Set up labor cost rates
The labor rates (role prices) for each price list are determined according to the content and date of effectivity of the price list. These rates are established to ensure accuracy and consistency throughout the price list.
Create a price list, and then on the Role Price tab, in the subgrid, select New Role.
On the Quick Create page, select the role and organization unit.
Enter other required field information as necessary.
The following fields are important during the creation of labor rates on a cost price list:
Role - This field show the role that the cost rate applies to and it's on the General tab and Quick Create pages. This line is matched with the incoming role estimate or actual to default the cost of the role.
Price - This field is on the General tab and Quick Create pages, and it establishes the cost rate for the role, resourcing company, and resourcing unit combination. For instance, a developer from Fabrikam India could be set with a rate of 1,000 INR, while a developer from Fabrikam US could be assigned a rate of 150.00 USD. The price is the cost rate that defaults on the per-unit cost of the incoming estimate or actual line for the Time transaction class.
Currency - The default currency for the cost price list is determined by the currency that's stated in the header. However, you can change it for specific items. For instance, a developer from Fabrikam India would cost 1,000 INR, while a developer from Fabrikam US would cost 150.00 USD. The per-unit cost of the incoming actual cost line for the Time transaction class is set as the default currency. When you're creating a project estimate, the currency value will be converted to the project currency and displayed in the Time-phased view of the estimate. This field is located on the General tab and Quick Create pages.
For more information, see Set up labor cost rates.
Transfer pricing and costs for resources outside your division or legal entity
In project-based companies, it's common to use employees from multiple legal entities or divisions on projects. A project might be managed by a single legal entity, or the employees and/or consultants who work on the project can come from multiple legal entities or divisions.
In Project Operations, the legal entity that's responsible for the delivery of the project is referred to as the Owning Company, and the division that owns the delivery is called the Contracting Unit. Other legal entities that provide resources are known as Resourcing Companies and the divisions that provide resources are called Resourcing Units. In most countries, companies are obligated to ensure that the Resourcing Companies and Resourcing Units charge the Owning Company and Contracting Unit for the use of resources.
For example, Fabrikam Corporation must ensure that Fabrikam India-Robotics has negotiated a cost rate card with Fabrikam US-Robotics or Fabrikam UK-Robotics. If a developer from Fabrikam India-Robotics is loaned to Fabrikam US-Robotics, they must be compensated at a rate of \$100, while a loan to Fabrikam UK-Robotics must include a rate of \$150.
Set up costs for outside resources
To set up costs for outside resources, follow these steps:
Create a cost price list called Fabrikam US-Robotics cost rates and then set a date effective range.
In the cost price list, set up rates by using information from the following table.
Role Resourcing Company Resourcing Unit Cost rate Developer Fabrikam India Fabrikam India-Robotics $100 Developer Fabrikam Philippines Fabrikam Philippines-Robotics $90 Developer Fabrikam US Fabrikam US-Robotics $150 Attach this cost price list to the Fabrikam US-Robotics organization unit.
Set up transfer pricing for a resource in the appropriate currency
You can set up resource pricing in any currency, and it defaults to whatever currency is on the price list header. To practice, you can change the currency now, if you want.
The following example shows how to change the currency.
Fabrikam corporation must ensure that Fabrikam India-Robotics has a negotiated a cost rate with Fabrikam US-Robotics or Fabrikam UK-Robotics.
A developer from Fabrikam India-Robotics costs 5,000 INR when lent to Fabrikam US-Robotics and 5,500 INR when lent to Fabrikam UK-Robotics.
In the cost price list for Fabrikam US-Robotics, cost rates can be expressed as shown in the following table.
| Role | Resourcing Company | Cost |
|---|---|---|
| Developer | Fabrikam India | 5.000 INR |
| Developer | Fabrikam US | 115.00 USD |
In the cost price list for Fabrikam UK-Robotics, cost rates can be expressed as shown in the following table.
| Role | Resourcing company | Cost |
|---|---|---|
| Developer | Fabrikam India | 5,500 INR |
| Developer | Fabrikam UK | 115.00 GBP |
When you're creating a cost estimate for a project, Project Operations will convert the labor rates from the cost price list into the currency of the project and will display it to the user. After time entries have been approved and cost actuals have been created, the system will price them in the same currency as the role price line on the cost price list. Though you can record cost actuals for time in a single project in multiple currencies, when summing up the labor costs at the project level, Project Operations will convert all amounts into the currency of the project, which the user can view.