Calculating Data in Financial Summary

This section describes how PPM calculates data in a financial summary.

Calculating Forecasted Labor Costs From Staffing Profile

You can specify whether forecasted labor costs on the financial summary are to be calculated (rolled up) from the staffing profile. If this option is selected, separate, non-editable forecast lines are automatically created in the financial summary to reflect the staffing profile estimates, including the percentage split between capital and operating costs.

The forecast labor cost of a staffing profile equals to the total sum of forecast labor costs of all positions in this staffing profile. The forecast labor cost of a particular position is calculated as follows:

Forecast Labor Cost of a Position = Sum (Forecast Labor Cost of Assignment/Promise of the position) + (Unmet Demand * Cost rate of the position)

where,

  • Forecast Labor Cost of Assignment = Total committed effort of the assigned resource * Cost rate of the resource

    Note: Starting from version 9.31, you can decide to use the cost rate of the resource role or the position role to calculate the forecast labor cost of assignment. If you set the SP_RESOURCE_ROLE_RATE_ENABLE parameter to true, the forecast labor cost of assignment is calculated by the cost rate of the resource role. If you set this parameter to false, the forecast labor cost of assignment is calculated by the cost rate of the position role. By default, this parameter is set to true. When the resource has no role defined, and you set the parameter to true, the cost rate of the position role is used.

  • Forecast Labor Cost of Promise = Total promised effort of the assignment * Cost rate of the position

The cost rate of a position/resource is determined by the cost rule described in Best Matching Strategy.

Note: If there is over allocation on assignments, the unmet demand becomes negative. The negative unmet demand values are by default ignored in the calculation.

Starting from version 9.31.0001, you can decide whether the negative unmet demand value should be ignored by using the following parameter in the server.conf file:

Parameter Name Usage, Description Value
IGNORE_NEGATIVE_UNMET_DEMAND

If you set this parameter to true, PPM ignores negative unmet demand value in the calculation of forecast labor cost.

If you set this parameter to false, PPM does not ignore negative unmet demand value (regards the negative unmet demand value as it is) in the calculation of forecast labor cost.

Default value: true

Valid values: true, false

The following table describes cost factors used for calculating the forecast labor cost.

Table 4-2. Cost factors and entities to which they apply
Entity Relevant Cost Factors
Forecast labor cost of a position

Role: Role of the position.

Region: Region of the staffing profile where the position belongs.

Resource Type: Resource type of the position.

Project: If the parent entity of the staffing profile where the position belongs is a project, the project is included as a cost factor.

Org Unit: If the default resource pool of the position is defined, the default org unit of the resource pool is included as a cost factor.

Forecast labor cost of an assignment

Role: If the role of the assigned resource is defined, use it. Otherwise, use the role of the position to which the resource is assigned.

Region: If the region of the assigned resource is defined, use it. Otherwise, use the region of the staffing profile where the resource belongs.

Resource Type: If the resource type of the assigned resource is defined, use it. Otherwise, use the resource type of the position to which the resource is assigned.

Resource: Resource assigned to the position.

Department: If the department of the assigned resource is defined, it is included as a cost factor.

Project: If the parent entity of the staffing profile where the assigned resource belongs is a project, the project is included as a cost factor.

Org Unit: If the primary Org Unit of the assigned resource is defined, it is included as a cost factor.

The forecast labor cost is not updated immediately when you change cost factors described in Table 4-2. Cost factors and entities to which they apply. Instead, it is recalculated base on the latest cost factors when the SP-FS sync service is triggered by effort or status change of the position or assignment. PPM does not keep or consider historic cost rates after you change cost factors.

Note: If you change the cost rate by clicking the Add New Rate button on the Edit Cost Rule page and specify a effective start date in the pop-up window, PPM keeps and considers historic cost rates when calculating the forecast and actual labor costs for periods earlier than the effective start date.

For more information about calculating forecast labor cost, see "Configuring a Lifecycle Entity Financial Summary for Capitalization and Roll-Ups" in Financial Management User Guide.

Best Matching Strategy

PPM calculates a score for each cost rule and considers the rule with the highest score as the best matching one. Cost rate of a position/resource used in the calculation of forecast labor cost is the one defined in the best matching rule.

Before calculating a score for a cost rule, PPM checks whether the cost rule and the position/resource contain the same cost factor and whether values of the factor are the same. If yes, the cost factor is considered matching. Then, scores of cost rules are calculated as follows:

  • If a cost rule contains no matching cost factors, it is considered not applicable and gets -1 point.

  • If a cost rule contains one or more matching cost factors, PPM assigns 2n points to each matching factor according to its priority. Priorities of cost factors are configured on the Change Cost Factors page (Open > Administration > Financials > Change Cost Factors). In the Selected Columns field, all cost factors are listed according to their priorities from top to bottom.

    For example, if a cost rule contains four cost factors and they are all matching factors, the factor of top priority gets 24 = 16 points; the one of second priority gets 23 = 8 points; the one of third priority gets 22 = 4 points; and the last one gets 21 = 2 points. The score of this cost rule is the sum of all points its factors get. In this example, it is 16 + 8 + 4 + 2 = 30 points.

  • If a cost factor contains no value, it is considered as a wildcard factor. PPM assigns one point to each wildcard factor.

  • Besides matching and wildcard factors, all other cost factors get no point.
  • If a cost rule is not the default one, add one point to its score. Therefore, if a cost rule contains the same cost factors with the default cost rule, it gets a higher score than the default one.

Note: There is at least one matching rule, that is, the default rule which cannot be deleted and whose cost factors are all wildcard factors.

Actual Labor Cost Period Break Down

The actual efforts you log in time sheets and work plans are in a continuous range. However, when rolling up the actual labor cost to the financial summary, PPM breaks it down into periods. The cost of each month is calculated as follows:

Actual Labor Cost of month n = Total Actual Cost * Working days in month n / Total working days during the period when actual efforts are logged

For example, a resource has been working on a task from July 17th to August 20th, 2013 and costs USD $10000. Data used when calculating the actual labor cost of this resource is as follows:

  • Total actual cost is USD $10000.

  • Total working days from July 17th to August 20th is 25 days.

  • Working days in July is 11 days.

  • Working days in August is 14 days.

Note: Working days are calculated according to the calendar of the resource.

Therefore, actual labor cost of this resource in July is USD $10000*11/25 = USD $4400, while that in August is USD $10000*14/25 = USD $5600.

The calculation of actual labor cost is the same for part time and full time resources.

For more information about calculating forecast labor cost, see "Configuring a Lifecycle Entity Financial Summary for Capitalization and Roll-Ups" in Financial Management User Guide.

Net Present Value and Total Nominal Return

For information about net present value and total nominal return, see Appendix A of Portfolio Management User Guide.