As I look at the standard out of the box ATUM cost model, it strikes me that there is some ambiguity in how external labor could be handled.  You could send it up through the Labor object (since, obviously, it is labor), or you could send it up though the Vendor object (since those dollars are tied to a vendor).

At this point, I don't really have a Vendor object that is integrated into my cost model, so I have it going up through Labor.  But is there a best practice or recommended way of handling these costs?  I wonder if it would even make sense to have the dollars initially going to one object then the other in order to have them represented in each (vendors first then labor, or labor first then vendors, before going up to ITRT).

Also, on a somewhat related note, how does everyone handle their external labor in terms of what month the cost hits?  For example, labor that takes place in August could be calculated (hours time rate) and applied to August.  The alternative would be to wait until the cost hits the GL (probably in September) and then apply the cost to that month.

James,

In my opinion it all depends on how your organization defines, contracts with, and views external labor. Temp labor, contractors and consultants are the three types to consider. The key question is if you are managing hours or deliverables. If the answer is hours, these belong in the labor object, otherwise they belong in the vendor tower.

To your second question, the timing when expenses hit the GL is they key for me. But again your organization will have accounting policies that determine the right answer for your specific case.

James,

I ran into the same situation as you and so did some brain storming on this. For our case we consider staff augmentation contracts as external labor which goes to Labor Object and their cost is allocated to projects or services using time reporting or project data. Whereas expenses related Managed Service contracts are directly tagged to projects so these may directly go to Vendor object.  However, external labor can also be the vendor spend which can be treated in couple of ways –

One approach is to allow external labor costs to both Labor and Vendor objects so this will initially look like I am doing
200% allocation of these line items from cost source.  However, I would filter the external labor portion to prevent 200% allocation further up the model when allocating from Vendor to IT Resource Towers.

Another approach is to bypass the external labor costs that flow from Labor to IT Resource Towers object via Vendor object. This may require each labor to be associated with vendor identification.

Your second question particularly interesting and raises another option, we use external labor cost on accrual basis by appending the data supplied by vendors to Cost Source. This data is being allocated to Labor object on cost basis and Cost Source drivers can pull out the payments that appear in the following month's GL report.   However, are all vendor payments identified in the GL on cash basis? Would it make sense to allocate GL cash payments of external labor to Vendor object and vendor billing file that can be appended to cost source on accrual basis to Labor object? Would it make your vendor reports on 100% cash basis? Of course I can always exclude cash payments pertaining to external labor while allocating from Vendor to IT resource towers so there is no double allocation!  If you’re allocating labor costs using time reporting or project data then it would be useful to plug in the billing file and move these costs to Labor on accrual basis otherwise you would be allocating August expenses with September activity data.

Best practice approach in my opinion is governed by factors such as ease of use and maintenance of the data/model apart from many others. And from an end user perspective, if I am looking at a vendor report by default I would assume report includes all vendors.

James,

All I would add beyond these wonderful comments so far is: feel free to flow costs from one object up to another, on their way to IT Resource Towers.

Vendors and Labor and Fixed Assets and (some or all of) Projects need to be below IT Resource Towers.  But you can flow Vendors up to Labor, then up to ITRT, for example.  This avoids double counting and avoids tough decisions about whether to flow costs to A or B.  Since you can aggregate at and drill to any model depth, you can build the report you need with this design flexibility in mind.

I like @Jesse Lee's suggestion. It's something I implemented during my time at DIRECTV...

Cost Source => Labor (includes internal and external labor - excludes managed services)

Cost Source => Vendors (includes all vendor related spend less external labor)

Labor => Vendors (external labor only)

Labor => ITRT

Vendors => ITRT

No over-allocation. =)