Project Partners Blog


Posts Tagged ‘project resource management’

Are you part of a non-traditional Professional Services Organization and feeling the staffing data-burden?

Then you are probably experiencing the common demand around deploying groups of staffing managers to manage these applications, yet with limited budgets and the same needs to manage resource supply and demand in order for your organization to stay effective and profitable.

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  • A simpler alternative for Resource Planning
  • How to utilize Project Financial Forecasting to address Resource Planning
  • Ultimately “Two For One – Getting It Done!” – Forecasting

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We look forward to sharing our expertise and knowledge with you for a simpler alternative for Resource Planning.  Register today, or feel free to review our resource library and services overview at www.projectp.com.

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Project Partners, Oracle Platinum Partner, and global leader in optimizing business processes and IT investments within project-driven organizations.

 

 

PROJECT PARTNERS PROUDLY ACHIEVES PLATINUM PARTNER STATUS IN
ORACLE PARTNERNETWORK (OPN)

HALF MOON BAY, Calif., January 16, 2019 – Project Partners, a global leader in optimizing business processes and IT investments within project-driven organizations, today announced that it has achieved Platinum partner status in Oracle PartnerNetwork (OPN).  By attaining Platinum level membership, Oracle has recognized Project Partners for its in-depth expertise and continued excellence in providing services for Oracle applications and technology.

“We are honored to be in the highest level of the OPN Program. With our new designation as a Platinum Partner in the Oracle PartnerNetwork (OPN), Project Partners will continue to strengthen and build upon its 20+ year relationship with Oracle,” said Randy Egger, President/CEO, Project Partners.  Our global team has continually demonstrated deep application expertise and are working to obtain additional certified specializations across Oracle application solutions areas to better serve our project-centric customers.”

The company offers deep industry expertise across key Oracle applications and technologies including the Oracle ERP Cloud, Oracle E-Business Suite, and Oracle Primavera applications.  In addition, we have developed products and solutions to support and augment our customers’ off-the-shelf products.  We are proud to be widely recognized as The Experts in Solutions for Project-Driven Organizations™ and look forward to continuing collaboration, sharing industry experiences and leveraging our Platinum Partner status to enable organizations, partners and Oracle.

With its Platinum status, Project Partners will benefit with the high level of engagement, commitment and resources available to OPN partners.  Platinum members receive dedicated virtual account management support to build joint development plans and help broaden specialization areas and revenue opportunities. Additional benefits include priority placement in the OPN Solutions Catalog, one free application integration validated by Oracle, joint marketing and sales opportunities, discounted training and more. For more information about the benefits of becoming an OPN Platinum level partner, please visit: http://www.oracle.com/us/partnerships/index.htm

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About Project Partners, LLC.

Headquartered in Half Moon Bay, California | Project Partners is the global leader in optimizing business processes and IT investments within project-driven organizations. We are dedicated to helping businesses achieve their goals with smart, effective and scalable Oracle Application solutions that improve processes and deploy technology to maximize project life cycle ROI. Our business process experts understand and support customers with their evolving business models and help them drive productivity to meet the demands of the market and their organization.

Project Partners has a diverse team who is expert in leveraging Oracle’s ERP Cloud, E-Business Suite and Primavera solutions. We have global locations worldwide to support multi-geographical operations and have executed implementations for hundreds of clients who manage tens of thousands of projects, thousands of users, multiple languages and currencies. In addition, we have developed products and solutions to support and augment our customers’ off-the-shelf products.  Project Partners is proud to be widely recognized as The Experts in Solutions for Project-Driven Organizations™.

Project Partners is a proud Oracle Platinum Partner, Oracle Certified Education provider and authorized Reseller of Primavera and Oracle Cloud PPM, and Cloud Financials.  We hold an Oracle Cloud Standard certification, with specializations in Oracle® E-Business Suite™ with Projects, Primavera and Oracle Validated Integration’s in EBS.

For more information, visit: http://www.projectp.com/

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About Oracle PartnerNetwork

Oracle PartnerNetwork (OPN) is Oracle’s partner program that provides partners with a differentiated advantage to develop, sell and implement Oracle solutions. OPN offers resources to train and support specialized knowledge of Oracle’s products and solutions and has evolved to recognize Oracle’s growing product portfolio, partner base and business opportunity. Key to the latest enhancements to OPN is the ability for partners to be recognized and rewarded for their investment in Oracle Cloud. Partners engaging with Oracle will be able to differentiate their Oracle Cloud expertise and success with customers through the OPN Cloud program – an innovative program that complements existing OPN program levels with tiers of recognition and progressive benefits for partners working with Oracle Cloud.

To find out more visit: http://www.oracle.com/partners

 

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 Project Partners Blog Author: Donna Dignam | Principal Functional Consultant 
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In April 2015, FASB (Financial Accounting Standards Board) issued ASU (Accounting Standards Update) 2015-05 to assist entities to determine when a customer in a cloud computing arrangement “CCA” (i.e. hosting arrangement) included a software license.

If a CCA includes a license to internal use software, the software license is accounted for by the customer as an intangible asset.  Basically, the intangible asset is recognized for the software license, and the payments or said license made over time are recognized as a liability.  If no software license is included in the contract, the company should account for the arrangement as a service contract, and the fees associated with the hosting service of the arrangement are expensed as incurred.

The Update did not give any guidance regarding the implementation costs for activities performed in a cloud computing arrangement as a service contract.  Since the FASB guidance in this area was not explicit, the Board decided to issue an Update to specifically address the resulting diversity in practice.

Who Is Affected by ASU 2018-154?

These Amendments on the accounting for implementation, setup and other upfront costs (commonly referred to as implementation costs) apply to entities that are a customer in a hosting arrangement that is a service contract.  Oracle Cloud computing arrangements where a license is sold to the customer along with a hosting arrangement with Oracle Cloud would be one such customer.

Main Provisions of ASU 20184

The Update’s intent is to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software and hosting arrangements that include an internal-use software license.  The current accounting for the service element of a hosting arrangement is not affected.

It is up to the company to determine which implementation costs to capitalize as an asset related to the service contract and which to expense.  Costs to develop or obtain internal use software that could not be capitalized under Subtopic 350-40, such as training costs and certain data conversion cost, also cannot be capitalized for a hosting arrangement that is a service contract.  The company in a hosting arrangement that is a service contract determines which project stage an implementation activity relates to.  Project stages include preliminary project stage, application development stage or post implementation stage.  Costs incurred for the application development stage are capitalized, while those costs related to the preliminary project stage or the post implementation stage are expensed as the activities are performed.

In addition, the company is required to amortize the capitalized implementation costs over the terms of the hosting arrangement.  The term of the hosting arrangement includes the noncancellable period of the arrangement plus periods covered by:

  1. Option to Extend – customer must be reasonable expected to exercise this option
  2. Option to Terminate the Arrangement – where the customer is reasonably expected NOT to exercise this option
  3. Option to Extend or Not to Terminate – where the vendor has control of exercising the option.

Impairment guidance, as if the costs were long-lived assets, and abandonment are to be applied based upon the existing guidance in SubTopics 350-40 and 360-10, respectively.

Income Statement presentation by the entity should be the same line item as the fees associated with the hosting service of the arrangement.  Similarly, classification of payments for capitalized implementation costs in the Statement of Cash Flows are done in the same manner as payments made for fees associated with the hosting arrangement.  In the Statement of Financial Position, capitalized implementation costs are presented in the same line item that a prepayment for fees associated to the hosting arrangement would be presented.

How is This Different and Why is it an Improvement?

Currently, GAAP does not specifically address accounting for implementation costs associated with a HASC.  Therefore, the Update improves current GAAP as it clarifies accounting and aligns the accounting for implementation costs for hosting arrangements, regardless of whether a license is conveyed.

For consulting firms, the new standards present an improved selling point as costs that were previously required to be expensed can now be capitalized.  For capital intensive industries, where cloud applications are being considered and dismissed due to financial considerations around increased expenses (and resulting decreased profitability metrics) due to cloud implementation, the new standard allows a way to capitalize the costs associated to both the license and the implementation and development costs around getting that application stood up.

When Does This New Update Take Affect?

For public entities, the amendments are effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. For all other entities, annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021 are required.  Early adoption is permitted at any time.

The amendments in this Update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.

Have Questions?
Simply reach out to us and our experts will immediately assist, provide additional information,
and answer any of your questions.

P: #1.650.712.6203  |   Email: cfryc@projectp.com

 

Author: Wendy Lamar | Managing Principal Consultant | Project Partners
Oracle E-Business Suite R12 Project Certified Implementation Specialist


By Kimberly McDonald Baker

Project Partners worked with Iberdrola Renewables to implement their Primavera P6 Enterprise Project Portfolio Management system – which resulted in awards for both Iberdrola Renewables and Project Partners. 

Iberdrola Renewables is a very exciting company in the fast growing renewable energy field.  Its portfolio of power assets require 24-hour energy management and scheduling, every day of the year.

The firm identified several key challenges they wanted their new Enterprise Project Portfolio Mangement system to address. Read the rest of this entry »

By Jason Ames, PMP

Continuing our discussion from the prior blog article, we are now ready to address success factor number 3 in the Key Drivers to EPPM Success.

Measuring What’s Important

Team members will work to what they are measured against, so it is important to ensure that you are measuring the right things and that management is encouraging the right actions. It does not make any sense for a team to spend lots of money on overtime when cost is the critical factor. Former UCLA basketball coach John Wooden used to say “Don’t mistake activity for achievement.”

When a program starts it is important to establish the measurement criteria. If your project has a fixed budget you should be targeting cost controls and allow your schedule to slip if necessary. If you have fixed deliverable milestones you do everything possible to complete them on time. Too often organizations measure non-value-added metrics.

What should be done to ensure this does not happen? Read the rest of this entry »

By Jason Ames, PMP and Kimberly McDonald Baker

Continuing our discussion from the prior blog article, we are now ready to address success factor number 2 in the Key Drivers to EPPM Success.

All Business Systems Talk to Each Other

An Enterprise Project Portfolio Management system is one of many business systems that an organization may use to improve its operations, but it must not live in a vacuum. An organization’s projects touch accounting through project costs and expenditures. Projects touch engineering through cost and material estimating, drawing releases and change orders. Service projects are affected when scheduling client engagements. Read the rest of this entry »

Oracle provides a strong resource with its recommended patch lists (RPL).  However, Project Partners is pleased to provide a  detailed list of patches that we have uncovered, either during implementations or as a result of internal testing. 

As with any patch you should always do detailed research so you can find the patch number and a description of the patch.  It is always important to investigate the patches completely, understand their compatibility with those you have already applied and how they might impact your environment, especially where customizations are concerned.  This is where the importance of testing your functionality comes into play.

With that said, below is some very useful ‘insider information’ for your review. Read the rest of this entry »

Introduction

Oracle Projects may be integrated with Inventory and WIP. This integration allows the tracking of project related transactions in Inventory and WIP. Some of those transactions will be interfaced to Oracle Projects. The simplest Inventory transactions that will be cost collected and imported to Oracle Projects are miscellaneous inventory transactions.

  • Miscellaneous Issue from stock to a project,
  • Miscellaneous Receipt from a project into stocks.

Those miscellaneous transactions are imported into Projects from any Inventory organization, whether or not the organization was classified as Project Manufacturing Organization. In a PJM organization those transactions are eligible for cost collection only if the stock locator is of another project or has no project at all.

The following transactions will be cost collected and imported into Oracle Projects only when executed within a PJM organization:

  • Items receipts of a project related purchase orders for inventory destination. The items are delivered into a project locator of the inventory organization.
  • Items issued from a project locator to WIP job (work order) of other project, or from a non project locator to a project work order.
  • Project Transfers transactions which move items from one project locator to another project locator on the same organization, or from a non project to a project locator.
  • Inter Organizations transfers from a project locator or non-project locator to another project locator in the receiving organization.
  • Resources charging WIP work orders, which are project related. Resources may be employees’ labor time, outside processing supplier costs, machine usages etc.

Cost Management invokes the cost processor program for each inventory and WIP transaction, one by one, following their creation order. It calculates the cost amount of each transaction and may generate the accounting lines. When cost processor is responsible for generating accounting, it uses the accounts set up of Cost Groups and WIP Accounting Class. In a PJM organization you assign each project to the organization, and enter the project parameters. Among them you link a project to a single cost group and may link it to various WIP Accounting Classes. Cost Management system also offers some extensions that may be implemented for changing those default accounts.

Accounting Options for PJM Organization

When Project Manufacturing is enabled for all or certain inventory organizations, there are (starting 11.5.10) several alternative options for accounting, which differ in scope and path. On the setup form of a PJM organization you should select one value for each one of the following parameters:

  • GL Posting Option:
    • Manufacturing: All inventory and WIP transactions are accounted by Cost Management process in Inventory, and sent from Inventory to GL. The project-related transactions are interfaced from Inventory to Projects as accounted.
    • Projects: Inventory is not interfacing any material or WIP transactions to GL. The project-related transactions are interfaced from Inventory and WIP to Projects.
  • Account Option: This option is applicable only if GL posting option is selected as Projects.
    • Send Accounts to PA: Inventory and WIP transactions are interfaced to Projects with the accounts defined by the source. However, Projects will interface those to GL.
    • Use Auto Accounting: Inventory and WIP transactions are imported into Projects unaccounted. Oracle Projects is responsible for distributing those expenditures using Auto Accounting rules.

Inventory miscellaneous transactions imported from a PJM organization will always be accounted by Auto Accounting rules in Projects.

Several points regarding these options are worth noting when implementing Project Manufacturing:

  • When selecting the Projects value for the GL Posting option, only transactions that are cost collected into Projects are accounted and posted in GL. All other inventory transactions, which are not charged to projects, will not be affecting any GL accounts. Any inventory transaction that represents a change in the physical on-hand value of inventory without adding or reducing any value to the project accumulated cost will not be cost-collected nor accounted in GL.
  • WIP transactions represent resources adding value to the project-work-orders; hence those are always cost collected into Projects, and always accounted.
  • PO delivery transactions into Inventory or Shop-Floor, and any subsequent correction or return transactions will always be accounted and interfaced to Projects as well. This is true for non-project purchase orders as well.
  • When selecting the Projects value for the GL Posting option you have to enable a project number as a Common Project on the PJM organization setup form. In a PJM organization, users may enter transactions without project and task. By enabling a common project the system will capture any WIP and Inventory transactions with no project data, and interface those to Projects, all assigned to the predefined common project and task.

In the following paragraphs I would like to explain the advantages of interfacing unaccounted Inventory and WIP transactions to Projects.

Many companies use to apply indirect costs on top of direct costs. In Inventory and WIP you may setup overhead rates, and the cost processor calculates the additional cost elements, material overhead and resource overhead. Those overhead materials are cost collected and interfaced as separate burden expenditures. The alternative tool for applying overhead is the burdening functionality of Oracle Projects. Projects will not allow burdening of externally accounted transactions. However, when expenditures are imported as not accounted, Oracle Project’s burdening functionality can process the PJM transactions, and apply burden costs to those expenditures. The ability to use Project Burden allows companies to apply systematically the same burden multipliers on PJM and all other expenditures charged to the projects. For example, employees may sometime charge work order in WIP or charge directly a project and task on their timecard. Using this feature the burden calculation may be shared, and you could save the maintenance of duplicate rates schedules. In addition, Projects’ burdening allows for updates to the burden rates. The ability to re-burden and apply final burden multipliers, replacing the provisory initial multipliers is a unique feature available in Projects. There is no way to revise overhead rates in Inventory. Last point in favor of using project burdening over inventory overhead is the ability to treat differently the burden amounts based on project types. Company may choose to use burden on separate expenditure items (summarized burden items) for contract projects, but use burden on the same item for capital projects.

Some companies also need to account differently for billable versus not billable expenditures. Such feature is easily done in Projects, and is a lot more complex to achieve using the accounting engine of Cost Management in Inventory. You may set up transaction control in Oracle Projects to derive the billability of Inventory and WIP expenditure items. With the expenditure items marked as billable, you can use Auto Accounting rules of Projects to generate the appropriate accounting based on billability.

The accounting generation for project expenditures is easily configured and maintained when you use only Oracle Projects’ Auto Accounting. Companies which need to account for PJM transactions using rules based on project attributes, project organization, project classification, will find the easiest solution is to use Auto Accounting. Alternatively, achieving the same project-based accounting in Cost Management; would require developing the Accounting Generation Extension. This is a separate tool based on workflow engine, which requires extra development and maintenance effort. Even when you are using SLA in Oracle release 12, the configuration of accounting rules for Project’s source transactions is easier than the need to additionally configure similar rules for Inventory’s source transactions.

Sending all project-related transactions to GL through one source – Projects – eliminates the need to reconcile between project costs and their respective journal entries generated and posted by Inventory. Using the single path also eliminates the need to manage the period close of the inventory organization. Since Inventory would no longer be an accounting source, the closing of accounting periods for each inventory organization can be obsoleted.

All the above mentioned factors call for using a unified tool for generating project-based accounting. Those points become clear advantages when meeting the following two characteristics: Inventory and WIP transactions of a PJM organization are mostly project related; and when accounting rules are based on projects flows of revenue versus costs. If, on the other hand, the majority of Inventory cost is non project, you might not use the recommended method above.

In cases where companies require accounting in GL for significantly high amounts of the Inventory Materials asset account, the alternative method may be favorable. In these cases, using the classic Inventory flow for accounting and interface directly to GL has indeed a significant advantage. When there is high value of non-projects transactions in a PJM organization, those costs will charge a single common project. Oracle Projects, however, does a poor job in accounting for the balance of on-hand inventory by the end of each period. Oracle Projects setup at a PJM organization might not be a good solution for physical inventory based accounting.

Today’s topic deals with how time worked (by people/labor resources) is collected and accounted for on projects charged.

Organizations that manage by project, collect labor costs against projects via timecards. These organizations struggle with the rules/validations that need to be applied to this time collection process based on the following competing business requirements:

  1. Need for accurate time reporting for
    1. Paying employees what they are due
    2. Collecting true cost of doing work in order to allow for accurate estimating for future work
  2. Need for Time Costing for Revenue Accrual and Invoice Generation based on project contracting rules.

Labor Resource Classification
People who charge time to projects in any organization fall into 3 categories:

1. Exempt resources:  these are typically full time employees of the organization who get paid a fixed salary and do not receive any additional compensation for Overtime worked.

2. Hours resources: these can be full time or contract labor that get paid by the hour and are eligible for additional compensation (time and a half or double time) for overtime worked.

3. Contingent or Contract workers who work as employees on projects. From a time accounting perspective these employees fall into one of the above two categories and are not considered separately for the purpose of this discussion.

Time Accounting for Hourly Resources
Hourly resources need to enter all time worked with the appropriate classification (Regular/Overtime) in order to get paid and also to record accurate costs to the project, including additional cost incurred for overtime pay. The need to record all hours for the purposes of accurate payment to the resource also serves an additional purpose of providing accurate expended effort for the purpose of future estimation.This then leaves the question of what is billable to the client. This wholly depends on the nature of the contract. The contract may demand that they be billed for all time at a standard bill rate (thereby reducing the margin to the project for overtime worked and paid) or even that no overtime be billed at all; in which case the project will need to absorb the overtime hours and their related costs.

The piece of time accounting for hourly resources that I have not addressed here are the additional complications introduced with Government and Union Regulations like prevailing wages. This is another topic for another day all together.

Time Accounting for Exempt Resources
It is in the best interest of the project organization to enforce policies that dictate that exempt employees record all time worked to the projects on which the work was performed. This provides two major soft benefits, one of which was discussed above: that of collecting accurate data for improving estimating algorithms for future work. The other benefit that can often be obscured is the visibility provided to management for the people consistently going above and beyond for their projects.Now let’s see the impact of project contracts on accounting for time of exempt resources. Contracts for project work typically come in two flavors:

1. Time and Material: Billings against these types of contracts typically bill for each time item charged to the project. Billings are dependent on using schedules of bill rates for specific people or specific classes of people. Such contracts may further limit the number of hours that are billable on a per day or week basis and hence the billability of time charged will need to be adjusted accordingly.

2. Cost Reimbursement: These contracts typically include terms for billings based on cost multipliers, cost + fixed hourly/daily/weekly fee or even a fixed/variable fee over total project cost which is reimbursed (as incurred) upto a specified cap. The application of multipliers or fees on cost can get complex but is relatively simple compared to trying to figure out how to determine cost of time charged.

The issues arise due to the need to accurately determine the exact cost of time charged and this can get tricky in the case of exempt resources who work for a fixed salary irrespective of the number of hours worked. If exempt resource charge more time than the standard (8 hrs/day or 40 hrs/week) hours, then the daily/weekly cost rate for the resources needs to be spread over all hours worked in order to derive the true cost time worked. This issue is further compounded when the same resources work on multiple projects: in this case cost determination needs to look at all hours charged across projects.

This concept of spreading periodic cost rate for an exempt resource over all time charged by the resource is called effective costing. Some of the challenges in accomplishing effective costing include identifying all time charged by a person for a given period across all projects charged. Another issue deals with late time. If some time for a period is charged late, it may result in the need for recalculating cost for all time charged in order to accommodate the new time charges.

One solution that some organizations use to workaround the challenges of effective costing is to limit the entry of hours to the standard hours only, i.e. 8 hours a day or 40 hours a week. This solves the problem but is not a good solution for all the reasons discussed above.
Standard v/s Actual Costing of Time
One major challenge that needs to be overcome by any organization that wants to operate on a project basis is determining which of the following costing method they would like to use determine cost rates for people resources.
1. Standard Costing: In using this method an average cost rate is derived for all resources in a particular resource classification (Job Category) and then used for all resources in that classification
2. Actual Costing: The actual cost rates for each individual are used for costing time. A variation of this is referred to as Payroll costing, where in the costs from actual payroll runs are distributed over time charged to projects to determine project costs. Payroll Costing has distinct disadvantages in terms of timeliness of cost collection, especially as payroll runs happen infrequently and this can delay reporting costs on the project.

The following table lays out some of the advantages and disadvantages of these two approaches towards time costing.

(Dis)Advantage
Std. Cost
Actual Cost
Comments
1. Accurate Cost Reporting

X

X

Actual costing obviously provides the most accurate view of cost of time. The place where it falls short on is items like variable compensation elements like Bonuses. These items are paid occasionally and it is impossible to spread these costs over time charged in prior periods
2. Labor Cost Security

X

  Standard Costing wins on this one as standard costing equates cost for all resources in a category.
3. Ease of Estimating

X

  It is easier to estimate accurately with standard costing, especially when the exact resources are not known
4. Cost Variance to Plan

X

  When std. costing is used for both planning and actuals, cost variance reflect planning deficiencies and are not based on cost rate variances.
5. Dependency on Payroll  

X

Actual Costing may be dependent on Payroll runs in order to reflect the true cost of resources.

These are some of the factors that can be used to decide on which approach to use and as is evident here, standard costing is preferred in most cases. The only time when users have no choice but to use actual costing is in very low margin industries like Engineering and construction where labor cost rates are known (due to prevailing and union rates) and the difference between standard and actual rates can actually wipe out the entire margin that a project may have planned for. Other times where actual costing may be mandated (almost) is when contracting with the government who typically provide you with Cost Reimbursement contracts and often audit your project costs to match your payroll. That’s it for now and remember:

There is no better way to manage a business than to Manage by Project.

PS: I welcome all comments / trackbacks / pingbacks / queries to my nascent venture here. I will try and respond to your comments, etc in future entries.