Project Costing in Unanet Version 9.5
Instructional Guide
Version 2.3
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Copyright © 2012 Unanet Technologies
Table of Contents
Overview of this document ..........................................................................................3
Why is project costing important? ............................................................................3
Direct and Indirect Costs and Calculation of Pool Rates ..................................4
Unanet support for direct and indirect cost reporting ......................................6
Project Costing Setup ....................................................................................................7
Setup Cost Structure .....................................................................................................8
Setup Cost Report .........................................................................................................11
Project and Person Setup ...........................................................................................14
Project Cost Reporting.................................................................................................15
Glossary for Project Costing ......................................................................................23
Frequently Asked Questions ......................................................................................25
Alternate Cost Structure Examples: ......................................................................26
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Copyright © 2012 Unanet Technologies
Overview of this document
Project Costing, starting with Unanet Version 9.3, enables users to report on
the fully burdened costs associated with their projects. These burdened costs
are calculated in real-time within Unanet using the indirect pool rates provided
by an external accounting system or other outside application. Fee for Cost
Plus projects, Fixed Price Schedules, and billable labor and expense
calculations for Time & Materials projects can also be included in reports,
providing the ability to see revenue and true margin. This document first
describes why organizations need to track and report on direct and indirect
project costs, and how Unanet supports these concepts. A detailed Glossary is
included at the end of this document as well as different examples of cost
structures. Unanet 9.4 included many enhancements related to project
accounting including definition of fixed price schedules, additional project
costing features and a post process to calculate billable and recognizable
amounts. There is a separate Project Billing guide which describes these
enhancements which should be read in conjunction with this document.
Why is project costing important?
Many services organizations need to see the true project costs, taking into
account allocation of costs from overhead activities and other costs not
specifically identifiable with a single project. This is especially true for
government organizations working on cost plus type projects, but time &
materials and firm fixed price projects sometime require separate reporting of
these costs too.
Key customers have identified the following benefits of project costing in
Unanet:
 Provide project managers with the tools they need to report on fully
burdened costs (direct and indirect) in real time, so that actuals can be
compared with budget and funded amounts.
o The ability to generate reports in real-time will drive more timely
data capture and thus improve DCAA compliance. Without this
functionality, project managers have to wait for reports from their
accounting system which may be weeks or even months late.
o It provides additional leverage for training the project/program
managers and pushing accountability to them.
o Report formats and usage are familiar and easier to use for
project staff than accounting system
 Forward visibility of under or over performance is particularly key for
fixed price contracts to see costs versus billings as funded amount, and
contract end, is approached.
o A real-time future view of project spend as resource loading and
project plans change will be valuable.
o This functionality allows Unanet to be used for project estimating
and pricing on government contracts, avoiding the need for third
party tools.
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Plans and budgets are integrated with detailed actual costs in one
system.
Deliver project costing information outside the finance department
o By providing improved information to program management,
faster resolution of potential problems will be achieved. As with
other Unanet reports all information is presented based on realtime data.
o Accounting will not have the burden of producing Job Summary
Reports (JSR) and other project costing information for
managers, saving time or avoiding the need for project managers
to have access to the accounting system
System specific:
o Accounting systems typically used by smaller government
contractors do not provide Project Costing Reports. Using Unanet
to provide this capability removes a driver for them to go through
a complex and costly migration from their existing accounting
system.
o Three sets of indirect cost rates are supported; Target,
Provisional and Actual, providing additional reporting options and
planning flexibility compared with many accounting systems
which only offer two rates. Note: Unanet does not calculate the
rates but uses calculated rates from other systems.
o There is no limit on the number of cost structures or indirect cost
elements. Some systems have limitations such as only seven
pools, and the inability to accurately calculate rates from multiple
cost structures.
o Unanet allows a descriptive label to be specified as well as an
account number for a cost element. This improves ease of use
over systems that assume that the user understands that 39
means Direct Labor, 51 means Subcontractor etc.
o


Direct and Indirect Costs and Calculation of Pool
Rates
Any cost that can be specifically identified with a project is known as a direct
cost, for example hourly salary cost, or Other Direct Costs such as travel or
materials. However the performing organization incurs other costs which
cannot be tied directly to a single project and these costs need to be grouped
so that they can be distributed appropriately across each project. These are
known as indirect costs. Examples of indirect costs are:
 fringe benefits,
 overhead, and
 general and administrative (G&A)
These indirect costs for the whole organization will be grouped in similar cost
pools, and their total calculated. A base is needed for distributing indirect
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costs to their final cost objectives and this is known as an allocation base.
Dependent on the type of indirect cost, different allocation bases might be
used. Fringe would typically be allocated based on total labor cost (including
direct project and all other non-project work), for example.
For example, if the total fringe pool costs were $1,100,000, and the allocation
base of total labor costs for the organization was $3,200,000, then the Fringe
Rate would be 34% (Fringe/Base). This percentage would be multiplied by the
project’s labor costs to calculate the fringe burden for that project.
Fringe benefits typically include:
 Employer federal, state and local payroll taxes
 Workers compensation
 Holidays, vacations and sick or lost time
 Jury duty, military or bereavement
 Medical, dental and vision
 Life insurance
 Short and long-term disability
 Stock incentive options
 Company contributions to 401(k)
 Bonuses (if applicable to all employees)
Expenses, known as Overhead, associated with assisting direct labor
employees in doing their jobs, typically include the following items:
 Communications/telephone
 Training
 Recruiting
 Travel expenses (unless allocated to the project as ODC)
 Utilities
 Depreciation of buildings and equipment
 Licenses and fees
 Computer equipment and maintenance
 Office supplies
 Postage and shipping
Note: The allocation base for Overheard will typically be the total labor and
fringe costs.
General & Administrative expenses (G&A) typically include:
 Executive management
 Finance and Administration
 Sales and marketing
 Human resources
 Information technology
 Professional fees
 Bid & proposal efforts
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Note: the commonly accepted base for allocating G&A expenses is total costs,
including direct costs (labor and ODC), fringe, and overhead.
Other indirect pools may be established dependent on the organization’s
accounting system. However, the organization should already fully understand
these concepts and their desired cost structures before attempting to
configure Unanet. If not, they should work with their auditors or other
financial consultant to establish their policies and procedures.
For reference, a typical indirect cost structure and associated rates for
government contractors are shown below.
35% Fringe – calculated as Rate x Labor
60% Overhead – calculated as Rate x (Labor + Fringe)
14% General & Administrative – calculated as Rate x (Labor + Fringe +
Overhead + ODC)
Organizations that have many staff working on client site would typically have
lower overhead.
Unanet support for direct and indirect cost
reporting
In order to enable total cost reporting:
 Fiscal Years, Cost Elements (Labor and Other Direct Costs (ODC)) and
Cost Structures must be established. This will be entered by a Unanet
Administrator
 Projects must be associated with cost structures. Project’s cost
structure defines the ODC tracked for the project. Other information
entered against the Project include Billing Type, Fee and various
budgeted amounts for comparison with actuals.
 Define which labor charges should be tracked for the project. Default
Labor Cost elements can be entered for each person and/or overridden
on the assignments that govern the person’s work on the project.
The completion of these steps ensures that all incurred and projected direct
project costs can be tracked correctly. Detail reports included with the Project
Costing module will show the project’s direct cost distribution by cost
elements. Note: Unanet does not calculate the rates but uses calculated rates
from other systems.
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Project Costing Setup
1. First, a Unanet Administrator defines Cost Elements. Three types are
specified; Labor, Other Direct Costs and Indirect Costs
2. Fiscal Year definitions must be established. They will be used to set up
Indirect Cost rates. Rates apply for a whole Fiscal Year and so these are
used on the reports where Indirect Costs are calculated. Accounting
calendars can additionally be specified to reflect ‘accounting months’ or
other periods rather than calendar months, and these accounting
periods can be used in reporting throughout the system.
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Setup Cost Structure
1. Cost Structures must have a unique name and optionally may have a
description.
2. You can assign Labor Cost Elements to your Cost Structure.
3. You can associate Expense Types with ODC Cost Elements in your Cost
Structure. Note: Expenses entered before this association was created
will not automatically appear on Project Costing reports. If there are
historic actual expenses you wish to include in project costing reports,
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contact Unanet Support for a script which will update your historic
expense actuals with the ODC-Expense Type mapping.
4. You can establish the rules (or formulas) for calculating Indirect Costs
for you structure. A typical, simple example is shown below for Fringe,
Overhead and G&A.
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5. You can enter Indirect Cost rates for your structure and specify when
the Actual Rates were last calculated. This date is shown on report
headers when Actual Rates are used so that it is clear if the rates are
current, as Actual Rates may change significantly over the Financial
Year.
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Setup Cost Report
1. You can now define a Project Cost Summary report layout. Note the
Actual and Budget Formulas which can be created. The Budget
Formulae uses the fields on the Project Profile tab.
Note also that labels for each report item can be specified. Certain
reports use these labels as column headers and to ensure the report is
not too wide to fit on the screen it may help to use abbreviated or
multiple words in the report item label to allow wrapping rather than a
single word, i.e. ‘Sub Contractor’ rather than ‘Subcontractor’.
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2. You can optionally, create one or more Fee Calculation methods. This
allows fee to be added to cost on the report format to give total project
revenue. Fee can be defined based on different approaches such as:
Total Labor and ODC Cost, or another method could just use Total Labor
cost. One of these fee calculation methods can be specified for each
project on the Project Profile tab along with the associated fee. It is also
possible to calculate a Budget fee for comparison based on fields held
on the Project Profile tab, as in the example below. A typical fee seen
on Cost Plus contracts is 5%. Revenue can be calculated directly using
the Revenue tag, or using a formula you create.
3. Calculations can be performed based on cost, bill or hour values for
labor cost elements, cost or bill values for ODC elements, and cost
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values for pools. This provides a number of possibilities. For example
labor hours can also be shown directly on the project costing reports
and average labor rate calculated as illustrated in the Project Cost
Report Definition above. The Revenue tag allows Cost Plus, Time &
Materials and Fixed Price projects to all be displayed using a single
format and compared on multi-project reports.
4. The availability of labor hours in report calculations means an actuals
fee method based on hours worked, for example $6 for every hour, can
be defined and used to calculate fee. Hours could also be included in the
report as a line item if desired. In the example below, hours worked is
included below the line showing Labor Total cost.
5. In Unanet 9.4 new functionality on the Cost Report included a new
Revenue tag. This allows actual posted data of estimated values to be
displayed on these reports, using the same calculations as the Post
Process and any additional items that have been included on invoices.
An example of a Cost Report definition using this Revenue tag is shown
below.
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Project and Person Setup
Each person now has a default Cost Structure and Labor Cost Element which is
entered on their Rates tab. This can be overwritten on Assignment.
On the Project Profile tab new fields Billing Type (with preset values of TM, CP
and FP), Cost Structure can also be specified. On the Budget tab there are
values for Total Value, Funded Value, Fee Factor Type, Fee Factor, Fee
Calculation Method, Burdened Labor Cost and Burdened Expense Cost can be
entered. These fields would hold budgeted values over the life of the project,
and are used in various reports. They can also be selected in the Cost Report
setup for comparison with actuals. The intended usage of the fields is as
follows:



Total Value: Anticipated maximum value of contract, may equal Funded
Value.
Funded Value: Authorized expenditure; may equal to project budgeted
revenue (calculated as sum of Labor and Expense Bill Budget values).
Calculate Fee:
o Fee Factor Type: Percent or a Number
o Fee Factor: Value to be used in conjunction with Fee Method to
calculate how the project fee.
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Fee Calculation Method: Selected from the items defined on the
Cost Report > Fee Calculation Method tab.
Burdened Labor Cost: total labor costs including burdens (e.g. Fringe,
Overhead and G&A)
Burdened Expense Cost: total ODC costs including burdens (e.g. G&A)
o


Project Cost Reporting
Eight Project Cost reports are provided on the Project Accounting reports
menu, in addition to other reports related to billing, invoicing and revenue
recognition.
The Labor Cost Details and ODC details reports are available via the
Reports menu and also via drilldown from the Project Cost Summary (JSR).
Note JSR is an acronym for Job Summary Report, a commonly used name
for that report format in popular accounting systems.
The purpose of each report is as follows:
1. Labor Cost Details – show actual hours, direct labor costs, labor
category and person by labor cost element for the same time periods as
the Project Cost Report. Average labor rate per cost element is also
shown. If the Unanet Project Portfolio product is used, Labor Detail
actuals can be compared with Assignments or Plans.
2. ODC Details – show actual costs for each expense type by ODC
element for the same time periods as the Project Cost Report. If the
Unanet Project Portfolio product is used, ODC Detail actuals can be
compared with Budgets or Plans.
3. Indirect Cost Rates - a report view of the data entered in the Cost
Structure > Indirect Cost Rates tab.
4. Cost Summary – a periodic report (user can select week, month or
quarter periods) showing costs for a project by cost element. Plans or
budgets can be included for labor, and expense. The vertical ordering
of the report output will match the layout defined in Admin > Setup >
Cost Report, with those elements not used in the cost structures of
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interest not displayed. On this report, data from multiple projects can
be summarized into a single block.
5. Cost Summary and Status – extending the Cost Summary report to
include actuals and plans or budgets for prior and future periods. Totals
are calculated with budgets for the project. Backlog is shown on the
report calculated as the difference between the project budget amounts
and the actuals. The Unallocated Budget is calculated as the difference
between the project budget amounts and sum of the actuals and people
and expense plans or budgets. On this report, data from multiple
projects can be summarized into a single block.
6. Project Cost Summary by element – providing one line per project,
showing cost element details for a project. The horizontal ordering of
the Project Summary by Cost Element report output will also match the
layout defined in Admin > Setup > Cost Report. Cost Element details
can be hidden via the selection screen, providing a report that displays
only totals. Additionally, users can choose to Sort by Project or Sort by
Billing Type (within Owning Org). With Unanet Version 9.4.11, this
report allows the Project Cost Report elements to be shown and rolledup by task.
7. Project Revenue and Funding Summary – providing one line per
project, shows date range, billing type and actuals for the user-specified
current period, fiscal-year-to-date, and prior years. This total is
compared with:
 Budgeted Revenue (as specified in the Cost Report definition)
 Backlog (calculated as Budget – Actuals),
 Funded Value (from Project Profile tab), and
 Remaining Funded (calculated as Funded minus Actuals to Date)
Additionally, users can choose to Sort by Project or Sort by Billing Type
(within Owning Org). This report can also be run at the task level with
rollup.
8. Project Cost Summary (JSR) - the vertical ordering of the Project
Cost Summary (JSR) report output will match the layout defined in
Admin > Setup > Cost Report, with those elements not used in the cost
structures of interest not displayed. As with the Labor Cost Details, ODC
Details and the other Summary reports, four periods are shown with
actuals;
 Current Period as specified by the user.
 Fiscal Year to Date
 Prior Fiscal Years
 Total (BoT to ToDate)
Budgeted, % of Budget Incurred and Backlog (Budgeted minus total
Actuals ToDate) are also shown.
On this report, data from multiple projects can be summarized into a
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single block.
The users may click on the detail links on the Project Cost Summary
(JSR) report output (shown below) to see the related labor and ODC
details. If the Unanet Project Portfolio product is used, Labor Detail and
ODC actuals can be compared with Budgets or Plans.
In addition to the standard selection criteria options Project Costing Periodic
and Summary reports allow you to select the indirect cost rate type (Target,
Provisional or Actual) to be used for reporting, and filter projects by Owning
Organization.
The selection screen for the Project Cost Summary Report is shown below.
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Examples of each report follow.
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Glossary for Project Costing
Item
Description
Actual Indirect Cost Rate
Computed by dividing the total amount of the cost pool by the total
amount of the direct cost element(s). Example would be dividing the
total dollars spent on fringe benefits by the total payroll dollars of the
people receiving the benefits. The actual rate is dynamic and
changes with each period as costs are incurred and recorded in the
General Ledger. This rate is computed in the accounting system and
keyed into Unanet as required. Unanet allows the effective date for
the Actual Rate calculation to be stored so that reports can show how
current the rate is.
Budget minus total Incurred to date
TM, FP, CP Values: New field in Project Record – Note: Bill Type is
only at the Unanet Project Level. Tasks do not have different billing
types
Elements comprising the total cost of a project. Elements can be
direct cost elements and indirect cost elements. Examples are Direct
Labor and Fringe.
Groupings of indirect costs to be allocated to a direct cost element.
Examples: Fringe, Overhead, and G&A. Contains the cost pool name
and the actual, provisional and target rates. Cost Pool rates are
calculated by the total dollar amount of the indirect cost divided by
the total dollar amount of the cost element.
A group of cost pools and how those cost pools are allocated to direct
costs. Cost structures can include multiple cost pools. Example:
Company A multiplies the total amount of direct labor by the fringe
rate.
A formula created by the user that defines the calculation steps
involved in computing the desired end total or amount for a cost
element.
Labor hours at hourly cost rates and expense amounts for materials
and other purchases charged to a project.
The date the change is effective. This date is used to determine
which historical file to use when making calculations. This is not
required. Only an Administrator will change Actual Rates?
Maximum contract value; may exceed Funded Value
This is a grouping of expenses incurred for the benefits of employees,
both direct and indirect. These may be different for different
categories of employees such as full-time or part-time. Items which
typically would be included in Fringe are:

Employer federal, state and local payroll taxes

Workers compensation

Holidays, vacations and sick or lost time

Jury duty, military or bereavement

Medical, dental and vision

Life insurance

Short and long-term disability

Stock incentive options

Company contributions to 401(k)

Bonuses (if applicable to all employees)
Backlog
Billing Type
Cost Element
Cost Pool
Cost Structure
Actuals or Budget Formula
Direct Cost Elements
Effective Date
Project Total Value
Fringe Pool
Funded Value
Indirect Cost Elements
Authorized expenditure, equal to project budgeted revenue.
Indirect cost allocated from a grouping of incurred costs in a pool
identified with two or more objectives (such as Fringe, Overhead or
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Sales & General Administrative costs) and apportioned to the some
grouping of other cost elements, both direct and indirect.
A percentage to be applied to the dollar amount of the direct costs.
Percentages can be provisional, target and actual.
Subcategory of cost elements that includes all labor costs that are
direct. Direct labor costs are expressed as a rate per hour.
Subcategory of cost elements that includes all costs other than labor
that are direct, such as expenses. Often, these are termed ODC’s.
This is a grouping of expenses associated with assisting direct labor
employees in doing their jobs. Items which would typically be
included in Overhead are:

Communications/telephone

Training

Recruiting

Travel expenses (unless ODC)

Utilities

Depreciation of buildings and equipment

Licenses and fees

Computer equipment and maintenance

Office supplies

Postage and shipping
Indirect Cost Rate
Labor Cost Elements
Other Direct Cost Elements
Overhead Pool
Owning Organization *
Person Organization
Project Organization
Provisional Indirect Cost Rate
General & Administrative
Pool
Target Indirect Cost Rate
For direct labor on client site, overhead will be lower than on
company site.
Unanet Organization: New field in Project Record. This component
allows the user to define groupings of projects or people and define
separate cost structures for each owning organization.
Each person in Unanet is identified as belonging to an organization
which is the person’s organization.
Each project in Unanet is associated with an organization which is the
project organization. Project organizations are designed to represent
customers and, specifically, the organization that benefits from the
project.
The rate determined by budgets or forward pricing and approved by
audit of an outside firm or agency. This rate is static and only
changes with authorization from the outside firm or agency. This
rate is normally used in proposals and in billing for Cost Type
contracts. This rate is keyed in.
This is a grouping of expenses associated with general administration
and overall management of the business. Typically abbreviated to
G&A, but sometimes known as SG&A (Sales, general &
administrative). Items which would typically be included in G&A are:

Executive management

Finance and Administration

Sales and marketing

Human resources

Information technology

Professional fees

Bid & proposal efforts
The rate determined by the company as a goal rate based on
budgets. This rate may be the same as the provisional rate and is
usually a static rate not changing but once or twice a year. This rate
is keyed. Note, some accounting systems such as GCS support only
two rates (Target and Actual). In such situations Target has the same
meaning as Provisional defined above.
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Frequently Asked Questions
Q:
Why doesn’t Unanet calculate pool rates?
A:
Calculating pool rates requires inclusion of all cost information typically only
found in an accounting system, including payroll and benefits costs, office
administration costs, rent, depreciation etc. If the accounting system does
not have functionality for calculating pool rates, it is not complex to do this
in a spreadsheet. The key effort is the management decision on which costs
belong in which pool. Target Rates, if used, may be valid for multiple years,
Provisional Rates typically are valid for an entire year, and Actuals are
recalculated periodically, perhaps quarterly or monthly. Unanet may
provide this functionality in the future.
Q:
Does Unanet Project Costing replace my accounting system?
A:
No, but it may eliminate a driver to upgrade your accounting system to
obtain fully burdened project cost reporting which Unanet offers to project
managers and other staff.
Q:
What roles are required to set up cost structures and run the reports?
A:
Admin role is required to set up cost structure data. Project Managers
without Cost Rate Manager role can run the reports with the exception of
the Labor Details Report which shows cost rates for individuals.
Q:
Which Unanet license is required to use this functionality?
A:
The new functionality is only available to customers with either the Project
Tracking or Project Portfolio licenses, i.e. Expense functionality is required
and an equal number of time & expense licenses. With Project Portfolio
comparison with plans and assignments and periodic reporting is included.
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Alternate Cost Structure Examples:
This document has used a simple, but typical example cost structure for a
services organization. Other examples are provided here:
(1) Two Overheads and G&A
Labor Cost Elements:
CONUS Labor (CONtinental US)
OCONUS Labor (Outside CONtinental US)
Indirect Cost Elements:
CONUS Overhead (includes Fringe)
OCONUS Overhead (includes Fringe)
G&A
(2) Fringe, Two Overheads and G&A
Labor Cost Elements:
Direct Labor - Company Site
Direct Labor - Client Site
Indirect Cost Elements:
Fringe
Overhead Company Site
Overhead Client Site (recognizing that employees located at client site have
lower overhead costs)
G&A
(3) Fringe, Overhead, Subcontract/Material Handling Overhead, and G&A
For situations where contracts are material intensive:
Labor Cost Elements:
Direct Labor
Indirect Cost Elements:
Fringe
Overhead
Subcontract Material Handling Overhead
G&A
(4) Fringe, Two Overheads, Subcontract/Material Handling Overhead, and G&A
For situations where contracts are material intensive:
Labor Cost Elements:
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Direct Labor - Company Site
Direct Labor - Client Site
Indirect Cost Elements:
Fringe
Overhead Company Site
Overhead Client Site
Subcontract/Material Handling Overhead
G&A
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