Actual Cost Calculation by Project

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

You can perform:

  • Simulated standard cost calculation
  • Estimated standard cost calculation
  • Actual standard cost calculation

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

Step 1. LN calculates the actual cost of customized items

The actual cost 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 standard cost is updated, per cost component, in the Standard Cost by Customized Item (tipcs3550m000) session. The total actual item standard cost is updated in the Item - 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 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 6. Update the actual project costs

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

Step 7. Update the invoice amount

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 Project-related Cost of Goods Sold Against field in the Project Control Parameters (tipcs0100m000) session.

LN performs two checks:

  1. If the Post Project-related Cost of Goods Sold 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 Project-related Cost of Goods Sold 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 Project-related Cost of Goods Sold 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 Project-related Cost of Goods Sold Against parameter is changed between the previous and the current cost calculation.

Suppose the Post Project-related Cost of Goods Sold Against parameter reads Estimated Costs. The project result is calculated as follows:

 Result = cost of
				  goods sold - actual project costs - already booked result
Standard to order items
  • Standard to order items

    If a standard item with the order policy standard-to-order (STO) item is linked to a project, the cost 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 generic 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 calculation program. During this process, material and operation costs are included in the cost calculation of the project for phantoms. Comments made regarding batch production and lowering setup costs do not apply to phantoms.

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.

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