Cost price calculation by project

You can perform a:

A. Simulated cost price calculation.

B. Estimated cost price calculation.

C. Actual cost price calculation.

A. Simulated cost price calculation

You can make a simulated cost price calculation for all Project types. During a simulation, LN calculates and updates the cost prices of the customized items in the Cost Price Calculation module. In the Project Control module, inventory is not revaluated and the project price and the customized item price are not updated.

Note

LN calculates the cost price of customized items by using the cost price calculation code of the project. This code is stored in the Projects (tipcs2101m000) session.

B. Estimated cost price calculation

The following steps are taken if an estimated calculation of the cost price is calculated:

Step 1. 

LN calculates the cost price of all customized items. The cost prices are updated in the Cost Price Calculation module.

Note LN calculates the cost price of customized items by using the cost price calculation code of the project. This code is stored in the Projects (tipcs2101m000) session.

Step 2. 

LN revaluates inventory for all warehouses with the FTP inventory valuation method.

Note Budgets do not have inventory.

Step 3. 

LN updates the cost prices of all customized items of the current project in the Project Control module.

Note For budgets, LN uses the data as stored in the Item - Cost Price Details (ticpr2505m000) session. For other project types, LN uses the data as stored in the Item - Standard Cost Price Details (ticpr3505m000) session.

Step 4. 

LN calculates the estimated project costs. Estimated project costs consist of the following costs:

  • Item costs of all project parts in the Project Parts (tipcs2111m000) session. For standard project parts, LN uses the cost price that is valid on the date as entered in the Freeze Cost Price on Date field of the Project Parts (tipcs2111m000) session. Standard parts are moved into the project on the three aggregated cost components. For customized parts, the estimated item costs are calculated as described above. These are stored in the detailed cost component in the Cost Price by Customized Item (tipcs3550m000) session.

Note Main projects do not have items assigned to them.

  • Activity costs. Activity costs are produced if you perform activities as defined in the Activities (tipcs4101m000) session. The operation rate code, linked to the task or work center of the activity (dependent on the value of the Type of Operation Rates parameter in the Cost Price Calculation Parameters (ticpr0100m000) session), is used to determine the activity costs. LN does not take activity costs into account if:
    • The Engineering Allowed check box in the Projects (tipcs2101m000) session is not selected.
    • The Activity Estimation check box in the Activities (tipcs4101m000) session is not selected.
  • Estimated project surcharges. If no estimated surcharges are defined for a sub project, LN takes the surcharges assigned to the main project. When estimated project charges cannot be found for a specific project, LN determines the estimated general surcharges for projects.

LN does not take surcharges for projects into account when the Engineering Allowed check box in the Projects (tipcs2101m000) session is not selected.

  • For a main project, the costs of all sub projects are added to the costs of the main project.
Step 5. 

LN stores the estimated project costs in the Cost Price by Project (tipcs3560m000) session.

For main, sub, and single projects, the budgetted costs are filled with the estimated costs of the linked budget (from which the project is derived). For a budget, the budgetted costs are always empty. Only the estimated costs are filled.

Step 6. 

LN updates the last calculation date for projects of the Budget type.

C. Actual cost price calculation

Note LN does not calculate the cost price for budgets. The following steps are taken if the cost price is calculated:

Step 1. 

LN calculates the actual cost price of customized items. The actual cost price per customized item is determined if you take the financial transactions from the PCS Financial Transactions by Transaction Origin and Financial Trans. (tipcs3500m000) session. All actual costs for an item are retrieved and divided by the total quantity for that item. The actual item cost price is updated, per cost component, in the Cost Price by Customized Item (tipcs3550m000) session. The total actual item cost price is updated in the Items - Costing (ticpr0107m000) session.

Note: This step is not executed for main projects.

Step 2. 

LN determines the actual project related costs. LN determines the financial transactions for the current project from the PCS Financial Transactions by Transaction Origin and Financial Trans. (tipcs3500m000) session. All actual item costs and general costs form the basic actual project costs.

Step 3. 

LN adds the actual project surcharges to the total project costs.

When no actual surcharges are defined for a sub project, LN takes the surcharges assigned to the main project. When actual project charges cannot be found for a specific project, LN determines the actual general surcharges for projects. LN does not take surcharges for projects into account when the Engineering Allowed check box in the Projects (tipcs2101m000) session is not selected.

Step 4. 

LN determines the differences per cost component.

If LN booked the surcharges in previous calculations, the difference per cost component is determined as follows:

New actual surcharges - the old (= already booked) actual surcharges. A financial transaction is then made for the difference between the transaction origin PCS and the financial transaction surcharges.

Step 5. 

LN updates the actual project costs in the Cost Price by Project (tipcs3560m000) session.

Step 6. 

LN determines the percentage invoiced.

To determine the costs of goods sold, LN calculates the percentage invoiced. To calculate the percentage invoiced, the Revenue Expected check box in the Project Details (tipcs2130m000) session must be selected. If the Revenue Expected check box is cleared, the following applies:

  • If no warehouse orders or sales orders exist for the current project, the percentage invoiced is 100.
  • If sales orders or warehouse orders exist and the invoiced amount is greater than zero, the percentage invoiced is 100.
  • If sales orders or warehouse orders exist and the invoiced amount is zero, LN checks whether deliveries are present or not. If deliveries are present, the percentage is 100. If deliveries are not present, the percentage is zero.

Note: If the Revenue Expected check box is cleared, the percentage invoiced is either 100 or zero.

Step 7. 

LN updates the invoiced amount in the Project Details (tipcs2130m000) session.

Step 8. 

LN calculates and books the costs of goods sold for projects for which the Investment Project check box in the Project Details (tipcs2130m000) session is not selected.

LN calculates the value of the costs of goods sold as follows:

  • If the project must be closed, the costs of goods sold are equal to the project costs.
  • If the project must not be closed, the costs of goods sold are equal to the project costs multiplied by the percentage invoiced. Project costs of goods sold can be based on Actual Costs or Estimated Costs dependent on the value of the Post Against field in the Project Control Parameters (tipcs0100m000) session.

LN performs two checks:

  1. If the Post Against field is set to Estimated Costs, LN takes the Estimated Cost of Goods Sold Limited by WIP Value parameter into consideration. If the Estimated Cost of Goods Sold Limited by WIP Value check box is selected, the cost of goods sold cannot be greater than the actual project costs. The cost of goods sold are limited by the actual project costs.
  2. If the Post Against field reads Actual Costs, the cost of goods sold is equal to the actual project costs, provided the following is true:
Percentage invoiced * estimated project costs > actual project costs

If the costs of goods sold are calculated, LN stores them. If the costs of goods are already booked during previous calculations, LN only books the difference.

Step 9. 

LN calculates the general result if a project is closed.

LN calculates the general result if the project is closed in the Close Project (tipcs2250m000) session. If the Post Against field reads Actual Costs, LN cannot calculate a result on project level. As a result, LN undoes the already booked results by booking the opposite amount. Old results only exist if the Post Against parameter is changed between the previous and the current cost price calculation.

Suppose the Post Against parameter reads Estimated Costs. The project result is calculated as follows:

Result = cost of goods sold - actual project costs - already booked result.

Note The actual project costs are exclusive to the actual item costs of the project. Results on item level must not be booked here. They should be booked when you close production orders, and so on. The result is booked with transaction origin PCS and financial transaction General Result.

Standard to order items

If a standard item with the order policy standard-to-order (STO) item is linked to a project, the cost price calculation program analyzes the complete standard to order structure. This complete standard to order structure is analyzed as if it were a customized item product structure. This product structure is then automatically exploded to the standard Anonymous items level. This means that standard items made to order do not have to be included in the product structure to perform a correct calculation of material and operation costs. As a result, any advantages resulting from batch production, in relation to setup costs, are not visible in the estimated project calculation. This applies if the same standard item made to order is linked to the project structure several times.

Standard phantom items

Comments referring to standard items made to order, also apply to standard phantom items linked to a project. The standard phantom structure is automatically analyzed by the cost price calculation program. During this process, material and operation costs are included in the cost price calculation of the project for phantoms. Comments made regarding batch production and lowering setup costs do not apply to phantoms.

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