Costpoint updates the Open Billing Detail for projects with hours-based formulas.

Hours-based formulas include: Loaded Labor w/Fee plus Non-Labor w/Burden w/Fee, Labor Cost times Multiplier plus Non-labor times multiplier (Cost), Cost times Multiplier plus Non-labor times multiplier (Hours), Loaded Labor plus Non-labor Plus Burden on Non-labor, Loaded Labor Plus Non-labor w/Burden w/Fee, Loaded Labor Rate, Loaded Labor Rate Plus Non-labor, Loaded Labor w/Burden w/Fee Plus Non-labor w/Burden, and Rate Schedule times Multiplier Plus Non-labor times Multiplier w/Fee.  If you want to use these formulas, you need to set up Project Labor Categories (PLCs). These formulas do not calculate properly without the PLCs. They are based on hours incurred times a labor rate. 

Costpoint calculates hours-based formulas using data on the Manage Open Billing Detail screen and the Manage Project Billing Information screen. The Open Billing Detail table is populated by the posting programs and by the Load Labor Rates process. The posting programs insert hours incurred, labor category, amount, account/org information, FY/Pd/Supd information, and other transaction details into the Open Billing Detail table. The Load Labor Rates process inserts the labor rate information into the Open Billing Detail table. The program uses the data in this table, along with some data on the Manage Project Billing Information screen, when calculating bills. 

The following processes take place when Costpoint calculates an hours-based bill:

1. Write Off and Hold hours are summarized in Open Billing Detail. The program compares these hours to the total transaction hours. If the transaction hours are greater, the difference is hours eligible to be billed.

   You can also partially bill transactions. If you select the Allow Transaction To Be Partially Billed check box on the Setup Information tab of the Manage Project Billing Information screen, partial transactions are also taken into consideration when arriving at allowable costs. Write Off, Hold, and Previously Billed Hours are summarized in Open Billing Detail. If the transaction hours are greater than the sum of those fields, the difference is hours eligible to be billed.

2. Next, Costpoint calculates allowable hours. To determine allowable hours, the hours in Open Billing Detail are summed by Project/Org/Account. Hours are allowable if they are less than the hours ceilings set on the Manage Hour Ceilings, Manage Employee Hour Ceilings, or Manage Vendor Hour Ceilings screens. When you set ceilings in these screens, they apply to both billings and revenue. Ceilings are set by employee, vendor, or labor category. You can also set ceilings at multiple project levels. Only ceilings at project levels equal to or lower than the project level of the invoice posting level are observed, however. For example, you set up a three-level contract. You post the invoice at the second level, and costs are charged at the third level. When determining allowable hours, Costpoint observes ceilings set at the second or third level. Ceilings set at level one of the project are ignored. If a ceiling is set for an employee, and an additional (higher) ceiling is set for the labor category of that employee, the employee ceiling takes precedence. For example, assume an employee is limited to charging 100 hours to a project. His labor category may charge 250 hours to the project. When calculating allowable hours, Costpoint considers hours in excess of 100 charged by this employee to be over ceiling.

   The hours of other employees may be used in the calculation of allowable hours for this labor category; however, this employee's hours are not considered allowable. In other words, the program determines allowable hours by employee as the first phase of the calculation. Allowable hours by labor category are determined in the second phase of the calculation.

3. The excess of ceiling amounts over amounts billed is the amount remaining to bill. The program compares this amount to the sum of currently billable hours. If the transactions currently billable are less than the ceiling, all hours are billed. If hours exceed the cost ceiling, the following equation is used to determine which are allowable:

   The program first looks at the fiscal year, period, and subperiod in which the hours were incurred. Hours incurred are allowed from earliest to the latest subperiod incurred. For example, assume that the Open Billing Detail contains unbilled hours from 1995, period 1, 2, 3, and 4. Hours are evaluated from period 1 first in the determination of allowable costs. Hours incurred in period 4 are evaluated last.

   However, there may be situations where a ceiling is reached in the middle of a subperiod. Within a given fiscal year, period, and subperiod, hours are next evaluated based on transaction size. Hours are allowed in ascending transaction size order. Therefore, smaller transactions are considered before larger ones. Assume a ceiling was reached in period 4, subperiod 1. The program evaluates transactions within this subperiod based on number of hours. Transactions from smallest to largest are allowed until the ceiling is reached.

   If you are partially billing transactions, a partial transaction may be allowed to arrive at a cost ceiling. Therefore, part of a transaction may be considered billable, and part of it may be considered over ceiling. In this situation, the billable hours copied into Billing Edit Detail are reduced by the portion of the transaction that has been disallowed. If partial transactions are not billed, the entire transaction being evaluated at the time the ceiling is reached is disallowed.

4. The program determines allowable hours before updating the Billing Edit Detail table. In other words, transactions are summed and evaluated in Open Billing Detail against cost ceilings. If transactions are partially billed, fully allowable transactions are copied into Billing Edit Detail. If only part of a transaction is allowable, only that portion is copied into Billing Edit Detail. Transactions over ceiling remain in Open Billing Detail. If transactions are not partially billed, the entire transaction used to arrive at the cost ceiling is disallowed and therefore is not copied into Billing Edit Detail. This is done so that the over ceiling transaction can be billed if the ceiling amount is increased.

   Additional fields are then updated into Billing Edit Detail. Write off hours, and hours on hold, are also copied into Billing Edit Detail. Therefore, for every billable transaction, Billing Edit Detail stores the part of that transaction that has been previously billed, written off, placed on hold, or is currently billed. The sum of these fields is the total transaction amount. The project ID that incurred the transaction and the Invoice Project ID, or Project level at which the invoice is posted, are stored for each transaction.

   Billing Edit Detail also needs to be updated with the T&M billing rates. Costpoint stores the billing rate in the Open Billing Detail table once you have run the Load Labor Rates screen. The appropriate labor rate is copied into Billing Edit Detail. The program multiplies the rate by allowable hours to arrive at billing amounts.

5. Next, the program updates Billing Edit Detail with non-transaction-based amounts. These amounts include burdens, fee, fee over ceiling, costs over ceiling, and retainage amounts.
   • Burdens: Burden amounts are the first non-transaction cost element calculated. The program groups allowable non-labor costs (hours, if using hours-based pools) by Project/Org/Account/FY/ Period and Subperiod. Burdens are applied to the allowable costs (hours) by pool. Burden amounts are stored in the Billing Edit table by Project/Org/Account/FY/ Period/Subperiod and pool number. If burden ceilings exist for billing purposes, they are taken into consideration as part of this calculation. Burden ceilings are set by project, fiscal year, account, and pool.

     You can set burden ceilings on the Manage Burden Cost Ceilings screen. Burden ceilings are applied for billing purposes only if you enter a ceiling code of B or A. The program compares the provisional rate on the Pool Rates subtask of the Manage Cost Pools screen to the burden ceiling rate. It multiplies the lower of the rates by the transaction amounts to arrive at a burden amount. A record is added to the Billing Edit Detail table for burden amounts. A record is added for each Project/Org/Account/FY/Period, and Pool number combination.

   • Fee: Next, the program calculates fee amounts. Fee calculations and updates occur in two phases. The program first calculates direct costs. Once allowable costs have been determined, fee is applied. The fee percentage from the billing formula is the initial starting point in the determination of a fee rate. Fee overrides are next taken into consideration. Fee overrides are set by account for both direct and burden costs. This override is observed when billings are computed if the override contains a ceiling code of B. Overrides may increase or decrease fee calculations.

     Once the fee rate is determined, the program multiplies it by the sum of transactions to arrive at a billable fee amount. A record that is grouped by Project/Org/Account/ FY/Period and Subperiod combination is added to the Billing Edit Detail. The second phase of the calculation involves the calculation of fee on burden costs. The fee percentage from the billing formula is the initial starting point in the determination of a fee rate for burdens as well.

     A fee override may have been set for a given cost pool. In this situation, the program uses the fee override rate to determine fee amounts on burden costs for that pool. However, fee overrides set on direct accounts are also taken into consideration when calculating fee on associated burdens. For example, assume fee on direct travel costs is limited to 2%, and that travel costs are burdened with G&A. The fee calculated on the G&A applied to that travel is also limited to 2%.

     Consequently, a situation may exist where a fee override percentage is set for a cost pool, but an override is also set for an element of that cost pool. In this instance, the program uses the override that applies a lower fee rate. For example, a fee override is set on the G&A pool of 3%. A cost fee override is set on travel accounts of 2%. Travel is burdened with G&A. In this instance, travel and its associated burdens (G&A) have been identified with a fee override of 2%. However, G&A has additionally been identified with a fee override of 3%. The lower of the two fee overrides (2%) is applied.

     Once the fee rate is determined, the program multiplies it by the burden amount to arrive at a billable fee amount per pool. A record is added to the Billing Edit Detail for fee on burden costs that is grouped by Project/Org/Account/FY/ Period/Subperiod and Pool number combination.

   • Fee Over Ceiling and Costs Over Ceiling: Next, the program applies total contract fee ceilings. You can set up contract and funded value fee ceilings on the Manage Total Ceilings screen. If the ceiling amount has a code of B or A, the ceiling is used for billing purposes. The program determines the Inception-to-Date (ITD) fee by adding the previously billed fee amount on the Manage Project Bill Summary screen to the fee currently billable. It compares this amount to the fee ceiling to determine the allowable fee. If the total ITD fee computed exceeds the fee ceiling, a record is added to the Billing Edit Detail for over fee ceiling amounts. The program applies fee ceilings only if they are set up at the billing level or below. Fee ceilings above the billing level are ignored. If an over fee ceiling is encountered, a record will be inserted to the Billing Edit Detail table at the level of the project where the ceiling was placed.

     The program adds allowable fee to allowable direct costs and burdens to arrive at a current billable amount. ITD amounts billed are summed in Maintain Project Bill Summary and added to current billable amounts. The program compares the total billing amount to the Contract and Funded Values set up on the Manage Total Ceilings screen. If the amount has a code of B or A, this value is used as a total billing ceiling amount. If the total billing computed exceeds the billing ceiling, the program adds a record to the Billing Edit Detail for over ceiling total amounts. If the ceiling is removed or increased, the amount that has not been billed can be included on the next billing.

     The over ceiling record is inserted into Billing Edit Detail at the level of the project where the ceiling was placed on the Manage Total Ceilings screen.

   • Retainage Amounts: In the final step, the program calculates retainage amounts. Retainage can be calculated on fee amounts, T&M labor, or billing amounts. Additionally, retainage can be withheld on each invoice, or from the final invoice. For T&M invoices, retainage can only be calculated based on T&M labor, and must be calculated on each invoice. To calculate retainage, the program uses the formula and percentage on the Manage Project Billing Information screen at the Invoice Project level. A record is added to Billing Edit Detail for the retainage amount. This retainage record is added at the invoice project level.