Follow the Money

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Oracle Primavera Contract Management, Business Intelligence Publisher Edition v14

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A one-stop reference to concepts and usability of the core modules of a complex application with this book and ebook.

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by Stephen D. Kelly | April 2013 | Enterprise Articles Oracle

This article prepared by Stephen D. Kelly, author of Oracle Primavera Contract Management, Business Intelligence Publisher Edition v14 , In this we will look into the details of managing the money side of your project. These are the nuts and bolts of the core of PCM.

The money is at the core of PCM. All documents in PCM related to money are also related to a specific contractual relationship defined in PCM (trends being a possible exception). And since the contractual relationship is the center of the universe as far as PCM is concerned, it follows that managing the money is at the core of the system. If you understand the information in this article you will be far ahead of most users of PCM, and all the other articles will make more sense.

(For more resources related to this topic, see here.)

It starts with the Cost Worksheet

In PCM, the Cost Worksheet is the common element for all the monetary modules. The Cost Worksheet is a spreadsheet-like module with rows and columns. The following screenshot shows a small part of a typical Cost Worksheet register:

The columns are set by PCM but the rows are determined by the organization. The rows are the Cost Codes. This is your cost breakdown structure. This is the lowest level of detail with which money will be tracked in PCM. It can also be called Cost Accounts. All money entered into the documents in any of the monetary modules in PCM will be allocated to a Cost Code on the Cost Worksheet. Even if you do not specifically allocate to a Cost Code, the system will allocate to a system generated Cost Code called NOT COSTED. The NOT COSTED Cost Code is important so no money slips through the cracks. If you forget to assign money to your Cost Codes on the project it will assign the money to this code. When reviewing the Cost Worksheet, a user can review the NOT COSTED Cost Code and see if any money is associated with this code. If there is money associated with NOT COSTED, he can find that document where he has forgotten to allocate all the money to proper Cost Codes. Users cannot edit any numbers directly on the Cost Worksheet; it is a reflection of information entered on various documents on your project. This provides a high level of accountability in that no money can be entered or changed without a document entered someplace within PCM (like can be done with a spreadsheet)

The Cost Code itself can be up to 30 characters in length and can be divided into segments to align with the cost breakdown structure, as shown in the following screenshot:

The number of Cost Codes and the level of breakdown is typically determined by the accounting or ERP system used by your organization or it can be used as an extension of the ERP system's coding structure. When the Cost Code structure matches, integration between the two systems becomes easier. There are many other factors to consider when thinking about integrating systems but the Cost Code structure is at the core of relating the two systems.

Defining the segments within the Cost Codes is done as part of the initial setup and implementation of PCM. This is done in the Cost Code Definitions screen, as shown in the following screenshot:

To set up, you must tell PCM what character of the Cost Code the segment starts with and how long the segment is (the number of characters). Once this is done you can also populate a dictionary of titles for each segment. A trick used for having different segment titles for different projects is to create an identical segment dictionary but for different projects. For example, if you have a different list of Disciplines for every project, you can create and define a list of Disciplines for each project with the same starting character and length. Then you can use the proper Cost Code definitions in your layouts and reporting for that project. The following screenshot shows how this can be done:

Once the Cost Codes have been defined, the Cost Worksheet will need to be populated for your project. There are various ways to accomplish this.

  • Create a dummy project with the complete list of company Cost Codes you would ever use on a project. When you want to populate the Cost Code list on a new project, use the Copy Cost Codes function from the project tree.

  • Import a list of Cost Codes that have been developed in a spreadsheet (Yes, I used the word "spreadsheet". There are times when a spreadsheet comes in handy – managing a multi-million dollar project is not one of them). PCM has an import function from the Cost Worksheet where you can import a comma-separated values (CSV) file of the Cost Codes and titles.

  • Enter the Cost Codes one at a time from the Cost Worksheet. If there are a small number of Cost Codes, this might be the fastest and easiest method.

Understanding the columns of the Cost Worksheet will help you understand how powerful and important the Cost Worksheet really is. The columns of the Cost Worksheet in PCM are set by the system. They are broken down into a few categories, as follows:

  • Budget

  • Commitment

  • Custom

  • Actuals

  • Procurement

  • Variances

  • Miscellaneous

Each of the categories has a corresponding color to help differentiate them when looking at the Cost Worksheet.

Within each of these categories are a number of columns. The Budget, Commitment, and Custom categories have the same columns while the other categories have their own set of columns. These three categories work basically the same. They can be defined in basic terms as follows:

  • Budget: This is the money that your company has available to spend and is going to be received by the project. Examples depend on the perspective of the setup of PCM. In the example of our cavemen Joe and David, David is the person working for Joe. If David was using PCM, the Budget category would be the amount of the agreed price between Joe and David to make the chair or the amount of money that David was going to be paid by Joe to make the chair.

  • Committed: This is the money that has been agreed to be spent on the project, not the money that has been spent. So in our example it would be the amount of money that David has agreed to pay his subcontractors to supply him with goods and services to build the chair for him.

  • Custom: This is a category that is available to be used by the user for another contracting type. It has its own set of columns identical to the Budget and Commitment categories. This can be used for a Funding module where you can track the amount of money funded for the project, which can be much different from the available budget for the project.

Money distributed to the Trends module can be posted to many of the columns as determined by the user upon adding the Trend. The Trend document is not referenced in the following explanations.

When money is entered in a document, it must be allocated or distributed to one or multiple Cost Codes. As stated before, if you forget or do not allocate the money to a Cost Code, PCM will allocate the money to the NOT COSTED Cost Code. The system knows what column to place the money in but the user must tell PCM the proper row (Cost Code). If the Status Type of a document is set to Closed or Rejected, the money is removed from the Cost Worksheet but the document is still available to be reviewed. This way only documents that are in progress or approved will be placed on the Cost Worksheet. Let's look at each of the columns individually and explain how money is posted.

The only documents that affect the Cost Worksheet are as follows:

  • Contracts (three types)

  • Change Orders

  • Proposals

  • Payment Requisitions

  • Invoices

  • Trends

  • Procurement

Contracts

Let's look at the first three categories first since they are the most complex. Following is a table of the columns associated with these categories. Understand that the terminology used here is the standard out of the box terminology of PCM and may not match what has been set up in your organization. The third contract type (Custom) can be turned on or off using the Project Settings. It can be used for a variety of types as it has its own set of columns in the Cost Worksheet. The Custom contract type can be used in the Change Management module; however, it utilizes the Commitment tab, which requires the user to understand exactly what category the change is related. The following tables show various columns on the Cost Worksheet starting with the Cost Code itself.

The first table shows all the columns used by each of the three contract categories:

Cost Worksheet Columns

The columns listed above are affected by the Contracts, Purchase Orders, or any Change Document modules. Let's look at specific definitions of what document type can be posted to which column.

The Original Column

The Original column is used for money distributed from any of the Contract modules. If a Commitment contract is added under the Contracts – Committed module and the money is distributed to various Cost Codes (rows), the column used is the Original Commitment column in the worksheet. It's the same with the Contracts – Budgeted and Contracts – Custom modules. The Purchase Order module is posted to the Commitments category.

Money can also be posted to this column for Budget and Commitment contracts from the Change Management module where a phase has been assigned this column. This is not a typical practice as the Original column should be unchangeable from the values on the original contract.

The Approved Column

The Approved Revisions column is used for money distributed from the Change Order module. If a Change Order is added under the Change Order module against a commitment contract and the money is distributed to various Cost Codes (rows), and the Change Order has been approved, the money on this document is posted to the Approved Commitment Revisions column in the worksheet. We will discuss what happens prior to approval later.

The Revised Column

The Revised column is a computed column adding the original money and the approved money. Money cannot be distributed to this column from any document in PCM.

The Pending Changes Column

The Pending Revisions column can be populated by several document types as follows:

  • Change Orders: Prior to approving the Change Order document, all money associated with the Change Order document created from the Change Orders module from the point of creation will be posted to the Pending Changes column.

  • Change Management: These are documents associated with a change management process where the change phase is associated with the Pending column. This can be from the Proposal module or the Change Order module.

  • Proposals: These are documents created in the Proposals module either through the Change Management module or directly from the module itself.

The Estimated Changes Column

The Estimated Revisions column is populated from phases in Change Management that have been assigned to distribute money to this column

The Adjustment Column

The Adjustment column is populated from phases in Change Management that have been assigned to distribute money to this column

The Projected Column

The Projected column is a computed column of all columns associated with a category. This column is very powerful in understanding the potential cost at completion of this Cost Code.

Actuals

There are two columns that are associated with actual cost documents in PCM. The modules that affect these columns are as follows:

  • Payment Requisitions

  • Invoices

These columns are the Actuals Received and Actuals Issued columns. These column names can be confusing and should be considered for change during implementation. This is the way you could look at what money these columns include.

  • Actuals Received: This column holds money where you have received a Payment Requisition or Invoice to be paid by you. This also includes the Custom category.

  • Actuals Issued: This column holds money where you have issued a Payment Requisition or Invoice to be paid to you.

As Payment Requisitions or Invoices are being entered and the money distributed to Cost Codes, this money will be placed in one of these two columns depending on the contract relationship associated with these documents. Be aware that money is placed into these columns as soon as it is entered into Payment Requisitions or Invoices regardless of approval or certification.

Procurement

There are many columns relating to the Procurement module. This book does not go into details of the Procurement module. The column names related to Procurement are as follows:

  • Procurement Estimate

  • Original Estimate

  • Estimate Accuracy

  • Estimated Gross Profit

  • Buyout

  • Purchasing Buyout

Variances

There are many Variance columns that are computed columns. These columns show the variance (or difference) between other columns on the worksheet, as follows.

  • Original Variance: The Original Budget minus the Original Commitment

  • Approved Variance: The Revised Budget minus the Revised Commitment

  • Pending Variance: The (Revised Budget plus Pending Budget Revisions) minus (Revised Commitment plus Pending Commitment)

  • Projected Variance: The Projected Budget minus the Projected Commitment

These columns are very powerful to help analyze relationships between the Budget category and the Commitment category.

Miscellaneous

There are a few miscellaneous columns as follows that are worth noting so you understand what the numbers mean:

  • Budget Percent: This represents the percentage of the Actuals Issued column of the Revised Budget column for that Cost Code.

  • Commitment Percentage: This represents the percentage of the Actuals Received column of the Revised Commitment column for that Cost Code.

  • Planned to Commit: This is the planned expenditure for the Cost Code. This value can only be populated from the Details tab of the Cost Code. It is also used for an estimators value of the Cost Code.

Drilling down to the detail

The beauty of the Cost Worksheet is the ability to quickly review what documents have had an effect on which column on the worksheet. Look at the Cost Worksheet as a ten-thousand foot view of the money on your project. There is a lot of information that can be gleaned from this high-level review especially if you are using layouts properly. If you see some numbers that need further review, then drilling down to the detail directly from the Cost Worksheet is quite simple.

To drill down to the detail, click on the Cost Code. This will bring up a new page with tabs for the different categories. Click on the tab you wish to review and the grid shows all the documents where some or all the money has been posted to this Cost Code.

This page shows all columns affected by the selected category, with the rows representing each document and the corresponding value from that document that affects the selected Cost Code on the Cost Worksheet.

From this page you can click on the link under the Item column (as shown in the previous screenshot) to open the actual document that the row represents.

Summary

Understanding the concepts in this article is key to understanding how the money flows within PCM. Take the time to review this information so that other articles of the book on changes, payments, and forecasting make more sense. The ability to have all aspects of the money on your project accessible from one module is extremely powerful and should be one of the modules that you refer to on a regular basis.

Resources for Article :


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Oracle Primavera Contract Management, Business Intelligence Publisher Edition v14 A one-stop reference to concepts and usability of the core modules of a complex application with this book and ebook.
Published: December 2012
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About the Author :


Stephen D. Kelly

Stephen D. Kelly graduated from Oregon State University in 1982 with a degree in Construction Engineering Management. He got his start with a mid-sized general contractor who was willing to take a chance with this college graduate and they both saw the benefits of a computer system in the contracting world. Even though the personal computer had not yet come to the scene, Steve was very interested in how computers could help the construction industry to manage time, cost and improve efficiencies. Steve used his knowledge gained at the University and a lot of "on-the-job training" along with his love for computers to advance in the construction industry. He then moved to computerized estimating and building estimating databases to allow estimators to become more efficient and more accurate. The problem was that the more accurate the estimator became, the more projects he would lose as he was more accurate and not bound to miss anything.

After working for many years in the construction industry in various positions and organizations, Steve decided he wanted to work for many companies at once and help them computerize their business in the construction industry. At this time, Primavera had already placed itself in the forefront of the computerized scheduling market with its DOS product, Primavera Project Planner (P3). Primavera then bought Expedition and started to market this as a project communication and cost controls tool to accompany their flagship product. The rest (as they say) is history.

Steve has been implementing and training with the Primavera suite since 1985. He has worked around the world in many large organizations to help them understand project controls and how to properly implement and use a tool such as Oracle Primavera Contract Management. His company, Pro Management Systems, Inc. has built many third-party applications to enhance the abilities of PCM. Steve has a passion, and is known for his desire to understand a business before even talking about the various tools available. Like he says, "I want to learn how you do business and then figure out how to possibly improve those processes and wrap the tools around them." He relates project management to the fireman profession. He has given speeches on this comparison saying, "Even if a fire is put out quickly, there is always residual damage to deal with." In other words, it is better to keep the fires from starting at all.

He likens that concept to project management and uses the Primavera tools to allow his clients to be proactive rather than reactive. He says, "Why not let the computer tell me what information needs my attention, it is much smarter and faster than I ever dreamed."

Steve has a wonderful, supportive wife of 30 years, five children, and two grandchildren. He lives on a small farm in Oregon where he enjoys time in the out of doors.

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