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Oracle Projects – Professional Services only?

Oracle Projects has been with us now for many years and has grown in a variety of directions to become a major project management tool rather than just an accounting “cost ledger”.I would suggest though that as a result of this rush to break into new areas some long standing issues with the costing and accounting in Projects are still troublesome and the level of trouble to be encountered depends to a significant degree in which industry you find yourself. I must immediately declare a specific interest in Engineering and Construction where I worked for many years though some of the issues I set out here apply in many other fields.

Let’s start with a simple question. What is a cost? Easy enough, materials and labour mainly. The trouble is that neither materials nor labour are actually that simple and what would be seen as a valid cost in one industry simply is not acceptable in another. Labour cost is a fine example. What Oracle Projects gives you is the ability to define a cost rate for an individual (or various higher groupings) and then record actual time against that standard rate. What you might call actual at standard. If you are a consultant, solicitor or accountant this is fine. Your clients expect you to charge this way. Indeed in these professional service industries you may even use standard at standard, effectively a fixed fee job and any extra work will be charged to you as an actual at standard.

In construction though this is rather more problematic. If you are a construction company you will be expected to charge to cost your actual labour costs for the site operatives, in other words actual hours at actual cost. This industry is traditionally rather confrontational and costs are routinely questioned, queried analysed and audited. Quantity surveyors, main contractors and others will go to considerable lengths to establish the exact basis of the cost and hope thereby to negotiate total cost down. So what you need is the ability to take a cost from payroll, add the individual’s relevant and verifiable on-costs for NI and other employer costs and post that through to Projects. This is clearly rather more complex than actual at standard, especially when you factor in bonuses, overtime, paid travel time and so on, but it is still a real need and has been on many a wish list for several years.

Functionality Wishlist for E & C Companies in UK

1 Applications and certificates, sales and purchase

The applications and certificate cycle of processing is not within Oracle core product. There is an OCS development that delivers applications and certificates and is supported in UK. This applications and certificates processing cycle is not only used in UK but also in much of the Commonwealth or former Commonwealth countries. Final invoicing, correct treatment of VAT should also be part of this.

2 Actual payroll costs to projects

Oracle Projects uses standard cost rates. Payroll costs on a project therefore reflect actual hours at standard rates. Roughly speaking labour costs in construction companies should be booked as actual hours at actual rates. For more professional staff on a project standard rates may be acceptable but for the general site operative cost should be actual hours at actual rate.

3 Plant hire system

There is no plant hire system within the Oracle system at the moment, neither for external nor internal hire. There is a partial solution for internal plant hire that delivers basic charging through a mixture of Project Resource Management and HR. In this case equipment is set up as a type of employee and assigned at a standard rate to a project through Project Resource Management. This does allow cost charging but none of the other plant management facilities, such as repair cost recovery.

4 Cost Value Reconciliation

This is more contentious as companies in E & C do not all do this but tracking internal and external values is a necessary activity. Some standard reports for this area would be helpful to Quantity Surveyors.

5 Receive materials to different project or task

This is much more of an issue with Procurement than Projects. It is possible to do this but it is quite cumbersome. It can be a significant issue with companies using large volumes of concrete or aggregates as these materials are often redirected to other projects at short notice.

6 Reconciliation of GL to Projects

This is not specific to E & C but a recurring and long standing issue. The standard reports help but the additional custom reports are frequently required. The interaction between Projects and the other modules changes in R12 so the processes around reconciliation will do too.

25 Jun, 2009 by admin_blog

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