Standard Cost Calculation by Project

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

You can perform:

  • Simulated standard cost calculations
  • Estimated standard cost calculations
  • Actual standard cost calculations

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

Step 1. 

LN calculates the standard cost of all customized items. The standard costs are updated in the Standard Cost Calculation module.

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

Step 2. 

LN revalues inventory for all warehouses with the standard cost valuation method.

Note Budgets do not have inventory.

Step 3. 

LN updates the standard costs 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 - Standard Cost Details (ticpr2505m000) session. For other project types, LN uses the data as stored in the Item - Standard Cost 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 standard cost that is valid on the date as entered in the Freeze Standard Cost 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 Standard Cost by Customized Item (tipcs3550m000) session.

Note Main projects do not have items assigned.

  • 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 Standard Cost 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 Standard Cost by Project (tipcs3560m000) session.

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

Step 6. 

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

Note

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

  • 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.