Project Partners Blog

By John Sasali and Kimberly McDonald Baker

As a follow up to our blog post of February 12, we want to let you know that Oracle has issued a patch to address the bug that affects Billing Extensions in Oracle E-Business Suite Projects applications.

Patch 16313327 has been released by Oracle support in a controlled status for bugs 16313327 and 10208280. Prequisites for applying this patch are as follows:

        Pre-requisite or Co-requisite, which is not included with this patch:
        Ensure to have patches 14477974:R12.PJC.B and 14667319:R12.PJF.B applied.

The following bugs are fixed by this patch:

10208280 – ERROR IN PRC: GENERATE INTERCOMPANY INVOICES FOR A SINGLE PROJECT

16313327 – PAI_ORACLE_ERROR CURSOR=31 CODE=-1458: INVALID LENGTH INSIDE VARIABLE CHARAC

By John Sasali and Kimberly McDonald Baker

We know that many, many users of Oracle Project Billing use Billing Extensions to tailor their invoicing capabilities.  You can learn more about the expanded functionality provided by Extensions in Oracle E-Business Suite Projects by visiting our resource library, where you will find two whitepapers and a presentation.

Therefore, we want to make sure everyone who uses Extensions knows that Oracle patch 13345785:R12.PJ_PF.B causes issues with Billing Extensions.  Oracle describes this patch as PERIODIC RELEASE 6 FOR 12.1.3 ON RELEASE DATE 01-FEB-2013.

This patch for Oracle E-Business Suite Release 12.1.3 causes numerous issues if you use a billing extension that creates automatic class events and you are billing expenditures on the same invoice. If your invoice is only expenditures or only events, however, you should not have any problems. 

Error messages vary but you will find the following in the log.

ORACLE error during DRAFT INVOICE GENERATION (cursor=31 code=-1458: ORA-01458: invalid length inside variable character string
          )
PAI_ORACLE_ERROR

or

ORACLE error during DRAFT INVOICE GENERATION (cursor=32 code=-1722: ORA-01722: invalid number)

Oracle has this listed as as bug 16313327.

By Kimberly McDonald Baker

We want to be sure you don’t miss a new case study article featured in the November 2012 issue of Profit Magazine, titled “Unifying Financial and Project Management” In this article you will learn about Colonial Pipeline Company’s integrated Oracle E-Business Suite and Primavera systems, and a few of the benefits that Colonial is receiving.

With the new, integrated Oracle system, Colonial will have all project related financial records and information in one centralized repository. Project managers and the leadership team will be able to view individual projects or overall capital spend easily. With the new system, Colonial expects time spent on monthly status reporting to decrease by 75 percent, from 8,000 to 2,000 project management hours annually.

“This is a paradigm shift of work for our project managers from doing data manipulation to actually being a project manager,” says Phillip Chandler, Financial Controls Administrator at Colonial Pipeline Company. “This allows them to support our customers both internally and externally in a more effective manner.”

Chandler says Project Partners has helped Colonial implement best practices into its processes, making the company more efficient. “The Project Partners team is sensitive to the specific needs of Colonial. At the same time, they are able to present solutions from an outside perspective that we also need to grow as a business,” says Chandler. “Project Partners has provided the expertise and professionalism that we needed for developing and implementing our project.”

You can read the full article here.

By Neeraj Garg

This is the third of three articles discussing new enhancements in Oracle E-Business Suite Projects Applications Release 12.2. In this article we address the third of three key enhancements: Costing Using Payroll Actuals

Costing Using Payroll Actuals

This enhancement enables companies to use actual payroll costs from Oracle Payroll or a third-party payroll system to cost project labor transactions. These actual costs are distributed to the labor transactions on projects using new mapping rules that specify the expenditure type, cost type and distribution rules to be used for this purpose. Figure 1 shows an example of this mapping.

Figure 1

Drawing on this mapping and the amounts retrieved from the payroll system, the costing process will distribute payroll costs to various labor transactions, as illustrated in Figure 2.

Figure 2

The resulting distributed costs are shown in Figure 3.

Figure 3

Users also have the choice of accruing standard labor costs prior to a payroll run in order to report project costs and support billing. When payroll costs are distributed, the accrued costs are automatically reversed. In addition, a new process has been introduced in the solution to support payroll roll-backs needed for error correction. This process will reverse out an existing labor distribution to projects, making all the transactions re-eligible for costing. Then, when the new payroll run is completed, these transactions can be costed with the corrected payroll numbers. This process may also be used to correct errors in the setup of labor costing in Oracle Projects. For example, it can be used to reverse out a standard costing run and replace it with an actual costing run.

As with the Costing Using HR rates method described above, companies implementing this feature need consider the need for labor-cost information security, because actual labor costs may be exposed.

Conclusion

With this recent set of enhancements, Oracle E-Business Suite Projects has evolved into a more complete solution that can be used to address nearly any costing requirements that companies may have. Oracle users can more easily take advantage of various approaches to labor costing, using payroll data, HR rates and total time. These enhancements allow companies to manage and perform costing in ways that fit their specific needs, which in turn helps create a better understanding of project costs and, ultimately, profitability.

If you have questions about the new costing enhancements, the use of costing extensions, or any other issues pertaining to using Oracle Applications in an project-intensive environment, contact us! We are always very happy to help end-users make the best use of the applications that we at Project Partners originally invented.

By Neeraj Garg

Continuing from last week’s blog article, new enhancements in Oracle E-Business Suite Projects Applications Release 12.2 allow companies to address various project costing requirements without the use of extensions. There are three key enhancements:

1. Total Time Costing
2. Costing Using HR Rates, and
3. Costing Using Payroll Actuals.

Total Time Costing

This enhancement addresses the need to cost labor transactions using effective rates, and especially to encompass exempt employees who do not get paid for overtime work. Like Standard Costing, this enhancement works with standard rates. However, it computes an effective rate for costing labor transactions based on total time charged for a period and the base hours for that period.

There are three new setup elements that are needed to enable Total Time Costing:

1. Effective period (typically, this will be “weekly”)
2. Base hours
3. Enabling Total Time Accounting – new Costing Method for Labor Costing

With these three elements enabled, the effective rate used for costing labor transactions is now computed using the following three-step formula:

                 I.          Base Hours/Charged Hours * Derived Rate = Effective Rate
                II.          Effective Rate * Charged Hours = Raw Cost (Labor)
               III.          Labor Raw Cost * (1 + Burden Multiplier) = Total Burdened Cost (Labor)

In addition, if Total Time Costing is enabled and a new or adjusted transaction is introduced for a person for a previously costed period, the solution does not re-cost all transactions in that previous period. That is, it leaves them at the old rate rather than applying the new rate that was derived using the new total charged hours.

Overall, this enhancement allows users to accurately cost labor for exempt employees. It also allows organizations to meets federal contracting rules for exempt employees, as spelled out in the DCAA Contract Audit Manual, Section 9.

Costing Using HR Rates

This enhancement enables organizations that hold employee rate information in Oracle HR to directly use these rates for project labor costing. This feature is enabled by setting Rate Source in Oracle Projects to “HR” in the costing rule allocation. Rates are then retrieved from the Oracle HR rate matrix using “Rate by Criteria.”

There are many standard criteria available for setting up matrix rates in Oracle HR. Users can also add custom criteria to the rate matrix; these criteria can even call for rates at the project and task levels, if that degree of granularity is needed. Typically, the most commonly used criteria in a matrix are “job,” “location,” and “work type.” A new Project Timecard Template in Oracle Time and Labor has been seeded with these three attributes.

HR rates may also be enabled for use in planning when companies need to compute labor costs in budgets and forecasts.

This enhancement can also play a role in compliance. For example, many companies will benefit from the fact that it enables support for the Davis-Bacon Act in the U.S., which requires companies to pay minimum prevailing wage rates for construction work done at a given location. Also, because the HR rates used in calculations are the actual rates paid to employees, it is very important that labor-cost information security be carefully considered and implemented prior to enabling this enhancement.

In the next blog article we will discuss Costing using Payroll Actuals.

By Neeraj Garg

Introduction

Oracle E-Business Suite Projects applications have provided Standard Costing for labor transactions for some time. However, other important approaches to costing have not been supported out of the box, such as costing using effective rates, HR rates or payroll actuals. To address these approaches, Oracle Projects provided three client extensions that could be used to replace Oracle’s standard capabilities.

Now, in Oracle Projects Release 12.2, Oracle has provided a number of enhancements that go beyond Standard Costing. These enhancements, which provide more options and greater flexibility, give companies new tools to help ensure that their costing approach fits their business, and gives them a clear view of the labor component of project costs.

The Traditional Approach

The Oracle Projects Standard Costing for labor transactions uses job or employee-based rates defined in Oracle Projects tables. However, this does not meet the specific needs of some companies and situations. For example, it does not support the following.

• Costing using effective rates: This is typically used to address costing of labor transactions for exempt employees. Under the Standard Costing approach, all hours (including overtime hours) are costed at the standard rate. This may result in the overstatement of project costs, because exempt employees do not get paid extra for overtime work.
• Costing using HR rates: Standard Costing in Oracle Projects requires users to set up rates by job or by employee with Oracle Projects Rate schedules. If a company is already using Oracle HR and holding employee rate information there, that information cannot be reused in Standard Costing. That is, companies cannot use HR rates directly to cost labor charges to a project.
• Costing using actual payroll information: The distribution of actual payroll costs to project labor transactions is an industry standard in a variety of industries, such as construction, where companies typically work with small margins. Without this ability, variations between Standard Costing calculations and actual costs may be greater than the profits on projects.

Because such costing requirements could not be met with Standard Costing, Oracle Projects has traditionally provided three Client Extensions that companies could use to address a wider range of needs: These extensions are:

1. Labor Costing Extension, which can be used to override or replace the costing algorithm provided by Oracle. It essentially allows users to implement any business logic they choose to cost labor transactions.
2. Labor Overtime Extension, which can be used to determine overtime transactions, and then classify and cost them based on the appropriate overtime rules.
3. Related Item Extension, which allows users to create separate “related” transactions for different labor-cost components in order to gain visibility for reporting or billing purposes.

Understanding the Enhancements

The new enhancements in Oracle Projects Release 12.2 allow companies to address various costing requirements without the use of these extensions. There are three key enhancements:

1. Total Time Costing
2. Costing Using HR Rates, and
3. Costing Using Payroll Actuals.

These elements are discussed in subsequent blog articles.

By Aijaz Ansari, MBA

Our previous blog entitled, “Oracle R12 Payments Delivers Enterprise Wide Benefits” discussed the retirement of Oracle iPayment. As mentioned in that blog, iPayment is no longer available in Oracle R12. So what has become of the features and functions previously offered by iPayment? Oracle R12 introduces Funds Disbursement Process (FDP) Dashboard as a component of Oracle R12 Payments and to replace iPayments features and functions.

Beginning with the Funds Disbursement Process Home Page, users are presented with a read-only form. This Home Page includes a Pending Actions region which displays the current status of various in-process payment process requests and payment instructions. The Pending Actions region also contains links enabling drill down capability to view details of entries, along with Take Action links. These Take Action Links enable the Payment Administrator to execute the next step in the payment process. Additionally, the Funds Disbursement Process Home Page contains links to other pages which support the overall payment process. Read the rest of this entry »

By Aijaz Ansari, MBA

Oracle Payments is an application within Oracle E-Business Suite (EBS) Release 12. It serves as the funds capture and funds disbursement engine across Oracle EBS R12.

Acting as the central payment engine, Oracle Payments processes transactions, such as:
1. Invoice payments from Oracle Payables
2. Bank account transfers from Oracle Cash Management
3. Settlements against credit cards and bank accounts from Oracle Receivables

Additionally, Oracle Payments provides the infrastructure needed to connect these applications and others with third party payment systems and financial institutions. Read the rest of this entry »

By Randy Egger
President, Project Partners LLC
Former chief architect of Oracle E-Business Suite Projects applications

Over 20 years ago, Finance and IT organizations (under the direction of the Chief Financial Officer), were in control of systems and desperately wanted to instill some financial controls and measures into the Delivery organizations that ran projects. The battle was always that the Project Managers (PMs) didn’t want to be controlled by departments they felt had no understanding of the world of project management, they wanted complete flexibility to best deliver their projects, and they were not concerned with the CFO’s desire for visibility into projects. Most PMs managed projects using personal systems based on Microsoft® Excel or Microsoft Access. The more sophisticated project managers used Microsoft Project, and the most advanced firms used Primavera, Cascade, Mantix, Artemis, and Cobra. BUT, the project systems used by PMs seldom could reflect accurate cost data which then made it difficult to really know the financial health of the project. Therefore, many PMs simply managed to effort and schedule.

In the “old days” a job code equating to a project was part of the general ledger chart of accounts – and most PMs were not strongly concerned about financials. So, how could you let accountants manage financials and project managers manage projects? You needed a system that allows both worlds to obtain the information that they wanted in the format that they wanted. To meet this need, in the early 1990’s Oracle released its first Project Accounting (PA) system: a true project based sub-ledger.

When the initial implementations of PA started, it was the Finance group that was imposing controls onto the Project Managers. Finance wanted visibility into ongoing projects, hence Finance was making most of the decisions, which generated friction between the organizations. To meet the requirements driven by Finance, PMs needed to change the way they were managing projects and that introduced a large opportunity for Change Management.

Getting structure into a non-structured environment was the primary challenge. When companies have been doing things a certain way for decades, it is VERY hard to change that culture… so compromises are made in an attempt to balance the needs of both organizations. Some folks would create a Work Breakdown Structure (WBS) to map to a Cost Structure simply so that they could track and control costs. Other companies placed intelligence into both the Project number as well as the WBS … because that was the way it was always done in the past. Some would claim that it made controlling charges easier while others would claim that it made reporting easier. But, in both cases, Project/Task naming was mirroring the way a General Ledger chart of accounts is structured, and not the way a project manager manages a project.

As time progressed, operations and project-based delivery organizations matured and developed a better understanding of what is needed to facilitate harmony between Finance and Project based Operations. At the same time, Oracle developed a Project Management system that was closely linked to its Project Accounting application. When Oracle released its Oracle Project Management (PJT) application and companies began to implement it, it became clear that Oracle had taken one step closer to really bridging the Accounting world to the Project Management world. But that still was not enough. PMs wanted and needed an EASY tool to assist them with their Project Management needs. Then, Oracle made the smart decision to purchase Primavera.

For those companies that implemented Oracle Project Costing and Project Billing only, without a futuristic vision of having a truly integrated Project Management system in place, trying to implement any form of integration of Project Accounting to a Project Management system became a horrible mess. When that happens, the only real thing that can be done is to update the implementation of Project Costing and Project Billing with a clear understanding of how it would integrate with either Oracle Project Management or Primavera. If there are other major issues that also need to be addressed, then a complete reimplementation of these modules should be considered.

Any company that is upgrading to E-Business Suite Release 12, or implementing R12 for the first time, will have the opportunity to rethink or redefine how they will move to become a truly project centric organization. Whether you are implementing for the first time, updating your implementation or re-implementing, thinking through the business needs that address both Project Accounting and Project Management will be paramount for your future long term success.

This issue applies to more firms than one might initially expect. I have always stated that “every company is a project company … they just don’t know it yet.” As more and more organizations decide to operate their firm or certain divisions on a project basis to better understand costs and level of effort and to develop repeatable processes using a structured Project Management methodology they will look to Oracle’s Enterprise Project Portfolio Management solutions, which remain the most complete in the market. And they will benefit from the significant evolution of these applications that enable Finance and Project Management to work together in harmony.

By Rajesh Silswal

In both Release 12 and 11.5.10, out-of-the box integration between Oracle E-Business Suite Projects and Oracle Enterprise Asset Management (EAM) allows the collection of maintenance costs into Oracle Projects from EAM. You can carry out maintenance activities, consume different resources and the resulting costs of those activities can be transferred into Oracle Projects. These can be brought in as an accounted cost or an unaccounted cost and will facilitate the analysis of Project Based P&L’s. Oracle treats internal maintenance costs as Work in Process (WIP) and is used in conjunction with an Oracle WIP Job. Utilizing Oracle Project Manufacturing enables the integration of Oracle Projects and EAM. Without configuring PJM along with Oracle Projects and Oracle EAM, you cannot leverage this standard out-of-the-box integration. Read the rest of this entry »