translate the intermediate value into
the corresponding segment value.
You do not always need to use a lookup set when you write an AutoAccounting rule. If you
define a simple constant rule, then you do not need to use a lookup set to supply a segment
value because you generally supply a valid segment value as the constant.
Chapter 7 - Page 15

Selecting a Segment Value Source
Assign Rules
Function
For each accounting transaction, you define rules to determine the appropriate account to
charge. Each accounting transaction is identified by an AutoAccounting function.
AutoAccounting functions are components of programs that you submit to generate accounting
entries.
Function Transactions
When you are assigning rules to an AutoAccounting function, you can assign different rules to
different conditions. For example, you can account for indirect projects using one set of rules,
and use two different sets of rules for billable items and non-billable items on contract projects.
Oracle Project Costing provides function transactions for each function which identify
commonly used conditions. You can assign rules to function transactions for each
AutoAccounting function. Complete the following steps to assign AutoAccounting rules to
AutoAccounting functions and function transactions:
Enable each function transaction you want to use.
For each function transaction you enable, specify an AutoAccounting rule for each
segment of your Accounting Flexfield.
Chapter 7 - Page 16

Assign Rules
Chapter 7 - Page 17

Assign rules to function transactions to tell Oracle Project Costing which AutoAccounting
rules to use under which circumstances. In cases where an AutoAccounting function consists
of several distinct function transactions, you assign rules to each function transaction that you
want to use. These rule assignments determine which account AutoAccounting uses to process
that function transaction. Oracle Project Costing attempts to use the most appropriate function
transaction. If you have not enabled that function transaction, then it tries to use the next most
appropriate transaction. Oracle Project Costing continues this process until it finds an enabled
function transaction.
Segment Rule Pairings
After you enable a function transaction, you match each segment in your Accounting Flexfield
with the appropriate AutoAccounting rule. For example, if you have a two-segment
Accounting Flexfield containing a Company segment and an Account segment, you assign one
rule to the Company segment and one rule to the Account segment. You use the Assign
AutoAccounting Rules window to enable AutoAccounting function transactions and assign
rules to them.

Quiz
Answer: b
Chapter 7 - Page 18

Agenda
Chapter 7 - Page 19
AutoAccounting for Costs Implementation Steps

Oracle Project Costing uses AutoAccounting to generate default accounting for cost
transactions. When you implement AutoAccounting, you define rules that determine accounts
that Oracle Project Costing assigns to transactions to meet your business requirements. You
can optionally define your detailed accounting rules in Oracle Subledger Accounting. If you
define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle
Oracle Project Costing derives using AutoAccounting.
Note: If you set up your own rules in Oracle Subledger Accounting, then you still set up
AutoAccounting so that Oracle Project Costing can determine valid default accounts. The
AutoAccounting setup enables programs, such as programs that distribute costs and generate
cost accounting events, to determine the default accounts that Oracle Project Costing sends to
Oracle Subledger Accounting. For example, if use total burdened cost accounting and set up
your own rules in Oracle Subledger Accounting, then you also need to define AutoAccounting
for total burdened costs so Oracle Project Costing can minimally determine a default debit and
credit accounts.
Chapter 7 - Page 20

AutoAccounting for Costs Implementation Steps
Accounting for Labor Costs

Oracle Project Costing uses the Labor Cost Account and the Labor Cost Clearing Account
functions to determine the default cost accounting for transactions associated with the Straight
Time and Overtime expenditure type classes.
Labor Cost Account Function
When you run PRC: Distribute Labor Costs or PRC: Distribute Labor Costs for a Range of
Projects, Oracle Project Costing calculates labor cost amounts based upon employee labor cost
overrides and labor costing rules. After calculating labor costs, Oracle Project Costing uses the
Labor Cost Account transactions to debit a default expense account for raw labor costs.
Labor Cost Clearing Account Function
When you run PRC: Generate Cost Accounting Events for the Labor Cost process category,
the program credits a default payroll clearing liability account to balance the labor expense
account. The program also generates cost accounting events in Oracle Subledger Accounting.
You can assign different sets of rules to and enable the Contingent Worker Labor and
Employee Labor function transactions to generate a different default clearing account based on
the person type. Alternatively, you can assign rules to and enable only the All Labor function
transaction to use the same rules for employees and contingent workers.
Chapter 7 - Page 21

Accounting for Labor Costs
Accounting for Expense Report Costs

Oracle Project Costing uses the Expense Report Cost Account function to determine the
expense default debit account for transactions associated with the Expense Reports expenditure
type class.
Expense Report Cost Account Function
When you run PRC: Distribute Expense Report Adjustments, Oracle Project Costing calculates
and distributes costs originating from expense report adjustments, and uses the Expense Report
Cost Account function transactions to determine which default expense account to debit for
expense report costs.
Expense Report Adjustment Liability Account
When you run PRC: Generate Cost Accounting Events for the Supplier Cost process category,
the program credits a default supplier cost liability account to balance the supplier cost expense
account. If you specify a default account in Oracle Project Costing implementation options,
then the program uses the Default Supplier Cost Credit Account. Otherwise, you must set up
Oracle Subledger Accounting to derive the account. The program also generates cost
accounting events in Oracle Subledger Accounting.
Chapter 7 - Page 22

Accounting for Expense Report Costs
Accounting for Usage Costs

Oracle Project Costing uses the Usage Cost Account and the Usage Cost Clearing Account
functions to determine the default cost accounting for transactions associated with the Usages
expenditure type class.
Usage Cost Account Function
When you run PRC: Distribute Usage and Miscellaneous Costs, Oracle Project Costing uses
the Usage Cost Account transactions to debit a default expense account for raw usages costs.
Usage Cost Clearing Account Function
When you run PRC: Generate Cost Accounting Events for the Usage Cost process category,
the program credits a default asset usages liability account to balance the usages expense
Chapter 7 - Page 23

Accounting for Usage Costs
Accounting for Miscellaneous Costs

Oracle Project Costing uses the Misc Trans Cost Account and the Misc Trans Cost Clearing
Account functions to determine the default cost accounting for transactions associated with the
Miscellaneous Transaction expenditure type class.
Miscellaneous Transaction Cost Account Function
the Misc Trans Cost Account transactions to debit a default expense account for raw
miscellaneous costs.
Miscellaneous Transaction Clearing Account Function
When you run PRC: Generate Cost Accounting Events for the Miscellaneous Cost process
category, the program credits a default miscellaneous cost liability account to balance the
miscellaneous cost expense account. The program also generates cost accounting events in
Oracle Subledger Accounting.
Chapter 7 - Page 24

Accounting for Miscellaneous Costs
Accounting for Burden Transactions

Oracle Project Costing uses the Burden Cost Account and the Burden Cost Clearing Account
functions to determine the default cost accounting for transactions associated with the Burden
Transaction expenditure type class.
Burden Cost Account Function
When you run PRC: Create and Distribute Burden Transactions, Oracle Project Costing uses
the Burden Cost Account transactions to debit a default expense account for the burden costs.
Burden Cost Clearing Account Function
When you run PRC: Generate Cost Accounting Events for the Burden Cost process category,
the program credits a default burden cost liability account to balance the burden cost expense
Chapter 7 - Page 25

Accounting for Burden Transactions
Accounting for Total Burdened Cost

Oracle Project Costing uses the Total Burdened Cost Debit and the Total Burdened Cost Credit
functions to determine the default cost accounting for total burdened costs.
Total Burdened Cost Debit/Credit
When you run PRC: Distribute Total Burdened Cost, Oracle Project Costing creates two
burdened cost distribution lines for the total burdened cost. One distribution line holds the
default account for the burdened cost debit and the other distribution line holds the default
account for the burdened cost credit. Oracle Project Costing creates these two distributions for
all expenditure items charged to projects which are defined to burden costs.
The Total Burden Costs Debit/Credit function consists of the following functions:
Total Burdened Cost Debit
Total Burdened Cost Credit
Chapter 7 - Page 26

Accounting for WIP and Inventory Costs

Oracle Project Costing uses the WIP Cost Account and the WIP Cost Clearing Account
functions to determine the default cost accounting for transactions associated with the Work in
Process (WIP) expenditure type class. In addition, Oracle Project Costing uses the Inventory
Cost Account and the Invent. Cost Clearing Account functions to determine the default cost
accounting for transactions associated with the Inventory expenditure type class.
WIP Cost Account Function
the WIP Cost Account transactions to debit a default expense account for raw work in process
costs.
WIP Cost Clearing Account Function
When you run PRC: Generate Cost Accounting Events for the Work in Process Cost process
category, the program credits a default work in process cost liability account to balance the
work in process expense account. The program also generates cost accounting events in Oracle
Subledger Accounting.
Chapter 7 - Page 27

Accounting for WIP and Inventory Costs

Inventory Cost Account Function

the Inventory Cost Account transactions to debit a default expense account for raw inventory
costs.
Invent. Cost Clearing Account Function
When you run PRC: Generate Cost Accounting Events for the Inventory Cost process category,
the program credits a default inventory cost liability account to balance the inventory expense
Chapter 7 - Page 28
Accounting for Supplier Cost Adjustments

When you enter project-related supplier invoices in Oracle Payables or receipt accruals in
Oracle Purchasing, Oracle Payables or Oracle Purchasing invokes the Account Generator in
real time. The Account Generator derives the Accounting Flexfield values based on project
information in much the same way that AutoAccounting works in Oracle Project Costing
programs. After you interface supplier costs to Oracle Project Costing, you can adjust the
supplier cost expenditure items in Oracle Project Costing. Oracle Project Costing processes
these supplier invoice adjustments using the Supplier Invoice Cost Account AutoAccounting
function.
Supplier Invoice Cost Account Function
Oracle Project Costing uses the Supplier Invoice Cost Account function to debit the
appropriate default expense account for supplier cost adjustments (includes adjustments to
expenditure items from invoices, receipts, and payments).
When you run PRC: Distribute Supplier Cost Adjustments or PRC: Distribute Supplier Cost
Adjustments for a Range of Projects, Oracle Project Costing uses the Supplier Invoice Cost
Account function to debit a default expense account for raw supplier costs.
Chapter 7 - Page 29

Accounting for Supplier Cost Adjustments

Supplier Cost Adjustment Credit Account

When you run PRC: Generate Cost Accounting Events for the Supplier Cost process category,
the program credits a default supplier cost liability account to balance the supplier cost expense
account. If you specify a default account in Oracle Project Costing implementation options,
then the program uses the Default Supplier Cost Credit Account. Otherwise, you must set up
Oracle Subledger Accounting to derive the account. The program also generates cost
accounting events in Oracle Subledger Accounting.
Chapter 7 - Page 30
Listings
IMP: AutoAccounting Functions - For each function, this report displays all of the
possible parameters that AutoAccounting rules use to derive key flexfield segment values.
The report also shows you all of the transactions related to the AutoAccounting function
and whether each transaction is enabled or disabled.
IMP: AutoAccounting Lookup Sets - For each AutoAccounting lookup, this report
prints each possible intermediate value and its corresponding segment value.
IMP: AutoAccounting Rule Definitions - For each AutoAccounting rule, this report
displays the type of its intermediate source and the corresponding value for that source. If
the intermediate value source is a SQL statement, this report displays the text of that
statement. This listing also includes the segment value source that maps an intermediate
value to the final segment value. If the segment value source is a lookup set, then this
report displays the name of that lookup set.
IMP: AutoAccounting Segment Rule Pairings - For each function, this report displays
each of the functions transactions. It also lists the AutoAccounting rule and key flexfield
segment pairings for each transaction. This report also displays the functions transactions
without paired segments and rules.
Chapter 7 - Page 31

Listings

Quiz
Answer: d
Chapter 7 - Page 32

Agenda
Chapter 7 - Page 33
Account Generator
Oracle Payables and Oracle Purchasing use the Account Generator to determine the default
account code combinations for purchasing requisitions, purchase orders, supplier invoices, and
expense reports based on the project information entered. You define functions and processes
to derive the Accounting Flexfield combinations. You can optionally customize the Account
Generator for each set of defined ledgers.
Oracle Purchasing
Oracle Purchasing uses item types to generate account numbers for all requisitions and
purchase orders, whether they are project-related or not. Oracle Purchasing provides a set of
default account generator processes for the accounts it needs to build. Oracle Purchasing
provides default account generator processes. To derive the accounts based on project
information, you must change the default processes so that they use the project information.
For more information, see the Oracle Purchasing Users Guide.
Oracle Payables
Chapter 7 - Page 34

Account Generator
Chapter 7 - Page 35

How the Account Generator generates default charge accounts for invoices and expense reports
depends on whether you are entering an invoice or expense report that contains project and task
information:
Supplier invoices
- Oracle Payables (Invoices window) calls the Project Supplier Invoice Account
Generator.
Oracle Internet Expenses and Oracle Payables expense reports
- Oracle Internet Expenses or Oracle Payables calls the Project Expense Report
Account Generator.
PA: Allow Override of PA Distributions in AP/PO
You use the profile option PA: Allow Override of PA Distributions in AP/PO to control
whether users can override the account number that the Account Generator derives for projectrelated distributions. Settings for this profile options are:
Yes - User is allowed to update and override the generated Account.
No - User is not allowed to update and override the generated Account.
(No Value) - Equivalent to Yes.
For more information regarding the Account Generator and Oracle Project Costing, see the
Oracle Projects Implementation Guide.
Account Generator Terminology

AutoAccounting determines default account combinations for all other project-related
transactions.
Chapter 7 - Page 36

Account Generator Terminology
Implementing Accounting for Project-Related Supplier Costs and Expense

Reports
AutoAccounting, the Account Generator, and Oracle Subledger Accounting each provide
functionality to create accounting for project-related supplier costs and expense reports. When
you implement Oracle Purchasing and Oracle Payables integration with Oracle Project
Costing, you must carefully consider how to set up the account derivation logic in each
location.
Oracle Purchasing Account Generator (required) - Oracle Purchasing uses the
Account Generator to derive default debit accounts for project-related purchasing
documents.
Project Supplier Invoice Account Generator (required) - Oracle Payables uses the
Account Generator to derive default debit accounts for project-related supplier invoices
that are not matched to a purchase order.
- Oracle Payables always uses the Account Generator for project-related invoices. You
must set up the Account Generator to generate a default account, even if the profile
option PA: Allow Override of PA Distributions in AP/PO. option is set to Yes.
Chapter 7 - Page 37

Implementing Accounting for Project-Related Supplier Costs and

Expense Reports
Chapter 7 - Page 38

- In addition, Oracle Project Costing uses the Account Generator to derive a default
debit account for supplier cost and expense report adjustments that you perform in
Oracle Project Costing. Oracle Project Costing uses this information to determine
whether to allow the adjustment when you enable Automatic Offsets in Oracle
Payables. Oracle Project Costing also uses this information to determine whether an
adjustment can potentially affect tax recoverability.
Project Expense Report Account Generator (required) - Oracle Internet Expenses and
Oracle Payables (Invoices window) use the Account Generator to derive default debit
accounts for project-related expense reports. You set up the Account Generator when you
implement Oracle Payables.
Supplier Invoice Cost Account AutoAccounting Function (required) - Oracle Project
Costing uses this AutoAccounting function to derive default debit accounts for supplier
cost adjustments that you perform in Oracle Project Costing.
Expense Report Cost AutoAccounting Function (required) - Oracle Project Costing
uses this AutoAccounting function to derive default debit accounts for expense report
adjustments that you perform in Oracle Project Costing.
Default Supplier Cost Credit Account Implementation Option (optional) - The
program PRC: Generate Cost Accounting Events uses the specified account as the default
credit account for supplier cost and expense report adjustments that you perform in Oracle
Project Costing.
User-defined Setup in Oracle Subledger Accounting for Supplier Cost Adjustments
(optional) - Oracle Project Costing predefines setup in Oracle Subledger Accounting so
that the create accounting program accepts the accounting for supplier cost and expense
report adjustments from Oracle Project Costing without change. You can optionally define
your own detailed accounting rules in Oracle Subledger Accounting.
- If you allow adjustments to supplier costs in Oracle Project Costing and you do not
define a default supplier cost credit account in Oracle Project Costing implementation
options, then you must set up Oracle Subledger Accounting to derive the credit
account for supplier cost adjustments.

Quiz
Answer: a
Chapter 7 - Page 39

Agenda
Chapter 7 - Page 40
Encumbrance Accounting and Project Budgets

Oracle Projects creates project encumbrance entries when you enable top-down budget
integration for a project. Oracle Purchasing and Oracle Payables create encumbrance entries to
relieve the existing encumbrances and to create new encumbrance accounting entries. Oracle
Projects provides this setup in Oracle Purchasing and Oracle Payables so that these
applications can create encumbrance for burden costs.
Oracle Purchasing and Oracle Payables create encumbrance journals whenever any funds
related action is performed for a document. For example, when you perform a Check Funds
action for document, the encumbrance accounting events are processed to create the
encumbrance journals in draft mode. When you perform a Reserve Funds action for a
document, the encumbrance accounting events are processed to create the encumbrance
journals in final mode and the funds balances are updated. After processing is complete, you
can review the updated funds balances.
Oracle Purchasing or Oracle Payables derives using the Account Generator.
Chapter 7 - Page 41

Encumbrance Accounting and Project Budgets
Project Budget Account Generation Workflow

Oracle Project Costing uses the Project Budget Account Generation workflow process to
generate default accounts when a project budget is integrated with a non-project budget. You
must customize the Project Budget Account Generation workflow process to generate accounts
according to your business needs.
For additional information, see the lesson titled "Appendix B: Budgetary Controls and Budget
Integration."
Chapter 7 - Page 42

Project Budget Account Generation Workflow

Quiz
Answer: b
Chapter 7 - Page 43

Agenda
Chapter 7 - Page 44
Overview of Oracle Subledger Accounting

Oracle Subledger Accounting is an intermediate step between each of the subledger
applications and Oracle General Ledger. Oracle Subledger Accounting creates the final
accounting for subledger journal entries and transfers the accounting to Oracle General Ledger.
It stores a complete and balanced subledger journal entry in a common data model for each
business event that requires accounting.
Oracle Subledger Accounting provides a uniform approach to accounting and a common set of
tools that enable you to configure accounting rules for applications that require accounting. It
includes a common user interface and a set of programs that can generate accounting for
Oracle and non-Oracle applications.
When you set up rules in Oracle Subledger Accounting, you can define the types of lines,
descriptions, and accounts to store on journal entries. Oracle Subledger Accounting partitions
data by subledger application, while storing the information in a common model.
Chapter 7 - Page 45

Overview of Oracle Subledger Accounting

Oracle Project Costing fully integrates with Oracle Subledger Accounting so that you can
create accounting for your project-related transactions.
Oracle Project Costing generates accounting events and creates the subledger accounting
entries for the accounting events. Oracle Project Costing predefines setup for Oracle Subledger
Accounting so Oracle Subledger Accounting accepts the default accounting information from
Oracle Project Costing without change. Oracle Subledger Accounting transfers the final
accounting to Oracle General Ledger. If you define your own detailed accounting rules in
Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts,
or individual segments of accounts, that Oracle Project Costing derives using AutoAccounting,
or the Project Budget Account Generation workflow for integrated budgets.
Chapter 7 - Page 46


Oracle Project Costing generates accounting events for the business events that it processes and
then creates subledger accounting entries for the accounting events.
For example, a business event takes place when an employee charges time to a project. After
you distribute costs for the labor expenditure items, you run PRC: Generate Cost Accounting
Events to generate accounting events. Next, you run PRC: Create Accounting to create
accounting entries for the accounting events in Oracle Subledger Accounting.
Chapter 7 - Page 47


As the foundation of the event model, Oracle Project Costing predefines event entities. An
event entity enables Oracle Subledger Accounting to handle the accounting for similar business
events in a consistent manner. The three event entities are Expenditures, Budgets, and Revenue
(Oracle Project Billing).
Each event entity is associated with one or more event classes. An event class represents a
category of business events for a particular transaction type or document. Event classes group
similar event types and enable the sharing of accounting definitions.
An event type represents a business operation that you can perform for an event class. An
accounting event has both an event class and an event type that affect the subledger accounting
entries. Event types provide the lowest level of detail for storing accounting definitions.
Oracle Project Costing provides a predefined set of event classes and event types for each
accounting event entity. Oracle Project Costing also predefines accounting event class options
for each event class to specify the detailed information about the event class. For example, the
accounting event class options specify the general ledger journal category and the balance type
(actual, encumbrance, or budget) for each event class.
Chapter 7 - Page 48


Quiz
Answer: a
Chapter 7 - Page 49

Agenda
Chapter 7 - Page 50
Oracle Subledger Accounting for Costs Implementation Steps

You can optionally set up your own accounting rules in Oracle Subledger accounting. For
additional information, see the Oracle Subledger Accounting Implementation Guide.
Chapter 7 - Page 51

Oracle Subledger Accounting for Costs Implementation Steps (continued)

You can optionally set up your own accounting rules in Oracle Subledger accounting. For
additional information, see the Oracle Subledger Accounting Implementation Guide.
Chapter 7 - Page 52


(continued)
Sources and Custom Sources

Oracle Project Costing predefines a set of sources. Sources are pieces of information that
Oracle Subledger Accounting uses to determine how to create accounting for an accounting
event. Oracle Project Costing assigns the predefined sources to accounting attributes.
Accounting attributes are values that Oracle Subledger Accounting needs to successfully create
subledger journal entries. For example, for the event class Labor Cost, Oracle Project Costing
assigns the source Raw Cost to the accounting attribute Entered Amount. The program PRC:
Create Accounting uses the raw cost value from the labor cost distribution line to determine the
entered amount for the subledger accounting journal entry.
You can optionally define custom sources to extend the list of sources available to application
accounting definitions. To create custom sources, you write PL/SQL functions that use the
predefined sources and constant values as parameters. For example, if you capture the
geographic region to which each organization belongs in a descriptive flexfield segment, then
you can create a custom source to use the information in your application accounting
definitions. You use the expenditure organization (a predefined source) as a parameter in the
definition of the custom source. For information about how to define custom sources, see the
Oracle Subledger Accounting Implementation Guide.
Chapter 7 - Page 53

Sources and Custom Sources
Journal Entry Methods and Definitions

Oracle Project Costing provides predefined accounting setup for Oracle Subledger Accounting.
If you use the predefined setup, then Oracle Subledger Accounting accepts the default accounts
from Oracle Project Costing without change. You can optionally define your own detailed
subledger accounting rules. Many different components come together to form the subledger
accounting setup:
Subledger Accounting Method: A group of common application accounting definitions
that determines how Oracle Subledger Accounting processes accounting events. The
subledger accounting method groups application accounting definitions from subledger
applications such as Oracle Project Costing, Oracle Payables, Oracle Purchasing, and
Oracle Receivables. This grouping capability enables you to assign a set of application
accounting definitions collectively to a ledger.
Application Accounting Definitions: Application accounting definitions are collections
of setup components for a subledger application that determine how Oracle Subledger
Accounting processes accounting events to create subledger and general ledger journal
entries. Application accounting definitions assign journal lines definitions to event class
and event type combinations.
Chapter 7 - Page 54

Journal Entry Methods and Definitions
Chapter 7 - Page 55

Journal Lines Definitions: Journal lines definitions group journal line types, account
derivation rules, and journal entry descriptions into a complete set of journal line types
within an event class or event type.
Journal Line Types: Journal line types determine the characteristics of subledger journal
entry lines for an event class. These characteristics determine whether the line is used to
create actual, budget, or encumbrance entries, whether the line is a debit or a credit,
whether matching lines are merged, and whether data is transferred to the general ledger in
summary or detail form.
Account Derivation Rules: Account derivation rules determine the Accounting Flexfield
values for subledger journal entries. You can define account derivation rules in Oracle
Subledger Accounting that generate either a value for a single Accounting Flexfield
segment or a complete Accounting Flexfield account code combination.
Mapping Sets: Mapping sets enable you to assign a specific output value to an
Accounting Flexfield or Accounting Flexfield segment. You use mapping sets when you
set up account derivation rules. Account derivation rules determine the Accounting
Flexfield values for subledger journal entries.
Journal Entry Description: The journal entry description determines both the content
and sequence in which the elements of the description appear. You assign journal entry
descriptions to headers and lines in the application accounting definition. Oracle
Subledger Accounting assigns the descriptions to the journal header and lines when it
creates the draft or final accounting.
For additional information, see the Oracle Subledger Accounting Implementation Guide.
Associating Subledger Accounting Methods and Ledgers

You must assign a subledger accounting method to a ledger. Assigning different subledger
accounting methods to different ledgers enables you to create multiple accounting
representations of transactions.
Chapter 7 - Page 56

Associating Subledger Accounting Methods and Ledgers
Post-Accounting Programs
Subledger applications use post-accounting programs to transfer transaction data between
subledgers based on the accounting generated from the transaction data. Oracle Subledger
Accounting uses accounting classes to classify journal entry lines. The post-accounting
programs distinguish journal lines for processing based on the accounting class assigned to
each journal entry line.
Oracle Project Costing provides two post-accounting programs, one for debits and one for
credits, to obtain final accounting information from Oracle Subledger Accounting because the
accounting that Oracle Project Costing creates using AutoAccounting may not be the same as
the final accounting that Oracle Subledger Accounting transfers to Oracle General Ledger.
Oracle Project Costing uses post-accounting programs to determine which journal entry lines
to retrieve from Oracle Subledger Accounting when Oracle Project Costing performs the
following activities:
Groups asset lines on capital projects
Generates audit reports
Chapter 7 - Page 57

Post-Accounting Programs
Chapter 7 - Page 58

Creates a reversing entry for expenditure items that you imported into Oracle Project
Costing from other applications, such as Oracle Purchasing, Oracle Payables, or Oracle
Inventory
Creates a reversing entry for expenditure items when you split an expenditure item,
transfer an expenditure item, or change transaction attributes for an expenditure item (for
example, change whether the expenditure item is billable or capitalizable)
The predefined setup for the post-accounting programs consists of the program code and a list
of the accounting classes assigned to each respective program. If you modify the accounting
class for a journal line type, or add a new accounting class and journal line type pair, then you
must also update the accounting classes assigned to each of the predefined post-accounting
programs. This update ensures that the asset generation program, audit reports, and expenditure
item splits and transfers in Oracle Project Costing continue to work accurately.
Important: Do not add the same accounting class to both the debit and the credit journal line
types.
Important: Oracle Project Costing predefines post-accounting program assignments for the
PA Postaccounting Debit program and the PA Postaccounting Credit program. Do not remove
the predefined accounting classes even if you define your own journal lines definitions and add
accounting class assignments to the programs. In this case, Oracle Project Costing uses the
predefined accounting classes to process and report on existing historical journals and new
user-defined accounting classes that you add to process and report on new journals.
Cross-Entity Balancing Rules

Oracle Subledger Accounting uses intracompany balancing rules to create balancing lines on
journal entries between balancing segment values. You set up this functionality in the
Accounting Setup Manager in Oracle General Ledger. The Accounting Setup Manager
centralizes the common setup steps for the Oracle financial applications.
For example, if you define accounting rules for project costs that use the operating unit to
derive the account for your balancing segment, then transactions can have unbalanced entries
when you create transactions between two different operating units. To address this situation,
Oracle Project Costing sends the unbalanced entries to Oracle Subledger Accounting and
Oracle Subledger Accounting automatically creates debit and credit accounting lines to balance
the subledger journal entries by balancing segment. Oracle Subledger Accounting uses the
balancing accounts that you define for the ledger in the Accounting Setup Manager.
You must select the Enable Intracompany Balancing option in the ledger definition to enable
the application of the balancing rules. You also must set up the accounts to ensure that Oracle
Subledger Accounting generates the balancing journal entries. For information about crossentity balancing rules, including examples, see the Oracle Financials Implementation Guide.
Chapter 7 - Page 59

Cross-Entity Balancing Rules
Oracle Subledger Accounting Inquiries

You can query accounting events, journal entries, and journal entry lines based on multiple
selection criteria. You can use subledger accounting inquiries to:
View information about an accounting event or journal entry error.
View detailed information about the subledger journal entry headers for an accounting
event.
Compare subledger journal entry information for any two journal entries.
View subledger journal entry lines for multiple documents or transactions.
View subledger journal entry in a t-account format.
View transactions for an accounting event or journal entry.
When you view a transaction for a cost accounting event, Oracle Subledger Accounting drills
down to Oracle Project Costing and automatically opens and queries information in
expenditure inquiry. Similarly, you can drill down to other subledger applications to view
transaction information for the accounting events that originated in those applications.
Chapter 7 - Page 60

Oracle Subledger Accounting Inquiries
Audit Reports
The Project Subledger Audit Reports print cost distribution lines related to projects. The
reports enable you to drill down from a GL account balance in the trial balance to the
individual project-related transactions.
AUD: Project Subledger Summary - This report prints a summary of cost distribution
lines by project. The report includes subtotals for GL Account, Project Number,
Manufacturing-Related, and Expenditure Type Class.
AUD: Project Subledger Detail by Project - This report shows cost distribution lines for
a single project by task.
AUD: Project Subledger Detail by Expenditure Type - This report shows project
subledger detail across projects for one expenditure type.
Chapter 7 - Page 61

Audit Reports

Summary
Chapter 7 - Page 62
Chapter 8
Implementing Non-Labor Costing
Chapter 8 - Page 1

Implementing Non-Labor
Costing

Chapter 8 - Page 2

Chapter 8 - Page 3

Objectives
Chapter 8 - Page 4

Agenda
Chapter 8 - Page 5

When you charge a usage expenditure item to a project, your must specify the non-labor
resource utilized and the non-labor resource organization that owns the resource. When you
define non-labor resources, you can choose only expenditure types with the Usages
expenditure type class.
Chapter 8 - Page 6


Non-Labor Costing Implementation Steps
Chapter 8 - Page 7
Defining Non-Labor Resources

1. In the Non-Labor Resources window, enter the name, description, effective dates. Select
an expenditure type for each non-labor resource entered.
2. In the Organizations region, select the organizations to which the resource is assigned and
enter the effective dates. The organizations include any organization from your
organization hierarchy, regardless of whether the organization has the Project
Expenditure/Event Organization classification enabled and regardless of the effective
dates for the organization.
Chapter 8 - Page 8

Defining Non-Labor Resources
Non-Labor Cost Rates

An expenditure type cost rate is a currency amount that Oracle Project Costing multiplies by
the expenditure type unit to calculate cost. In the Expenditure Types window, select an
expenditure type and choose the Cost Rates button to enter a cost rate for it.
When you define an expenditure type, you specify whether cost rates are required. You can
only select the Cost Rates button for the expenditure type if you enable the Rate Required
option. You cannot change this setting after you save the expenditure type. Instead, you must
create a new expenditure type with a unique name and set the Rate Required option for it.
In a multi-organization environment, you set up expenditure types once and they are shared
across all operating units. However, the cost rates for expenditure types are specific to each
operating unit. You must define cost rates for each operating unit.
For additional discussion regarding defining expenditure types, see the lesson titled
Implementing Expenditures.
Chapter 8 - Page 9

Non-Labor Cost Rates
Non-Labor Cost Rate Overrides

You define cost rate overrides in the Non-Labor Resources window. When you define nonlabor resources, you assign each non-labor resource an expenditure type. The cost rates you
define for an operating unit for the expenditure type apply to all non-labor resources with that
expenditure type.
You can optionally define non-labor cost rate overrides for non-labor resources. You define
each cost rate override by operating unit for a specific non-labor resource and organization
combination.
In a multi-organization environment, you set up non-labor resources once and share them
across all operating units, while you define cost rate overrides by operating unit.
Chapter 8 - Page 10

Non-Labor Cost Rate Overrides

Agenda
Chapter 8 - Page 11
Listings
Use the following concurrent programs to document non-labor resource setup information:
IMP: Expenditure Cost Rates - Use the IMP: Expenditure Cost Rates listing to review
the non-labor expenditure cost rates. You can print a listing for one or all expenditure
categories, one or all expenditure types, or for a specified effective date. If an effective
date is specified for the report, then the report lists only expenditure cost rates that are
active as of the date you enter.
IMP: Non-Labor Resources by Organization - Use the IMP: Non-Labor Resources by
Organization listing to review all non-labor resources associated with a particular
organization, expenditure category, or expenditure type. For each organization listed, this
report displays the organizations non-labor resources and the corresponding expenditure
types and expenditure categories.
Chapter 8 - Page 12

Listings

Quiz
Answer: a, c
Chapter 8 - Page 13

Quiz
Answer: b
Chapter 8 - Page 14

Summary
Chapter 8 - Page 15

Chapter 8 - Page 16
Chapter 9
Implementing Labor Costing
Chapter 9 - Page 1


Chapter 9 - Page 2

Chapter 9 - Page 3

Objectives
Chapter 9 - Page 4

Agenda
Chapter 9 - Page 5
Labor Costing Implementation Steps

When you import or enter labor costs into Oracle Project Costing as a quantity of hours, the
cost distribution program determines how to calculate the raw cost of the labor. To accomplish
this, within Oracle Project Costing you can maintain labor cost rate schedules by employee or
by job or use a labor costing extension to calculate the cost. You also have the option of
overriding labor cost rates for individual employees. When you run the program PRC:
Distribute Labor Costs or the program PRC: Distribute Labor Costs for a Range of Projects,
the program uses the cost rates to determine the raw cost for each uncosted labor expenditure
item. You can also define a method for calculating overtime cost.
Chapter 9 - Page 6

Labor Costing Implementation Steps
Define Labor Costing Multipliers

A labor costing multiplier is a value by which Oracle Project Costing multiplies an employees
labor cost rate to calculate the employees overtime premium cost rate:
Labor Cost Rate * Labor Cost Multiplier = Overtime Premium Labor Cost Rate
Oracle Project Costing then multiplies this overtime premium labor cost rate by the number of
overtime hours an employee works to calculate the overtime premium for that employee:
Overtime Premium Labor Cost Rate * OT Hours = Overtime Premium
You define a labor cost multiplier for each kind of overtime your business uses, such as double
time, or time and a half. For example, if you pay an employee double time for all overtime
hours, then define a labor cost multiplier of 1.0. You multiply the employees labor cost rate by
1.0 to calculate the employees overtime premium labor cost rate. If you pay an employee time
and a half for all overtime hours, then define a labor cost multiplier of 0.5 to calculate the
employees overtime premium labor cost rate. An employees total labor cost is the overtime
premium plus the total number of hours that employee worked multiplied by the employees
labor cost rate:
Overtime Premium + (Total Hours x Labor Cost Rate) = Total Labor Cost
Chapter 9 - Page 7

Define Labor Costing Multipliers

Quiz
Answer: a
Chapter 9 - Page 8
Labor Costing Rules

You define a labor costing rule for each pay type your business uses. For example, you can
define a labor costing rule for pay types such as exempt, non-exempt, uncompensated,
compensated, or hourly. When an employee charges time to a project, Oracle Project Costing
processes the labor hours according to the employees labor costing rule.
To define a labor costing rule:
1. Enter a unique rule name and select a costing method.
- Costing methods determine how Oracle Project Costing calculates labor costs:
- Rates: When you select Rates, Oracle Project Costing calculates the labor costs
for entered hours using hourly cost rates.
- Extension: When you select Extension, labor costs are calculated by the labor
costing extension. When you use this option, you are not required to maintain
hourly cost rates in Oracle Project Costing.
2. If the overtime calculation extension creates overtime hours, then you can select the
Overtime Trans Defaults button and specify a default project and task by operating unit
for system-generated expenditure items.
Chapter 9 - Page 9

Labor Costing Rules

3. Enter the Effective Dates during which the labor costing rule is valid.
4. Assign cost multipliers to overtime expenditure types.
- Enter this information if your employees enter overtime hours manually. When you
select a costing method of Rates and a transaction is charged to an expenditure type
that has an assigned multiplier, then the distribution program applies the multiplier as
it calculates labor costs.
Chapter 9 - Page 10

Quiz
Answer: b, c
Chapter 9 - Page 11
Rate Schedules
You can define rate schedules for both billing and costing. A cost rate schedule maintains
hourly cost rates for employees or jobs. No system attribute exists to distinguish between a bill
rate schedule and a cost rate schedule.
For labor cost rate schedules, specify one of the following schedule types for each rate
schedule you define:
Employee
- Use this type of rate schedule to define standard hourly rates or percentage markups
for billing by employee.
Job
- Use this type of rate schedule to define standard hourly rates by job title. When you
enter a job-based rate schedule, you enter a job group to indicate which jobs are used
to determine rates. When a project uses a job-based bill rate schedule, the job group
on the schedule must match the projects billing job group.
In a multi-organization environment, you can share rate schedules across different operating
units, or have different rates for the same resource in different operating units.
Chapter 9 - Page 12

Rate Schedules
Chapter 9 - Page 13

To define a rate schedule:

1. Specify the operating unit to which your organization and rate schedule belongs. When
you have access to only one operating unit, that operating unit appears as a default value
in this field.
2. Specify the organization that maintains the schedule.
- The organization you enter can be any organization from your organization hierarchy,
regardless of whether the organization has the Expenditure Organization
classification, and regardless of the start and end dates for the organization.
3. In the Rate Schedules window, enter a schedule name and a description of the schedule.
4. Specify a currency for the schedule.
5. Optionally, enable the Share Across Operating Units check box.
- This optional enables other operating units to use this schedule.
6. Select a schedule type.
7. Specify rates or markups for employees or for job titles.
Assign Costing Rules and Rate Schedules

Use the Organization Labor Costing Rules window to:
Assign costing rules and rate schedules to operating units, parent organizations, and
specific expenditure organizations. The costing rule and rate schedules assigned to an
organization apply to all employees in the organization.
Specify currency rate attributes to calculate labor costs if the currency of the cost rate
schedule is different from the currency of the operating unit in which the timecard is
entered.
Define default overtime projects and tasks for organizations using the overtime calculation
extension to generate overtime transactions.
When you assign a costing rule and a rate schedule to an organization, Oracle Project Costing
applies the following rules in the order presented to determine the costing rule for each
transaction:
If an assignment exists for the transaction expenditure organization, then the
corresponding costing rule and rate schedule are used to calculate labor costs.
If an assignment does not exist for the expenditure organization, Oracle Project Costing
uses the Expenditure Organization Hierarchy and searches for an assignment for the parent
Chapter 9 - Page 14

Assign Costing Rules and Rate Schedules
Chapter 9 - Page 15

organization that owns the expenditure organization. If an organization has multiple

parents and a rule is assigned to each, then the rule assigned to the lowest level parent
organization is applied.
If an assignment does not exist for a parent organization, then Oracle Project Costing
searches for an assignment for the expenditure-operating unit.
To assign costing rules and rate schedules:
1. Select an Operating Unit, Organization or both.
- If you do not select an operating unit, then Oracle Project Costing displays all
organizations that are part of any Expenditure/Event Organization Hierarchy.
- If you select an operating unit, then Oracle Project Costing displays only those
organizations that are in the Expenditure/Event Organization Hierarchy for the
selected operating unit. An organization does not have to be classified as Project
Expenditure/ Event Organization to appear on the list.
2. Select a labor costing rule.
- If the labor costing rule has a costing method of Rates, then select the cost rate
schedule that defines the hourly cost rates for employees in the selected organization.
- If you assign an organization labor costing rule to an organization that is not
classified as a Project Expenditure/Event Organization, then the rule applies to
organizations that are below it in the hierarchy, unless you assign a rule to an
organization at a lower level in the hierarchy. For example, a hierarchy has three
organizations: Organization 1, Organization 11, and Organization 111. Organization 1
is the parent of Organization 11. Organization 11 is the parent of Organization 111.
Organization 111 is the only Project Expenditure/Event Organization. If you assign
organization labor costing rules only to Organization 1 and Organization 11, then the
rule that you assign to Organization 11 takes precedence for Organization 111.
3. Enter a default job rate schedule.
- This schedule is used to forecast costs for unstaffed positions.
4. Enter the effective dates.
5. Optionally, enter a default project and task for system-generated transactions.
- Enter this information if you use the overtime calculation extension,
6. Enter the currency conversion attributes in the Currency Conversion Attributes region.
- Enter this information if your cost rate schedule currency is different from your
operating unit currency.
- If you do not specify currency attributes, then Oracle Project Costing applies the rate
attributes defined in the Implementation Options window.
Labor Costing Overrides

For individual employees, you can enter labor costing overrides. You can override the assigned
costing rule, override the assigned cost rate schedule, or enter an overriding cost rate.
To override labor costing:
1. In the Labor Costing Overrides window, find any existing labor costing overrides.
- Select either the Employee Name or Employee Number from the list of values.
- Select the operating unit from the list of values.
- Select the Find button.
2. Optionally, select a labor costing rule.
3. Choose an override type to specify whether to override the assigned rate schedule or enter
an overriding cost rate:
- Schedule - Enter the overriding rate schedule in the Cost Rate Schedule field.
- Rate - Enter an overriding rate. Optionally, select a new currency code and define
currency conversion attributes.
4. Enter effective dates.
Chapter 9 - Page 16

Labor Costing Overrides
Labor Costing Extension

Use the labor costing extension to implement a unique costing method for labor transactions.
The standard method calculates raw cost using the number of hours multiplied by the
employees hourly cost rate. The labor costing extension enables you to derive raw cost
amounts for individual labor transactions. Examples uses of the extension include:
Standard cost rate by job
Capped labor cost rates
Multiple cost rates per employee
You can use the labor costing extension to implement unique costing methods other than the
standard method, which calculates raw cost using the number of hours multiplied by the
employees hourly cost rate.
Processing
Oracle Project Costing processes the labor costing extension during labor cost distribution
before calculating standard raw cost amounts. If Oracle Project Costing encounters a labor
costing extension that derives the raw cost amount of a labor transaction, then it skips the
standard raw cost calculation section for that transaction.
Chapter 9 - Page 17

Labor Costing Extension
Labor Transaction Extension

The labor transaction extension enables you to create additional transactions for individual
labor items charged to projects:
Create overtime premium transactions for overtime hours based on company overtime
policies.
Create fringe benefit transactions that are charged to the same project as the source labor.
Create additional transactions for hazardous work performed for every labor transaction
charged to certain projects.
You can create additional transactions for straight time labor transactions and overtime labor
transactions. You create additional labor transactions based on the source labor transactions
that you enter on timecards.
Related Transactions
Additional transactions created for labor transactions are referred to as related transactions. All
related transactions are associated with a source transaction and are attached to the expenditure
item ID of the source transaction. You can identify and process the related transactions by
referring to the expenditure item ID of the source transaction.
Chapter 9 - Page 18

Labor Transaction Extension
Chapter 9 - Page 19

You create related transactions to process a raw cost amount separately than the source
transaction raw cost amount. Related transactions can be burdened, billed, and accounted for
independently of the source transaction.
Processing
Oracle Project Costing processes the labor transaction extension during labor cost distribution.
When you distribute labor costs, the program processes the labor transaction extension after it
calculates the raw cost of the source transactions. This sequence enables you to derive the cost
of the related transaction from the cost of the source transaction. You also use the labor
transaction extension to calculate new cost amounts for related transactions if the source
transaction is recosted.
Implement Overtime Processing

Complete the following steps to implement an indirect project to collect overtime premium
costs:
Implement the Oracle Project Costing Overtime Calculation extension.
Define overtime expenditure types.
Define labor cost multipliers.
- For each type of overtime your business uses, define a corresponding labor cost
multiplier. You assign the appropriate labor cost multiplier to each overtime task.
Enter an overtime project.
- You can define one indirect project to hold all of your companys overtime costs, or
you can define many indirect projects to make it easier to enter and report overtime
by group or office.
- If you decide to use more than one indirect project to hold your companys overtime
costs and you are using automatic overtime calculation, then you must include logic
in your Overtime Calculation extension to charge the overtime hours to the
appropriate overtime project.
Chapter 9 - Page 20

Implement Overtime Processing
Chapter 9 - Page 21

Define overtime tasks.

- For each overtime project, you must define a task for each type of overtime your
business uses. Different types of overtime use different labor cost multipliers to
calculate overtime costs.
- If you are using automatic overtime calculation, then you must include the logic in
your Overtime Calculation extension to charge overtime hours to the appropriate
overtime task.
Define labor costing rules.
- If you charge overtime costs to an indirect project, then you can use Oracle Project
Costing to record the premium your business pays employees for overtime hours they
work.
Assign a labor cost multiplier for each overtime task.
Implement AutoAccounting.
For additional discussion regarding how to implement overtime calculations, see the Oracle
Projects Implementation Guide.
Overtime Calculation Extension

You can specify how to use the Overtime Calculation extension in the Implementation Options
window.
The overtime calculation extension enables you to define your own rules to implement
company-specific overtime calculation policies. The extension calculates overtime costs and
charges them to an indirect project other than the project where the labor was charged.
To charge overtime to the project where the labor was charged, consider creating items via the
labor transaction extension.
Oracle Project Costing provides a template Overtime Calculation extension. You can use the
template to understand the extension, and then make appropriate changes to meet your business
needs.
If you use both the Labor Transaction Extension and the Overtime Calculation program, then
you must define conditions so that only one of these options processes each transaction.
Chapter 9 - Page 22

Overtime Calculation Extension

Quiz
Answer: a
Chapter 9 - Page 23

Agenda
Chapter 9 - Page 24
Listings
IMP: Labor Cost Multipliers - Report to review all labor cost multipliers.
IMP: Labor Cost Rates Listing - Report to review all employees and their cost rates, job
level, job discipline, or labor costing rule. For each employee listed, this report displays
the employees active organization and job assignments, the assigned labor costing rule,
and the hourly cost rate.
IMP: Labor Cost Rates Listing by Organization - Report to review all employees and
their cost rates, job level, job discipline, or labor costing rule. This report starts at a
specified organization and reports down the organization hierarchy listing employees and
their labor cost rates. You cannot print a listing for a single organization using this report
unless the organization is at the lowest level of the hierarchy.
IMP: Labor Costing Rules Listing - Report to review labor costing rules.
Chapter 9 - Page 25

Listings

Summary
Chapter 9 - Page 26
Chapter 10
Implementing Burden Costing
Chapter 10 - Page 1

Implementing Burden
Costing

Chapter 10 - Page 2

Chapter 10 - Page 3

Objectives
Chapter 10 - Page 4

Agenda
Chapter 10 - Page 5
Overview of Burdening
Burdening, also known as cost plus processing, is a method of applying one or more burden
cost components to the raw cost amount of each individual transaction to calculate burden
costs. You can choose to account for the individual burden cost components to either track the
overhead absorption or to account for the total burdened costs. You can write custom reports
using standard views to report all burden cost components for each detail transaction.
The objective of burdening is to provide you with a buildup of raw and burden costs, so you
can accurately represent the total cost of doing business. You can choose to calculate total
burdened costs as a buildup of costs using a precedence of multipliers. Taking the raw cost,
Oracle Project Costing performs a buildup of burden costs on top of raw costs to provide you
with a true representation of costs. You provide the multiplier that Oracle Project Costing uses
to calculate the cost. Oracle Project Costing performs the buildup for each detailed transaction.
Chapter 10 - Page 6

Overview of Burdening
Burden Costing Terminology

Burden Cost Code - An implementation-defined classification of overhead costs that
represents the type of burden cost to apply to raw cost.
Burden Costs - Legitimate costs of doing business that support raw costs and cannot be
directly attributed to work performed.
Burden Multiplier - A numeric multiplier associated with an organization for burden
schedule revisions, or with burden cost codes for projects or tasks.
Burden Schedule - An implementation-defined set of burden multipliers that you
maintain to use across projects.
Burden Structure - Determines how cost bases are grouped and what types of burden
costs are applied to the cost bases. A burden structure defines relationships between cost
bases and burden cost codes and between cost bases and expenditure types.
Burdened Cost - The cost of an expenditure item, including raw cost and burden costs.
Cost Base - The grouping of raw costs to which burden costs are applied.
Raw Costs - Costs that are directly attributable to work performed. Examples of raw costs
are salaries and travel expenses.
Chapter 10 - Page 7

Burden Costing Terminology
Storing Burden Cost Calculations

Storing Burden Cost on the Same Expenditure Item
You can choose to store the total burdened cost as a value along with the raw cost on each
expenditure item. You can view the total burdened cost and the raw cost of each item. Oracle
Project Costing displays the raw and burdened costs on windows and reports.
Storing Burden Costs as a Separate Expenditure Item on the Same Project or on a
Separate Project
You can choose to hold the burden cost components as separate expenditure items on the same
project. Alternatively, you can show burden cost as summarized expenditures on a separate
project that you assign in the Project Types window. The expenditure items storing the burden
cost components have a different expenditure type that is classified by the expenditure type
class Burden Transaction. Oracle Project Costing summarizes the burden cost components to
create the burden transactions. The summarization is by project, lowest task, expenditure
organization, expenditure classification, supplier, PA period, and burden cost code. You can
also use the Burden Resource Extension to specify the attributes that Oracle Project Costing
uses when it groups summary burden transactions. The link to the original expenditure item is
maintained, but is not visible when you look at the summarized expenditures.
Chapter 10 - Page 8

Storing Burden Cost Calculations
Accounting for Burden Costs

Accounting for Burden Costs by Burden Cost Component
You can account for the individual burden cost components when you want to track the
burdening in Oracle Subledger Accounting and Oracle General Ledger. The program PRC:
Create and Distribute Burden Transactions summarizes the burden costs and creates the
expenditure items for the burden transactions. You can create the burden transactions on the
same project as the raw cost transactions or on a separate project.
You may choose to account for the total burdened cost of the items, without distinguishing the
amounts by burden cost components. You can use this approach to track the total burdened
cost in a cost asset or cost WIP (work in process) account. This method is also sometimes
referred to as project inventory.
Storing Burden Costs with No Accounting Impact
You can choose to calculate the burden costs for project transactions for management reporting
without an accounting impact. If you store burden costs as a value on the expenditure item,
then you have no extra setup to perform and no accounting programs to run on the burden
costs, as long as you do not enable Total Burdened Accounting for any project types.
Chapter 10 - Page 9

Accounting for Burden Costs

If you store burden costs as separate, summarized expenditure items and perform the
accounting in Oracle Project Costing (rather than importing the accounting), then you must set
up AutoAccounting to derive the same default GL account for both the debit and the credit
account. You must generate cost accounting events for the cost distribution lines for these
expenditure items, create the final accounting in Oracle Subledger Accounting, and transfer the
subledger accounting to Oracle General Ledger.
Chapter 10 - Page 10
Project Types and Burdening

Use the Costing Information tab on the Project Types window to define default settings for
burdening and processing for projects:
Burdened - Indicates whether to burden raw costs charged to projects using this project
type.
Schedule - The burden schedule to use as the default cost burden schedule. You enter a
schedule only if the project type is burdened. If the project type is burdened, then this field
is required.
Allow Schedule Override - Indicates whether you can override the default cost burden
schedule when entering and maintaining projects and tasks. Deselect the check box if you
want to ensure that all projects of a project type use the same schedule. Check the box to
allow updates to the cost burden schedule on the projects and tasks. You can enter this
only if you enabled the Burdened check box.
Burden Cost on same expenditure item - Select if you want to store the burden amount
in the same expenditure item, and then optionally select a project and task to account for
the expenditure item.

Project Types and Burdening

Account for Burden Cost components: Select this option to store the burden amount in
the same expenditure item, and additionally to show the burden cost on separate,
summarized expenditures on a separate project. Select a project and (optional) task that
accounts for the expenditure item.
Burden Cost as separate expenditure item - Select this option to account for burden
amounts as a separate expenditure item.
Enable Accounting for Total Burdened Costs - Select this option to generate accounting
for the total burdened cost.
- Note: If you store burden costs as a value on the same expenditure item for reporting
purposes only, and you do not want to generate accounting for total burdened cost,
then do not enable this option.

Quiz
Answer: b

Agenda
Burden Costing Implementation Steps

Complete the setup steps listed on the slide to implement burden costing.

Burden Costing Implementation Steps
Cost Bases and Cost Base Types

Cost bases refer to groups of raw costs that you use for applying burden costs. You assign cost
bases to burden structures, and then specify the types of raw costs that are included in the cost
base along with the types of burden costs that are applied to the cost base.
Cost base types refer to the use of cost bases. Oracle Project Costing predefines the cost base
types Burden Cost and Other. You use cost bases with the type Burden Cost in burden
calculations. Oracle Project Costing does not include cost bases with a type other than Burden
Cost in burden calculations. You use these cost bases for grouping expenditure types for
different purposes, such as for billing extension calculations.

Cost Bases and Cost Base Types
Burden Cost Codes

Burden cost codes represent the types of costs to allocate to raw costs. You can use burden cost
codes for costing, revenue generation, and billing. You can also use burden cost codes to report
and account for on burden cost recovery components in Oracle Project Costing.
Define an expenditure type for burden cost codes that Oracle Project Costing processes as
separate, summarized burden transactions. You must assign the Burden Transaction
expenditure type class to the expenditure type.

Burden Cost Codes
Burden Structures
You define the cost buildup using a burden structure. A burden structure determines how you
group cost bases and establishes the method of applying burden costs to raw costs. Expenditure
types classify raw costs and burden cost codes classify burden costs. The relationship between
expenditure types and burden cost codes within each cost base determines what burden costs
Oracle Project Costing applies to specific raw costs, and the order in which Oracle Project
Costing applies the burden costs.
Each expenditure type can belong to only one cost base having a type of Burden Cost within
each burden structure. This setup ensures that Oracle Project Costing does not burden an
expenditure types more than once.
If you do not assign an expenditure type to a cost base, then Oracle Project Costing does not
burden transactions with that expenditure type. The burdened cost for these transactions equals
the raw cost of the transaction.
Example
The diagram on this page illustrates a burden structure with the following cost bases:
Labor
- Includes the expenditure types Professional, Clerical, and Sales.

Burden Structures

- Is assigned the burden cost codes Fringe, Overhead, and General and Administrative
(G&A).
Material
- Includes the expenditure types Supplies and Construction Materials.
- Is assigned the burden cost codes Handling and General and Administrative (G&A).
Expense
- Includes the expenditure types Travel, Meals, and Airfare.
- Is assigned the burden cost code General and Administrative (G&A).
Copying Burden Structures
When you copy a burden structure, Oracle Project Costing copies the following assignments
from the existing (From) structure to the new (To) structure:
Cost base assignments
Burden cost codes
Expenditure types
To copy an existing burden structure to a new burden structure, first enter header information
for the new burden structure.
Burden Structures
Create an Additive burden structure to apply each burden cost code assigned to a cost base
using the same precedence when calculating burden costs. Additive schedules automatically
provide a default precedence value of 1 to each burden cost code in the structure.

Burden Structures
Burden Structures
Create a Precedence burden structure to specify the order in which each burden cost code in a
cost base is applied to raw costs. Enter the precedence in which you want to apply each burden
cost code to raw costs within the cost base.

Burden Structures
Burden Schedule Types and Burden Schedules

Two types of burden schedules exist that you can use in Oracle Project Costing:
Firm - Use firm schedules if you do not expect your multipliers to change. Generally, you
use firm schedules for costing or commercial billing schedules. Firm schedules can have
multiple versions, but never more than one version for an effective date range.
Provisional - Because you do not always know burden multipliers at the time that you
calculate total burdened costs, you can use provisional multipliers. Provisional multipliers
are generally estimates based on a companys forecast budget for the year. When you
determine the actual multipliers that apply to costs, then you replace the provisional
multipliers with the actual multipliers. Oracle Project Costing processes the adjustments
from provisional to actual changes for costing, revenue, and billing.
You define schedule versions for a burden schedule to record the date range within which
multipliers are effective. You can have an unlimited number of versions for each burden
schedule, but you can have only one active version at a given point in time.
The profile option PA: Default Burden Schedule Type indicates the default burden schedule
type when entering a standard burden schedule using the Burden Schedules window.

Burden Schedule Types and Burden Schedules
Assigning Burden Multipliers

When you create burden schedules, you assign a multiplier to an organization and burden cost
code. The multiplier specifies the amount by which Oracle Project Costing multiplies the raw
cost to obtain the burden cost amount. When you cost the expenditure items, Oracle Project
Costing looks at the expenditure organization on the expenditure item to determine what
multiplier to use for burden calculation.
Burden Multiplier Hierarchy
Effective multipliers cascade down the Project Burdening Hierarchy, starting with the parent
organization. If Oracle Project Costing finds a level in the hierarchy that does not have a
multiplier defined, then it uses the multipliers entered for the parent organization. Therefore, an
organization multiplier schedule hierarchy is really a hierarchy of exceptions. You define the
multipliers for an organization only to override the multipliers of its parent organization.
Suggestion for Organizations that Have No Burden
You can set up special procedures for organizations that have no burden. For example, your
company can use contractors that do not have a particular type of burden cost (such as fringe)
applied to their raw cost. To implement this scenario, first set up a new expenditure
organization for contractors. Then, assign that organization to the burden schedule and use a

Assigning Burden Multipliers

multiplier of zero for the burden cost of Fringe to create a zero burden cost amount. Each time
that burden cost for Fringe is calculated for the contractors organization, Oracle Project
Costing multiplies the contractors raw cost multiplier by zero, resulting in a burden cost
amount of zero, which reflects the true representation of the raw cost and burden multipliers.
Adding a New Organization
If you add a new expenditure organization after you have compiled schedule revisions, you
must ensure that the new organization is included in the schedules:
If the organization has its own multipliers, then add multipliers to appropriate schedule
revisions and recompile.
If the organization uses parent organization multipliers, then run the concurrent program
PRC: Add New Organization Burden Compiled Multipliers.
Defining Burden Schedules

In the Burden Schedules window, enter the name and description of the burden schedule
you are defining.
Enter the default burden structure for this schedule. You can see the structure of a
particular revision when you review revision details. You can change the default structure
of the schedule at any time. Oracle Project Costing uses the new default structure for any
new revisions that you create. You can update the default structure to create revisions that
use a different burden structure for a given burden schedule.
Choose the burdening hierarchy for this schedule.
- The burden hierarchy you enter for the burden schedule is the default hierarchy for
the latest version. The burden hierarchy information is displayed in the Burden
Schedule Version Details window and can be overridden at this level.
Choose the Type of schedule, either Firm or Provisional.
Versions
In the Versions region, define revisions. You can have many different revisions of a
particular schedule. For example, you can have a schedule revision for each quarter in

Defining Burden Schedules

your fiscal year. You also create schedule revisions when you want to use a new burden
structure, enter new burden multipliers, or apply actual rates to provisional multipliers.
The start and end dates for revisions in a provisional schedule must match GL periods. For
firm schedules, Oracle Project Costing provides you with the flexibility to use any date as
the start or end date.
Whenever you create a new schedule revision, Oracle Project Costing automatically closes
the previous open revision. The end date defaults to the date preceding the start date of the
new revision.
Enable the Hold check box to hold this schedule revision from compiling.
Choose the Details button to review the details of a particular revision.
Choose Actual if you want to apply actual multipliers to provisional revisions.
Multipliers
In the Multipliers region, enter multipliers for a schedule revision.
You also use this region to compile burden multipliers.
Choose the Copy button to copy multipliers from one schedule revision to a new revision.
You must create and save the Copy To revision before you can copy multipliers to the new
revision. If you have a responsibility with the Project Burden Schedule Copy function
assigned to it, then you can copy multipliers across schedules and schedule revisions.
Otherwise, you can only copy multipliers between revisions that use the same burden
structure.
When you modify the multipliers on a burden schedule and recompile, Oracle Project
Costing identifies the existing expenditure items affected by the changes and marks the
items for retroactive reprocessing. If you want to change the multipliers and only use them
for expenditure items moving forward, then end date the current version of the schedule
and create a new version with the revised multipliers. Oracle Project Costing uses the new
version to calculate burden amounts for expenditure items with expenditure item dates that
fall within the dates for the new burden schedule version.
Compiling
After you have completed entry of all multipliers and saved your work, choose the
Compile button to compile new multipliers. When you compile a schedule, Oracle Project
Costing automatically submits PRC: Compile All Burden Schedule Revisions.
You can also run PRC: Compile All Burden Schedule Revisions to compile multiple
schedules at one time.
Assigning Burden Schedules

You can assign burden schedules to project types, projects, and tasks. When you assign
schedules to a project type, the schedules are the default schedules for projects and tasks that
use the project type. Assigning burden schedules to project types allows you to implement
company policies. For example, you can implement a policy that requires all projects of a
particular project type to maintain the same multipliers for costing purposes. You can change
the default schedule for a project or task. You can use burden schedule overrides to override
default schedules at the project and task levels. Burden schedule overrides generally reflect
multipliers that have been negotiated specifically for a particular project or task.
You can change the default burden schedules for a project or task. If you change the burden
schedule for a lowest level task that has items processed, then Oracle Project Costing does not
automatically mark the items for reprocessing. Only new items that you charge to the task use
the new burden schedule. You can mark the items for recalculation in the Expenditure Inquiry
window. Marking the items causes Oracle Project Costing to use the new burden schedule
assigned to the task to reprocess the items.
Once you assign a burden schedule to a project, you can use the View Burdened Costs window
to test your burden structure and burden schedule implementation.

Assigning Burden Schedules
Burden Costing Extension

Use the Burden Costing client extension to override the burden schedule ID and assign a
different burden schedule to an expenditure item. Oracle Project Costing calls the Burden
Costing extension during cost distribution processing. You can modify the extension to satisfy
your business rules for assigning burden schedules. For additional information, see the Oracle
Projects APIs, Client Extensions, and Open Interfaces Reference.

Burden Costing Extension
Reporting Separate Burden Transactions with Source Resources

You can set the PA: Report Separate Burden Transactions with Source Resources profile
option to have Oracle Project Costing assign summary burden transaction expenditure items to
the same resource class as their source raw cost expenditure items. This option enables you to
assign both burden costs and their source raw costs to the same resource class for reporting
purposes.
For example, for timecards, if you set the profile option to Yes, then Oracle Project Costing
assigns both the labor raw cost expenditure items and the related summarized burden
transaction expenditure items to the People resource class. Alternatively, if you set this profile
option to No, then Oracle Project Costing assigns the raw cost expenditure items to the People
resource class and the related summarized burden transaction expenditure items to the
Financial Elements resource class. These assignments takes place because labor raw cost
expenditure items have an expenditure type class of Straight Time and burden transaction
expenditure items have an expenditure type class of Burden Transaction.
This profile option only affects transactions charged to projects where the Burden Cost as
Separate Expenditure Item option is enabled for the project type.

Reporting Separate Burden Transactions with Source Resources

Burden Resource Extension

If you set this profile option to Yes, then you must modify the Burden Resource Extension to
specify the attributes that Oracle Project Costing uses when it groups summary burden
transactions. For additional information about this extension, see Burden Resource Extension,
Oracle Projects APIs, Client Extensions, and Open Interfaces Reference.
Accounting for Cost Adjustments Resulting from Burden Schedule Revisions

When you modify burden schedules and recompile burden multipliers, Oracle Project Costing
identifies the existing transactions affected by the changes and marks the items for
reprocessing. When accounting for the adjusted cost, you can choose to reverse the original
accounting entries and generate new ones for the adjusted cost, or you can choose to generate
new accounting lines for the difference between the original and new burden cost amounts. To
select the accounting option that best fits your business needs, enable or disable the profile
option PA: Create Incremental Transactions for Cost Adjustments Resulting from a Burden
Schedule Recompilation. See the following pages for examples of how this profile option
affects adjustment accounting.
Adjustments from the Expenditure Inquiry Window
Setting the profile option to Yes does not affect raw and burden cost recalculation adjustments
that you make from the Expenditure Inquiry window. Although burden cost recalculation does
not affect raw cost amounts and accounts, Oracle Project Costing always accounts for burden
cost recalculation adjustments from this window with a full reversing and rebooking
accounting entry that includes both the raw cost and burden cost amounts.

Accounting for Cost Adjustments Resulting from Burden Schedule

Revisions
Accounting for Cost Adjustments Example 1: Total Burdened Costs without

Incremental Transactions
When you set the PA: Create Incremental Transactions for Cost Adjustments Resulting from a
Burden Schedule Recompilation profile option to No, Oracle Project Costing reverses the
original accounting entries and creates new entries for the adjusted cost amounts. Oracle
Project Costing reverses the raw accounting lines and generates new adjusted lines even though
the raw cost amount does not change.
Accounting Example 1 Assumptions
The following assumptions are made in this accounting example:
Transaction Raw Cost = $100
Original Total Burdened Cost = $300
Adjusted Total Burdened Cost = $400

Accounting for Cost Adjustments Example 1: Total Burdened

Costs without Incremental Transactions


Costs without Incremental Transactions
Accounting for Cost Adjustments Example 2: Total Burdened Costs with

Incremental Transactions
Burden Schedule Recompilation profile option to Yes, Oracle Project Costing does not reverse
the original accounting entries. Instead, Oracle Project Costing creates new accounting entries
for the difference between the original and new burden cost amounts.


Costs with Incremental Transactions


Costs with Incremental Transactions
Accounting for Cost Adjustments Example 3: Summarized Burden Cost

Components without Incremental Transactions
Burden Schedule Recompilation profile option to No, Oracle Project Costing reverses the
original accounting entries for the raw cost. Oracle Project Costing then creates new raw cost
entries and burden entries for the difference between the original and new burden cost
amounts.

Accounting for Cost Adjustments Example 3: Summarized Burden

Cost Components without Incremental Transactions


Cost Components without Incremental Transactions
Accounting for Cost Adjustments Example 4: Summarized Burden Cost

Components with Incremental Transactions
Burden Schedule Recompilation profile option to Yes, Oracle Project Costing does not reverse
the original accounting entries. Instead, Oracle Project Costing creates new burden entries for
the difference between the original and new burden cost amounts.


Cost Components with Incremental Transactions


Cost Components with Incremental Transactions

Quiz
Answer: b

Quiz
Answer: a

Quiz
Answer: a, b, d

Agenda
Burden Calculation in Costing Programs

The calculation of burden cost includes the following processing logic and calculations:
1. The program selects expenditure items with a raw cost amount for processing.
2. The program determines whether the related project type of the expenditure item is
defined for burdening.
- If Yes (the project type is defined for burdening), then the program determines which
burden schedule to use.
- If No (the project type is not defined for burdening), then the program does not
burden the item. The program assumes the burden multiplier is zero (burden cost is
zero, thus burdened cost equals raw cost).


3. To determine which burden multiplier to use, the program determines if there is a burden
schedule override for the expenditure:
- The program uses the task burden schedule override on the associated task, if such
an override exists.
- If no task burden schedule override exists on the associated task, then the program
uses the project burden schedule override on the associated project.
4. If no burden schedule override exists, then the program determines which standard
burden schedule to use for burden cost calculations in the following order:
1. Standard task burden schedule
2. Standard project burden schedule


5. After the program determines which schedule to use, it verifies whether the expenditure
items expenditure type is found in any of the cost bases of the selected burden schedule
revision.
- If an expenditure type is excluded from all cost bases in the burden structure, then
the program does not burden the expenditure items that use that expenditure type
(burden cost equals zero, thus burdened cost equals raw cost).
- Otherwise, the program uses burden multipliers from the appropriate burden
schedule revision. If a schedule ID override exists, then the program uses that
revision.
6. The program calculates burden cost and total burdened cost amounts according to the
following calculation formulas:
- Burden cost equals raw cost multiplied by a burden multiplier
- Total burdened cost equals the sum of raw cost and burden cost

Concurrent Programs: Total Burdened Cost Accounting

1. PRC: Distribute Total Burdened Costs - Creates the total burdened cost distribution
lines for all transactions charged to burdened projects, even if the transaction is not
burdened, to account for the total project costs in the cost WIP account.
2. PRC: Generate Cost Accounting Events - Generates accounting events for total
burdened cost distribution lines. If you select Total Burdened Cost for the Process
Category parameter, then the program generates accounting events only for total
burdened costs.
3. PRC: Create Accounting - Creates draft or final accounting entries in Oracle Subledger
Accounting for the accounting events. When you run the program in final mode, you can
optionally choose to automatically transfer the final accounting to Oracle General Ledger,
initiate the journal import program, and post the journal entries in Oracle General Ledger.
If you select Total Burdened Cost for the Process Category parameter, then the program
creates accounting only for total burdened cost accounting events.

Concurrent Programs: Total Burdened Cost Accounting
Concurrent Programs: Account for Summarized Burden Cost Components

1. PRC: Create and Distribute Burden Transactions - Summarizes the burden costs,
creates the expenditure items for the burden transactions, and runs the distribution
program. The burden transactions are created on different projects depending on the
method you use to store burden costs.
2. PRC: Generate Cost Accounting Events - Generates accounting events for burden
transactions. If you select Burden Cost for the Process Category parameter, then the
program generates accounting events only for burden costs.
3. PRC: Create Accounting - Creates draft or final accounting entries in Oracle Subledger
Accounting for the accounting events. When you run the program in final mode, you can
optionally choose to automatically transfer the final accounting to Oracle General Ledger,
initiate the journal import program, and post the journal entries in Oracle General Ledger.
If you select Burden Cost for the Process Category parameter, then the program creates
accounting only for burden cost accounting events.

Concurrent Programs: Account for Summarized Burden Cost

Components
Maintenance Concurrent Programs

PRC: Add New Organization Compiled Burden Multipliers - Adds burden multipliers
to burden schedules for an organization when you add a new organization to your
organization hierarchy. If you do not add the organization to a specific schedule revision,
then this program compiles rates for the organization in all burden schedule revisions
using the rates of the parent organization as defined in the organization hierarchy. A
burden schedule revision must already be compiled for this program to add the
organization rate. Run this program after you create the organization and before you
charge transactions using this organization as the expenditure organization.
Note: Run this program for the parent organization before you run it for the child
organization.
PRC: Compile All Burden Schedule Revisions - Compiles all burden schedule revisions
that are not compiled and are not on hold.

Maintenance Concurrent Programs

Quiz
Answer: a, c

Summary

Chapter 11
Performing Cost Adjustments
Chapter 11 - Page 1


Chapter 11 - Page 2

Chapter 11 - Page 3

Objectives
Chapter 11 - Page 4

Agenda
Chapter 11 - Page 5
Adjusting Expenditure Items

Oracle Project Costing provides powerful features that allow you to:
Adjust expenditure items on your projects
Report the audit trail of the adjustments
See also:
For discussion regarding Cross Charge related adjustments, see the lesson titled Cross
Charge.
For discussion regarding adjustments to supplier costs, see the lesson titled "Integration
with Oracle Purchasing and Oracle Payables."
For discussion regarding Capital Project specific adjustments, see the lesson titled Asset
Capitalization.
For discussion regarding Contract Project specific adjustments, see the course titled
R12.x Project Billing Fundamentals.
Chapter 11 - Page 6

Adjusting Expenditure Items
Adjustments to Imported Transactions

The Allow Adjustments option for a transaction source controls what types of adjustments you
can make to expenditure items associated with the transaction source.
Allow Adjustments Option - Enabled
If you enable this option, then you can adjust imported transactions in Oracle Project Costing
after you load them via Transaction Import. Enabling this option enables you to make
adjustments and changes that can result in a new GL account or cost amounts for an item. For
example, you can make the following types of adjustments:
Transfer an item to another project or task
Split an item into two or more items
Recalculate raw and burden costs (Raw cost values for transactions that were already
costed when loaded into Oracle Project Costing are not changed if you mark the item for
cost recalculation.)
Reclassify an item as billable or nonbillable
Reclassify an item as capitalizable or noncapitalizable
Change the work type of an item
Chapter 11 - Page 7

Adjustments to Imported Transactions
Chapter 11 - Page 8

Note: If you enable this option, Oracle Project Costing allows adjustments even if you disable
the Interface Costs to GL options in the Implementation Options.
Note: If Burden Transaction is the default expenditure type class for a transaction source, then
you cannot enable the Allow Adjustments option for the transaction source.
Important: If you enable the Allow Adjustments option for a predefined transaction source for
supplier costs, you must complete at least one of the following setup steps:
Specify the default supplier cost credit account for supplier cost adjustments in the
Implementation Options for each operating unit.
Define a rule in Oracle Subledger Accounting to determine the supplier cost credit
account.
This setup is required for the program PRC: Create Accounting to successfully create
accounting for supplier cost adjustments.
Allow Adjustments Option - Disabled
If the option is disabled, then you can still perform the following adjustments:
Apply a billing hold
Apply a one-time billing hold
Release billing hold
Recalculate burden cost - You can recalculate burden costs only if the Import Burdened
Amounts transaction source option is not enabled.
Recalculate revenue
Change comment
Reprocess cross charge
Mark for no cross charge processing
Change transfer price currency attributes
Change the work type (only if the change does not affect the billable status or capitalizable
status of the expenditure item)
- Note: The profile option PA: Transaction Billability derived from Work Type controls
whether the work type determines the billable status of an expenditure item.
If you do not allow users to adjust imported transactions in Oracle Project Costing, then you
can adjust the transactions in the originating external system. After you adjust the transactions,
you import adjustments into Oracle Project Costing.
Project Status and Adjustments

To adjust the expenditure items for a project, the project status must allow adjustments. You
use the Status Controls region of the Statuses window to define actions that are allowed or
restricted for each project status. Enable the Adjust Transactions status control to allow
adjustments for projects with that status.
Chapter 11 - Page 9

Project Status and Adjustments
Recalculate Burden Cost

You can recalculate the burden cost of an expenditure item if you find that the burdened cost
amount is incorrect. To produce correct recalculation results, you must correct the source of the
problem before redistributing the items.
When you select Recalculate Burden Cost for a burden transaction, no recalculation of the
burden amount takes place.
You can recalculate the burden cost of an invoice line.
To Recalculate Burden Costs:
Make the appropriate changes by either selecting another burden cost schedule or
changing the AutoAccounting setup.
Identify and mark appropriate items for burden cost recalculation.
Oracle Project Costing reprocesses the items the next time that you run the costing
programs.

Recalculate Burden Cost
Recalculate Raw Cost

You can recalculate the raw cost of an expenditure item if you find that the raw cost amount is
incorrect. To produce correct recalculation results, you must correct the source of the problem
before redistributing the item. For imported expenditure items, you can recalculate raw cost
only if the Allow Adjustments transaction source option is enabled on the transaction source
that is associated with the expenditure item.
Note: You can recalculate the raw cost of expenditure items imported as costed to generate a
new debit account; however, the cost amount does not change.
To Recalculate Raw Costs:
Make the appropriate changes to the rates or AutoAccounting.
Identify and mark appropriate items for raw cost recalculation.
Oracle Project Costing reprocesses the items with new rates and accounting rules the next
time that you run the costing programs.

Recalculate Raw Cost
Change Work Type

You can change the work type of an item. You can use this adjustment to reclassify an item for
reporting and billing purposes.
Note: To change the work type, you must set the profile option PA: Require Work Type Entry
for Expenditures to Yes.
Note: If you set the profile option PA: Transaction Billability Derived from Work Type to Yes,
then changes to the work type can affect whether a transaction is billable and therefore follow
the same rules as changes to the billable status for an expenditure item.
For imported expenditure items, you can change the work type if the Allow Adjustments
transaction source option is enabled on the transaction source that is associated with the
expenditure item. If the Allow Adjustments transaction source option is not enabled, then you
can change the work type only if the change does not affect the billable status or capitalizable
status of the expenditure item.

Change Work Type
Change Comment
You can edit the expenditure comment of an item. You can use this adjustment to make the
expenditure comment clearer if you are including the comment on an invoice backup report.

Change Comment
Split Item
You can split an item into two items so that you can process the two resulting split items
differently. The resulting split items are charged to the same project and task as the original
item. When you split an expenditure item charged to a contract project, you can select whether
each resulting split item is billable. When you split an expenditure item charged to a capital
project, you can select whether each resulting split item is capitalizable.
For imported expenditure items, you can split an item into two items only if the Allow
Adjustments transaction source option is enabled on the transaction source that is associated
with the expenditure item.

Split Item
Transfer Item
You can transfer an item from one project and task to another project and task.
Oracle Project Costing provides security as to which employees can transfer items
between projects. Cross-project users can transfer to all projects. Key members can
transfer to projects to which they are assigned. Oracle Project Costing performs a standard
validation on all transferred items.
Oracle Project Costing also ensures that you only transfer items which pass the charge
controls of the project and task to which you are transferring. If the items you are
transferring do not pass the new project and task's charge controls, then you cannot
transfer the item.
For imported expenditure items, you can transfer an item only if the Allow Adjustments
transaction source option is enabled on the transaction source that is associated with the
expenditure item.

Transfer Item
Change Currency Attributes

You can change the functional or project currency attributes of multi-currency transactions.
When you select Change Functional Currency Attributes or Change Project Currency
Attributes from the Reports menu, Oracle Project Costing displays a window where you can
enter changes in the following fields: Rate Type, Rate Date, and Exchange Rate.
The window displays the project or functional currency, depending on which currency you
have selected, as well as the transaction currency.
You can also change currency attributes for expenditure items using the Mass
Adjustments feature.
If the project currency and the functional currency for an expenditure item are the same,
then you can select only the Functional Currency Attributes option. Oracle Project Costing
copies any changes you make to the functional currency attribute to the project currency
attributes.

Change Currency Attributes
Adjustments to Multi-Currency Transactions

When you adjust multi-currency transactions, Oracle Project Costing must determine currency
attributes for the transactions that result. The following rules apply:
The original expenditure item is reversed, with all the same amounts and currency
attributes as the original item.
The new expenditure items are created and treated as new transactions, following the
standard default logic for currency attributes.
For reversals and splits, the reversing and new items have the same currency attributes as
the original transaction.
For a transfer, the reversing item has the same currency attributes as the original
transaction. For the new item, the cost distribution program uses the conversion rules for a
new transaction, taking the default currency attributes from the destination project.

Adjustments to Multi-Currency Transactions
Adjustments to Supplier Costs

You can make adjustments to supplier costs in Oracle Project Costing, Oracle Purchasing, and
Oracle Payables.
In Oracle Project Costing, you can make the following adjustments to supplier cost and
expense report cost expenditure items:
Transfer an expenditure item to another project or task
Split an expenditure item
Reclassify the billable or capitalizable status
Place a billing hold or one-time hold
Release a billing hold
Recalculate burden costs
Recalculate raw costs
- Note: For supplier costs, Oracle Project Costing does not recalculate the cost amount.
It only re-derives the default debit account.
Recalculate revenue
Change comment

Adjustments to Supplier Costs

Change project functional currency attributes

Reprocess cross charge transactions
Mark for no cross charge processing
Change transfer price currency attributes
In Oracle Purchasing and Oracle Payables, you can adjust the project-related information such
as the invoice amount, supplier, project, task, expenditure type, expenditure organization and
expenditure item date.
Restrictions to Supplier Cost Adjustments
Oracle Project Costing restricts the types of adjustments that you can make to supplier cost
expenditure items in Oracle Project Costing. The restrictions apply to supplier costs interfaced
to Oracle Project Costing from Oracle Purchasing and Oracle Payables, and to expense report
costs interfaced from Oracle Payables. For a discussion of these restrictions, see the lesson
titled Integration with Oracle Purchasing and Oracle Payables.
Mass Adjustments
Use the Find Expenditure Items window or the Find Project Expenditure Items window to
process a mass adjustment of expenditures. The mass adjustment feature provides faster
performance when you adjust a large number of expenditures.
If you use the Find Project Expenditure Items window, you can mass adjust expenditure items
for a single project across operating units. The expenditure items that you adjust can cross
operating units, but you must have security access to an operating unit to view and adjust those
expenditure items. For example, a project has expenditure items associated with operating units
A, B, C, and D. If your responsibility only gives you access to operating units B and C, then
you can view and adjust only the expenditure items from operating units B and C.
If you use the Find Expenditure Items window, you can mass adjust expenditure items across
projects, within a single operating unit. If you have access to more than one operating unit,
then you must select the operating unit. If you have access to only one operating unit, then that
operating is the default value. Oracle Project Costing adjust only the expenditure items that
correspond to the current operating unit.
To perform mass adjustment of expenditures:
1. Navigate to the Find Project Expenditure Items or Find Expenditure Items window.

Mass Adjustments
Enter your search criteria.

Choose Mass Adjust.
From the Mass Adjust list, select the adjustment to perform on the selected expenditures.
Choose the processing method for the adjustments. You can choose to either process
adjustments online or submit a concurrent program to process the adjustments. If you
choose to submit the concurrent program to process the adjustments, then Oracle Project
Costing submits the PRC: Adjust Expenditure Items concurrent program.
6. Review the results. When you process adjustments online, Oracle Project Costing displays
a message when the adjustment program is complete. If you process adjustments using a
concurrent program, you can review the output report when the program is complete.

2.
3.
4.
5.
Correct Approved Expenditure Items

When correcting approved expenditure items:
Reverse the original item and then create a new item using the correct information.
You can also select the Transfer adjustment action to change the project and task
assignment of an expenditure item.
For supplier cost expenditure items, you cannot correct the amount, expenditure type, or
supplier in Oracle Project Costing. You must correct these attributes in the source
application: Oracle Payables or Oracle Purchasing. You can use the Review Transactions
window to update the expenditure item date in Oracle Project Costing only if the date fails
validation when you run the program PRC: Interface Supplier Costs.
You must correct expenditure items imported from Oracle Inventory or Oracle
Manufacturing in their respective systems except for the transactions with transaction
source Inventory Misc. You cannot reverse or correct expenditure items from these
applications in Oracle Project Costing.
To correct an approved expenditure item:
1. Create a new batch for the correction items.

Correct Approved Expenditure Items
3.
4.
5.

2.
- The Expenditure Ending date must match the week that includes the expenditure item
you are reversing.
- Optionally check the All Negative Transactions Entered As Unmatched check box if
you want to enter transactions with negative amounts and do not want Oracle Project
Costing to search for corresponding existing transactions.
In the Expenditure Items window, select the Reverse Original button.
- Instead of choosing the Reverse Original button, you can enter a negative amount in
the Quantity field. Precede negative amounts with a minus () sign. If the All
Negative Transactions Entered as Unmatched check box is not enabled, then Oracle
Project Costing searches for a matching expenditure item and alerts you if it is unable
to find a match.
In the Reverse Expenditure Items window, specify the items that you want to reverse.
Select the Reversal button.
- Oracle Project Costing inserts a reversing (negative) expenditure item into the batch.
Finish entering the batch and submit the batch as usual.
- Expenditure batches can contain both positive and negative expenditure items.
Processing Adjustments
After you perform adjustment actions, run the appropriate programs to process the adjustments:
1. Distribute Costs - Run the appropriate cost distribution programs to process the
adjustments. For example, if you adjust timecard expenditure items on a project that uses
total burdened accounting, then you run PRC: Distribute Labor Costs and PRC: Distribute
Total Burdened Costs.
2. Generate Accounting Events - Next, run PRC: Generate Cost Accounting Events to
derive the default credit accounts as needed and generate accounting events for the
adjustments in Oracle Subledger Accounting. You can either run the program separately
for each type of cost (select appropriate process category) or once for all unprocessed cost
distribution lines (leave the Process Category parameter blank).
3. Create Accounting - Finally, run PRC: Create Accounting to create subledger accounting
entries in Oracle Subledger Accounting for the accounting events. You can set the
Transfer to General Ledger parameter to Yes to enable the program to automatically
transfer the final accounting to Oracle General Ledger and run the Journal Import
program. If you choose to transfer to Oracle General Ledger, then you can also set the
parameter Post in General Ledger to Yes to enable the program to automatically post

Processing Adjustments

successfully imported journal entries in Oracle General Ledger. Otherwise, you can run
PRC: Transfer Journal Entries to GL to transfer the final subledger journal entries from
Oracle Subledger Accounting to Oracle General Ledger. You can either run the programs
separately for each type of cost (select appropriate process category) or once for all
unprocessed cost distribution lines (leave the Process Category parameter blank).
Alternatively, you can also choose the Run Request button on the Expenditure Items window or
Project Expenditure Items window to initiate a streamline process. In addition, you can submit
project and interface streamline processes from the Submit Request window.
Results of Adjustment Processing

After you run the appropriate programs to recalculate the adjusted expenditure items, you can
review the results of the adjustments. When you process an adjustment, a cost adjustment
results if one or more of the following attributes is different from the original value:
Raw cost amount
Burden cost amount
Account to which the cost is charged
Billable/Capitalizable status of the item
Corrections to Pre-Approved Expenditure Items, Transfers, and Splits
When processing a reversing item which resulted from a correction of a pre-approved
expenditure item, a transfer, or a split, the cost distribution programs use the same cost rate as
the original item to ensure that the cost nets to zero for the original and reversing item. The
program charges the reversing item to an account based on the original distribution line. The
program processes the new positive item resulting from a transfer just as a new expenditure
item is processed. To process new items for a split the same way that a new expenditure item is
processed, you must mark the item for recalculation.

Results of Adjustment Processing

Accounting for Cost Adjustments

When a cost distribution program encounters an item that requires a cost adjustment, the
program updates the expenditure item with the new raw and burden cost rates and amounts,
and creates new cost distribution lines. The program creates a reversing cost distribution line
and a new cost distribution line. These lines form the audit trail of cost adjustments.
As a result of adjustment processing, the following two different sets of account code
combinations exist:
The original cost account code combination and original cost clearing account code
combination.
The adjustment cost account code combination and adjustment cost clearing account code
combination.
Oracle Project Costing copies the account code combination IDs (CCIDs) from the original
transaction to the reversing transaction and assigns the cost adjustment lines to the earliest
open or future GL period. For additional information, see the Oracle Project Costing User
Guide.

Quiz
Answer: a

Quiz
Answer: c

Quiz
Answer: b

Quiz
Answer: a

Agenda
Audit Reporting for Expenditure Adjustments

Oracle Project Costing provides an audit trail of all adjustments performed on an expenditure
item. The audit trail records the following information about the adjustment:
The name of the user who performed the adjustment.
The type of adjustment action performed.
The date and time that the adjustment was performed.
The window from which the adjustment action was performed.
Run audit report concurrent programs to produce reports for review:
AUD: Project Expenditure Adjustment Activity - Use this report to review all
adjustments users made to expenditure items of a particular project. Your accounting
department can submit this report regularly to audit the kinds of expenditure adjustments
being made for a project. For example, they can use this report to identify any expenditure
adjustments that are unauthorized or against company policy.
AUD: Supplier Cost Audit Report - Use this report to audit transactions between Oracle
Project Costing, Oracle Purchasing, Oracle Payables, Oracle Subledger Accounting, and
Oracle General Ledger. This report lists all supplier cost transactions in Oracle Project

Audit Reporting for Expenditure Adjustments

Costing for a selected operating unit. When you run the report, you can specify an
adjustment type to limit the transactions that you want to include in the report.
MGT: Transfer Activity - Use this report to review the expenditure item transfers into
and out of a particular project. You can use this report as an audit tool to control project
costs by identifying incorrect or unauthorized transfers for a project. You can also use this
report to verify any expenditure item transfers that you perform. For each specified
project, this report shows you the expenditure items transferring into or out of the project
and the transfer history of each of these expenditure items. For each expenditure item
listed, this report displays the items cost amount, its quantity, and either the destination
project and task numbers or the originating project and task numbers, depending on the
expenditure items transfer direction.

Summary


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R12.x Oracle Project Costing

Copyright 2010, Oracle. All rights reserved.

For Instructor Use Only.

Restricted Rights Notice

Overview of Oracle Project Costing...............................................................................................................1-1

R12.x Oracle Project Costing Fundamentals Table of Contents

For Instructor Use Only.

Entering Expenditures ....................................................................................................................................4-1

R12.x Oracle Project Costing Fundamentals Table of Contents

For Instructor Use Only.

Budgetary Control Settings: Control Levels..................................................................................................3-9

Implementing Expenditures ...........................................................................................................................5-1

R12.x Oracle Project Costing Fundamentals Table of Contents

For Instructor Use Only.

Currency Fields for Expenditures ..................................................................................................................4-11

Accounting for Costs .......................................................................................................................................7-1

R12.x Oracle Project Costing Fundamentals Table of Contents

For Instructor Use Only.

Implementing Non-Labor Costing .................................................................................................................8-1

R12.x Oracle Project Costing Fundamentals Table of Contents

For Instructor Use Only.

Accounting for Burden Transactions.............................................................................................................7-25

Implementing Burden Costing .......................................................................................................................10-1

R12.x Oracle Project Costing Fundamentals Table of Contents

For Instructor Use Only.

Labor Costing Extension ...............................................................................................................................9-17

Integration with Oracle Purchasing and Oracle Payables...........................................................................12-1

R12.x Oracle Project Costing Fundamentals Table of Contents

For Instructor Use Only.

Transfer Item .................................................................................................................................................11-15

Integration with Oracle Internet Expenses ...................................................................................................13-1

R12.x Oracle Project Costing Fundamentals Table of Contents

For Instructor Use Only.

Manually Adjusting Unmatched Reversing Expenditure Items.....................................................................12-61

R12.x Oracle Project Costing Fundamentals Table of Contents

For Instructor Use Only.

R12.x Oracle Project Costing Fundamentals Table of Contents

For Instructor Use Only.

Appendix B: Budgetary Controls and Budget Integration ..........................................................................19-1

R12.x Oracle Project Costing Fundamentals Table of Contents

For Instructor Use Only.

Enable Project Cost Collection......................................................................................................................18-15

Summary of R12.x Project Costing Fundamentals.......................................................................................21-1

Copyright Oracle 2010. All rights reserved.

R12.x Oracle Project Costing Fundamentals Table of Contents

For Instructor Use Only.

Implementing the Capitalized Interest Extension ..........................................................................................20-23

Working experience with project management and project accounting

R12.x Oracle E-Business Suite Essentials for Implementers

R12.x Project Foundation Fundamentals

How This Course Is Organized

Copyright Oracle 2010. All rights reserved.

R12.x Oracle Project Costing Fundamentals Table of Contents

For Instructor Use Only.

Oracle Project Costing User Guide

Oracle Projects Implementation Guide

Oracle Projects Fundamentals

System release bulletins

Installation and users guides

International Oracle Users Group (IOUG) articles

Copyright Oracle 2010. All rights reserved.

R12.x Oracle Project Costing Fundamentals Table of Contents