Overview of Labor Costing
When you enter timecards in Oracle Projects, you charge the total hours an employee worked to the project(s) on which the employee worked.
When an employee works overtime, in addition to charging the total hours an employee worked to the project(s) on which the employee worked, you calculate and charge the overtime hours and costs. Therefore, the employee's pay includes two components:
- Straight time cost (straight time and overtime hours)
- Overtime or premium cost (overtime hours only)
Straight time cost
Straight time cost is the dollar amount that an employee is normally paid for straight time (or regular) hours worked. Oracle Projects calculates straight time cost using an employee's hourly labor cost rate:
(Hours Worked x Hourly Labor Cost Rate)
You charge an employee's straight time hours to the project(s) on which the employee worked.
Overtime cost
Overtime cost, also referred to as premium cost, is the extra dollar amount that an employee is paid for overtime hours worked. Oracle Projects calculates overtime cost using a labor cost multiplier that corresponds to the kind of overtime worked:
(Hours Worked x Hourly Labor Cost Rate x Labor Cost Multiplier)
You can charge an employee's overtime hours to the indirect project that collects all overtime costs or to the project on which the employee worked.
Costing straight time and overtime hours
You charge the total hours an employee works to the project(s) on which that employee worked regardless of overtime hours. Additionally, you charge a project in which you collect overtime to calculate and track the overtime cost.
For example, if Don Gray worked 10 hours of overtime (Time and Half) on a bid and proposal project for Fremont Corporation, you charge 10 hours to the bid and proposal project (total hours worked), and 10 hours to the project on which you collect overtime (total overtime premium hours worked). In this case, the project on which you collect overtime is an to an indirect project. Oracle Projects calculates the cost of Gray's time using the following information:
- Gray's labor cost rate is $40.00 per hour
- The labor cost multiplier for Time and Half is 0.5
Thus, Gray is paid $600 for the 10 hours he worked. Table 1 - 93 illustrates how Oracle Projects calculates this total:
| Straight Time
| B&P
| 10
| $400.00
(10 Hours x $40.00)
|
| Overtime
| OT
| 10
| $200.00
(10 Hours x $40.00 x .05)
|
| Total
| 10
| $600.00
|
There are few things to note about straight time and overtime:
- When summing total hours for an employee, only include straight time hours. If both straight time and overtime hours were summed, the overtime hours would be double counted. For example, Gray's total hours equal 10, not 20
- When summing total overtime hours for an employee, include overtime hours only. In the example, above, the 10 hours Gray worked are recognized as overtime
- When summing total cost for an employee, include both straight time and overtime costs. For example, Gray's total cost is his straight time cost ($400.00) plus his overtime cost ($200.00)
- The straight time and overtime costs are burdened based on your burden costing setup and whether your burden costs on the projects are charged
