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  • 1.  Cost Allocation from Cost Source

    Posted Sun February 28, 2021 09:05 PM
    Hi All,

    I have a scenario, for which i need your advise.

    There are some resources from Cost center(CC1) booked timesheets to specific project in time tracking system. I want to account this labor cost in my Project TCO. But the situation here is, there is no spend in Cost center(CC1) in General Ledger.

    How can i handle this scenario? Kindly share your suggestions

    Thanks in Advance
    #CostingStandard(CT-Foundation)


  • 2.  RE: Cost Allocation from Cost Source

    Posted Mon March 01, 2021 06:32 AM
    Edited by Guillermo Cuadrado Tue November 05, 2024 05:48 PM

    Hello @Marimuthu S.
    One way you could do it is by looking at what level you get the labor costs in your General Ledger.
    Let's assume that you get costs for 3 cost centers (CC1, CC2 and CC3).
    I would split the aggregated costs weighted by the number of hours/days reported in the time tracking system.
    Say that your time tracking data is like this:

    Cost Center Activity Hours
    CC1 A1 20
    CC2 A2 25
    CC3 A3 30
    CC1 A4 35
    CC2 A5 25
    CC3 A6 15
    Cost Center Number of Hours Weighting
    CC1 55 37%
    CC2 50 33%
    CC3 45 30%


    By adding up the hours on each CC, you'd get a weighting, which CT would use to allocate the labor costs to each CC/activity.


    I have written a blog post about this topic in my "Bill, the TBM Guy" series (link).



    ------------------------------
    Regards, Guillermo
    ------------------------------

    Original Message


  • 3.  RE: Cost Allocation from Cost Source

    Posted Tue March 02, 2021 05:04 AM
    Hi @Marimuthu S

    This is an interesting question, since you're asking it in one direction (time booked but no cost) but you're just as likely to need to ask it in the other (cost but no time booked, usually in August)​.

    One thing that you imply here is that your Project TCO is a separately calculated value, which has Project Time as a charge (hours x day rate) rather than as a Cost. This is a regular requirement for Project accounting, but is not logically part of a cost model as you are no longer dealing with Cost.

    I suggest that you try very hard to keep this type of Project Accounting separate from an Apptio Cost Model. If you must do it, you should look at creating a separate Project Labor metric and allocating that separately from Cost. That way you can do some sort of comparison of the Cost of Labor and Project Labor within a custom report. This becomes even more complex if you want to make sure that you net to your finances, as you may need to create Labor 'credits' matching your Project Labor 'debits', but that would take too much space to describe here. 

    Good luck.
    Original Message


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