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Examples of the Costpoint Project Budget Process

For Part One of this example, create a total budget using labor cost rates.

This is a baseline cost budget using project labor categories. For the example, set up the project where:

  • The project number is 1000.001.
  • The project name is New York City.
  • The period of performance is 01/01/00 to 12/31/05.
  • The default organization is 1.
  • The contract value is $2,000,000.

Make the following selections on the Configure Project Budget Settings screen:

  • Update Baseline Budget with Approved COs (change orders)
  • Allow Workplan Budgets (use for workplan budgets)
  • Freeze on Save Baseline Budget
  • Set up an undistributed account called "manage reserve."

Use the following accounts in this example:

  • Direct Labor Engineering — 0675
  • Direct Labor Construction — 0650
  • Direct Labor Project Management — 0600
  • Travel — 0575
  • Misc ODC (Other Direct Cost) — 0550
  • Subcontractor Costs — 0500
  • Project Revenue — 0400

The following are average cost amounts and PLC categories:

  • PM — Project Manager; and an average cost rate of 50/hour
  • PM1 — Assistant Project Manager; and an average cost rate of 25/hour
  • ARCH — Architect; and an average cost rate of 40/hour
  • ENG — Engineer; and an average cost rate of 40/hour
  • CA :— Contract Administrator; and an average cost rate of 25/hour

Baseline - Step 1 - Information

On the Manage Project Budgets and ETC screen, create the baseline project budget and enter "1000.001." Click the Baseline option as the Budget Type. Proceed to the Info tab (refer to the tab documentation). Notice that the Contract Amount of $2,000,000 is displayed along with the period of performance (01/01/00 to 12/31/05). Select the Labor Cost option, which is the default in the Labor Budgeting group box, and save this information. Go back to the main screen (Manage Project Budgets and ETC) and the subtask links (DIRECT, LABOR, UNITS, FEES, ETC) are enabled.

Note: After you save the Labor and Unit Budgeting settings for the selected project, you CANNOT modify them.

Baseline - Step 2 - Direct

Proceed to the Direct subtask to enter the ODC and subcontractor charges. Enter the following data:

  • Select Line Type D for direct costs. Org 1 defaults into the Organization and Organization Name columns.
  • Tab to the Account column and click to select Travel — 0575.
  • In the Budget Amount column, enter 50,000.
  • Click and proceed to a new line.
  • Select Line Type D for direct costs. Org 1 defaults into the Organization and Organization Name columns.
  • Tab to the Account column and enter 0550 for Misc ODC.
  • In the Budget Amount column, enter 100,000.
  • Click and proceed to a new line.
  • Select Line Type S for subcontractor. Org 1 defaults, but for this example, change it to Org 2.
  • Tab to the Account column and click to select Subcontractor Costs — 0500.
  • Tab to Vendor and click to select a vendor that has been established in the Manage Vendors screen.
  • Tab to the Subcontract No column and enter A275 for the subcontract number.
  • Tab to Budget Amount and enter 450,000.
  • Save this data.

Return to the main screen (Manage Project Budgets and ETC) and click the Recalculate button on the Total Budget tab.

  • Notice that the Budget Amt and Total Budget fields for the Direct summary information row display 600,000.

Baseline - Step 3 - Labor

Now proceed to the Labor subtask to enter labor charges and the following information:

Org 1 defaults into the Organization and Organization Name columns.

  • Tab to the Account column and enter 0675 — Direct Labor Engineering.
  • Tab to PLC and click to select ENG — Engineer, and the rate of 40/hour defaults into the Average Cost Rate column.
  • Tab to the Budgeted Hours column, enter 5,000 hours, and tab to the Cost Budget Amount column where 200,000 displays.
  • Click to move to a new line.

Org 1 defaults into the Organization and Organization Name columns.

  • Tab to the Account column and enter 0675 — Direct Labor Engineering.
  • Tab to PLC and click to select ARCH — Architect.
  • The rate of 40/hour defaults into the Average Cost Rate column.
  • Tab to the Budgeted Hours column, enter 5,000 hours, and tab to the Cost Budget Amount column where 200,000 displays.
  • Click to move to a new line.

Org 1 defaults into the Organization and Organization Name columns.

  • Tab to the Account column and enter 0650 — Direct Labor Construction.
  • Tab to PLC and click to select ENG — Engineer.
  • The rate of 40/hour defaults into the Average Cost Rate column.
  • Tab to the Budgeted Hours column, enter 2,500 hours, and tab to the Cost Budget Amount where 100,000 displays.
  • Click to move to a new line.

Org 1 defaults into the Organization and Organization Name columns.

  • Tab to the Account column and enter 0650 — Direct Labor Construction.
  • Tab to PLC and click to select ARCH — Architect.
  • The rate of 40/hour defaults into the Average Cost Rate column.
  • Tab to the Budgeted Hours column, enter 2,500 hours, and tab to the Cost Budget Amount where 100,000 displays.
  • Click to move to a new line.

Org 1 defaults into the Organization and Organization Name columns.

  • Tab to the Account column and enter 0600 — Direct Labor Project Management.
  • Tab to PLC and click to select PM — Project Manager. The rate of 50/hour defaults into the Average Cost Rate column. Change this rate to 60/hour.
  • Tab to the Budgeted Hours column, enter 5,000 hours, and tab to the Cost Budget Amount column where 300,000 displays.
  • Click to move to a new line.

Org 1 defaults into the Organization and Organization Name columns.

  • Tab to the Account column and enter 0600 — Direct Labor Project Management.
  • Tab to PLC and click to select PM1 — Assistant Project Manager.
  • The rate of 25/hour defaults into the Average Cost Rate column.
  • Tab to the Budgeted Hours column, enter 2,000 hours, and tab to the Cost Budget Amount where 50,000 displays.
  • Click to move to a new line.

Org 1 defaults into the Organization and Organization Name columns. Change this to Org 3.

  • Tab to the Account column and enter 0600 — Direct Labor Project Management.
  • Tab to PLC and click to select CA — Contract Administrator.
  • The rate of 25/hour defaults in the Average Cost Rate column.
  • Tab to the Budgeted Hours column, enter 2,000 hours, and tab to the Cost Budget Amount where 50,000 displays.
  • Click the OK button at the bottom of the screen and save this data.
  • Return to the Manage Project Budgets and ETC screen and click the Recalculate button.
  • Notice that the labor summary cost budget and total amount row contain the amount 1,000,000.
  • The Quantity column displays 24,000 for total labor hours.
  • The Total Budget is 1,600,000.
  • The Undistributed Amount field displays the 400,000, which is the management reserve amount.

Revenue - Row Multiplier

For Part Two of this example, use Costpoint to calculate revenue by using a multiplier on each row and the Fee subtask.

This section uses a multiplier to calculate revenue. In the first example, you created a total budget using labor cost rates and direct costs. Now you set up multipliers for the Labor subtask using the Info tab.

Beginning at the Info tab, enter a Target Multiplier of 1.4. Then, in the Multiplier Method drop-down list, select Use Multiplier on Budget Amt. Return to the Manage Project Budgets and ETC screen. As shown in the first example, the Direct subtask charges are already entered. The Labor subtask data is the same, but the revenue portion of the Labor subtask entries are highlighted below.

Note: You can override the multiplier on any row of the Direct, Labor, or Units subtasks with a different multiplier.
  • On the Labor subtask, Org 1 defaults into the Organization and Organization Name columns.
  • Tab to the Account column and enter 0675 — Direct Labor Engineering.
  • Tab to PLC and click to select ENG — Engineer and the rate of 40/hour defaults into the Average Cost Rate column.
  • Tab to the Budgeted Hours column, enter 5,000 hours, and tab to the Cost Budget Amount column where 200,000 displays.
  • The labor multiplier 1.4 displays in the Multiplier column.
  • Tab to the Profit Amt column where 80,000 displays; the Total Budget Amt is 280,000.
  • Click to move to a new line.
Org 1 defaults into the Organization and Organization Name columns.
  • Tab to the Account column and enter 0675 — Direct Labor Engineering.
  • Tab to PLC and click to select ARCH — Architect. The rate of 40/hour defaults in the Average Cost Rate column.
  • Tab to the Budgeted Hours column, enter 5,000 hours, and tab to the Cost Budget Amount where 200,000 displays.
  • The labor multiplier 1.4 displays in the Multiplier column.
  • Tab to the Profit Amt column where 80,000 displays; the Total Budget Amt is 280,000.
  • Click to move to a new line.

Org 1 defaults into the Organization and Organization Name columns.

  • Tab to the Account column and enter 0650 — Direct Labor Construction.
  • Tab to PLC and click to select ENG — Engineer. The rate of 40/hour defaults in the Average Cost Rate column.
  • Tab to the Budgeted Hours column, enter 2,500 hours, and tab to the Cost Budget Amount where 100,000 displays.
  • Our labor multiplier 1.4 displays in the Multiplier column.
  • Tab to the Profit Amt column where 40,000 displays; the Total Budget Amt is 140,000.
  • Click to move to a new line.

Org 1 defaults into the Organization and Organization Name columns.

  • Tab to the Account column and enter 0650 — Direct Labor Construction.
  • Tab to PLC and click to select ARCH — Architect. The rate of 40/hour defaults in the Average Cost Rate column.
  • Tab to the Budgeted Hours column, enter 2,500 hours, and tab to the Cost Budget Amount column where 100,000 displays.
  • The labor multiplier 1.4 displays in the Multiplier column.
  • Tab to the Profit Amt column where 40,000 displays; the Total Budget Amt is 140,000.
  • Click to move to a new line.

Org 1 defaults into the Organization and Organization Name columns.

  • Tab to the Account column and enter 0600 — Direct Labor Project Management.
  • Tab to PLC and click to select PM — Project Manager. The rate of 50/hour defaults in the Average Cost Rate column. Change this rate to 60/hour.
  • Tab to the Budgeted Hours column, enter 5,000 hours, and tab to the Cost Budget Amount column where 300,000 displays.
  • The labor multiplier 1.4 displays in the Multiplier column.
  • Tab to the Profit Amt column where 120,000 displays; the Total Budget Amt is 420,000.
  • Click to move to a new line.

Org 1 defaults into the Organization and Organization Name columns.

  • Tab to the Account column and enter 0600 — Direct Labor Project Management.
  • Tab to PLC and click to select PM1 — Assistant Project Manager. The rate of 25/hour defaults in the Average Cost Rate column.
  • Tab to the Budgeted Hours column, enter 2,000 hours, and tab to the Cost Budget Amount column where 50,000 displays.
  • The labor multiplier of 1.4 displays in the Multiplier column.
  • Tab to the Profit Amt column where 20,000 is displayed; the Total Budget Amt is 70,000.
  • Click to move to a new line.

Org 1 defaults into the Organization and Organization Name columns. Change this or Org 3.

  • Tab to the Account column and enter 0600 — Direct Labor Project Management.
  • Tab to PLC and click to select CA — Contract Administrator. The rate of 25/hour defaults in the Average Cost Rate column.
  • Tab to the Budgeted Hours column, enter 2,000 hours, and tab to the Cost Budget Amount column where 50,000 displays.
  • The labor multiplier 1.4 displays in the Multiplier column.
  • Tab to the Profit Amt column where 20,000 displays; the Total Budget Amt is 70,000.
  • Click the OK button at the bottom of the screen to save this data.

Return to the Manage Project Budgets and ETC screen and click the Recalculate button on the Total Budget tab. Notice that Budget Amt displays 1,000,000.

  • The Profit column displays the amount 400,000 and Total row displays the amount 1,400,000.
  • The Quantity column displays 24,000, which represents total labor hours.
  • The Total Budget is 2,000,000, and the Undistributed Amount is 0.
  • The profit has taken the place of what was formerly the management reserve.

Revenue - Fee Subtask

In this section, you will use the Fee subtask to calculate revenue. You created the total budget using labor cost rates and direct costs. You can also set up the entire cost budget using the Fee subtask. This is an example of a cost plus fee percentage (or a cost plus a fixed fee if you are using a fee amount). Remember the information entered in part one of this example. Our cost budget total was 1,600,000. You have entered data on the Direct and Labor subtasks.

Cost Plus Fee Percentage

  • Click the FEES link on the Manage Project Budgets and ETC screen.
  • The default for Organization and Organization Name is Org 1.
  • Tab to the Account column and click to select 0400 — Project Revenue.
  • Tab to the Fee Percentage column and enter 1.25, then save this data.
  • Return to the Manage Project Budgets and ETC screen and click the Recalculate button on the Total Budget tab.
  • The screen displays Direct and Total budget of 600,000, Labor and Total budget of 1,000,000, Fee and Total budget of 400,000, and a Total Budget amount of 2,000,000 with an Undistributed Amount of 0.

Cost Plus Fixed Fee Amount

  • Click the FEES link on the Manage Project Budgets and ETC screen.
  • The default for Organization and Organization Name is Org 1.
  • Tab to the Account column and click to select 0400 — Project Revenue.
  • Tab across to the Fee Amount column and enter 350,000 and an Other Fee Amount of 50,000. (The 50,000 Other Fee Amount is an award fee for timely project completion.)
Note:

This award fee can be recorded as a fee percentage with an Other Fee (fixed) Amount.

  • Click OK to save this information.
  • Return to the Manage Project Budgets and ETC screen and click the Recalculate button on the Total Budget tab.
  • The screen displays Direct and Total budget of 600,000, Labor and Total budget of 1,000,000, Fee and Total budget of 400,000, a Total amount of 2,000,000 with an Undistributed Amount of 0.