Case Study: Organization Change in Fremont Corporation
In this case study, we use Fremont Corporation to demonstrate how to use Oracle Projects to address organization changes.
In its original implementation, Fremont Corporation's organization hierarchy contained four organizations directly subordinate to its business group. The four organizations have several subordinate organizations. Following is an illustration of Fremont Corporation's initial organization hierarchy:
Due to the continued growth of its international construction business sector, Fremont Corporation sets up a separate organization for Europe, subordinate to the existing International organization, to manage its European construction projects. The new organization hierarchy is shown in the following illustration:
Business Assumptions
This case assumes there is no impact from the organization change on a multiple organizations architecture.
For information on multiple organization change, see Multi-Organization Support in Oracle Projects.
Business Requirements
Fremont Corporation identifies the following requirements for the organization changes:
- The organization changes take effect on 22-Sep-97. This date begins the tenth month and last quarter of fiscal year 1997. See Defining PA Periods.
- All active Europe projects and their corresponding tasks will be transferred and managed by the Europe organization. The rest of the international projects will still be owned by the International organization.
- Europe will get some resources transferred from International. Europe will also acquire additional resources. Europe will be a cost center that will incur project costs, generate project revenue, and maintain its own budget.
- Europe will have it own billing schedule with a higher international markup.
- Burden Schedules are standardized at Fremont Corporation, and will not require any changes.
- Fremont Construction customer invoices will continue to be processed and collected by Fremont Construction.
- In addition to obtaining reports at each organization level, Fremont Corporation also wants reports at the Fremont Construction level (total construction business) and at the U.S. and International organization levels.
Planning the Organization Change
Oracle Projects provides the flexibility to allow adjustments made to meet real world organization changes. You must plan the necessary setup changes and processes to implement the changes according to your business requirements. Careful planning and analysis will ensure your business objectives are met.
When to Make the Change
Oracle Projects enables you to track project data on both a PA period and GL period basis. To have a clear audit trail for reporting and analysis, most businesses choose a new fiscal month, quarter, or year to implement any organization changes. You must make the necessary setup changes on or after the effective date of the organization change. See: Setup Changes Required for an Organization Change.
In our example, Fremont Corporation chooses to have the organization change take effect on 22-Sep-97. Any impacted projects, tasks and transactions that were processed before the system setup changes took place, and whose transaction date is on or after 22-Sep-97, must be adjusted to reflect the organization changes. Following is a summary of actions that Fremont Corporation takes.
Before the Organization Change
Before the changeover date of 22-Sep-97, Fremont Corporation must analyze, plan and document procedures for performing the organization changes. They process project transactions as usual under the old organization setup.
To avoid adjustments, you can optionally delay processing transactions dated on or after the changeover date. However, you can use manual adjustments or the Oracle Projects Mass Update Batch process to adjust the transactions after they are processed.
On or After the Organization Change
Fremont Corporation will complete the following steps on or after the date of the organization change:
Complete normal steps to finish processing transactions that will post to months prior to Fremont Corporation's fiscal month 10 of 1997.
Although not required by the system, you may want to perform steps to close the prior periods. This will prevent transactions from incorrectly posting to the prior GL or PA periods under the new organization setup.
3. Assign New Organization to Projects, Tasks, and Transactions
Fremont Corporation must transfer some of the projects and tasks formerly associated with the International organization to the new Europe organization.
They must also change transactions that were processed before the change, but that need to reflect the organization changes. This can be done by performing one or a combination of the following steps:
- Manually update the project/task organization from International to Europe, using the Projects, Templates window. For an audit trail, Oracle Projects will create a mass update batch with a Manual prefixed name and Completed batch status.
- Manually adjust transactions of affected projects or tasks that are on or after 22-Sep-97 to Europe.
- Prepare the mass update batch. You can prepare the batch by using the Mass Update Batches window or through a customized process. Run the PRC: Mass Update Batch process. Resolve any errors encountered during the process. See: Mass Update Batches.
The Mass Update Batch process will mark the affected expenditure items. You must manually adjust any outstanding events affected by the organization changes. You must also manually adjust any cost-based or event-based revenue or invoices affected by the organization change.
Setup Changes Required for an Organization Change
Some or all of the following implementation steps must be performed when you have an organization change.
1. Define Organizations
- Define a new organization called Europe.
- Enable the HR Organization classification to enable Europe to have employees
- Enable the Expenditure/Event Organization classification so that Europe can incur project expenditures and have its own budgets and billing schedules.
- Enable the Project/Task Owning Organization classification so that Europe can own projects.
- Do not enable the Project invoice Collection Organization classification. Invoices for Europe are processed using transaction types associated with Fremont Construction.
- Define a new organization called U.S. No organization classifications are required for the U.S. organization.
2. Define the New Organization Hierarchy
Fremont Corporation must update the organization hierarchy version, according to the new hierarchy.
Organization Hierarchy Oracle Projects
Because Fremont Corporation has chosen to standardize the organization hierarchy version for all of its project processing, it only needs to make adjustment to the organization hierarchy named Oracle Projects, and the organization hierarchy version number 1. If Fremont Corporation had originally set up different organization hierarchy versions to meet different business policies, procedures, and processes for its business, each organization hierarchy version would have required updating.
3. Assign a Project Burdening Hierarchy to the Business Group
Fremont Corporation will skip this step, because Fremont Corporation uses the same organization hierarchy version for project burdening that it uses for other business processes.
4. Define Employees
Transfer and add employees to the Europe organization.
5. Define Implementation Options
- If the Project/Task Owning Organization Hierarchy Branch of an operating unit will change as a result of the organization change, you must change the organization hierarchy /version and/or start organization assigned to the operating unit.
- If the Expenditure/Event Organization Hierarchy Branch will change, you must change the Expenditure/Event Organization Hierarchy Branch assigned to the operating unit.
- If the Default Reporting Organization Hierarchy Version will change, you must change the Reporting Organization Hierarchy Branch assigned to the operating unit.
Fremont Corporation can skip this step, since none of the above conditions are true for this organization change.
6. Define Cost Rates for Expenditure Types
Update existing expenditure types and add new expenditure types based on the organization change.
Fremont Corporation does not need to add new expenditure types for their organization change. They have already set up standardized expenditure types for the corporation.
7. Define Non-Labor Resources
Define non-labor resources for the new organization(s).
Fremont Corporation must update the non-labor resources PC and Minivan to add Europe as an additional owning organization:
| PC
| PC on the HQ network
| Computer Services
| Europe
|
| Minivan
| Site visit minivan
| Vehicle
| Europe
|
8. Define Expenditure Type Cost Rates
Update rates for expenditure types and/or set up new expenditure type cost rates.
Fremont Corporation sets up higher expenditure cost rates for the expenditure type Computer Services, to cover the overall increased cost of supporting the Europe organization.
| Computer Services
| Hours
| 10.00
|
9. Define Usage Cost Rate Overrides
Set up new usage cost rate overrides for the Europe organization.
Fremont Corporation sets up higher cost rates for minivans owned by the Europe organization.
| Minivan
| Vehicle
| Europe
| 60.00
|
10. Define Employee Rates
Define employee rates where required for changed rates and for new employees hired for the Europe organization.
11. Define Burden Schedules
Update and/or add new burden schedules based on the organization change.
Fremont Corporation does not need to define new burden schedules.
12. Define Bill Rate Schedules
Fremont Corporation must define a new bill rate schedule for the Europe organization, because Europe will have higher billing rates.
13. Define Resource Lists
Update resource lists that are affected by the organization changes. Add new organizations to the resource lists that group or maintain resource details by the organizations resource type.
14. Define Project Types
Set up new project types you will need, using the new defaults such as bill rate schedules and burden schedules.
15. Define Project Templates
Set up new project templates you will need, using new defaults such as project and task organizations.
16. Set Up AutoAccounting
Make changes to the AutoAccounting setup based on the organization change. Fremont Corporation must update the following Lookup Sets:
| Modify Lookup Sets:
|
| Name
| Organization to Company
|
| Description
| Map organization to the appropriate company code
|
| Segment Value Lookups
|
| Intermediate Value
(Organization)
| Segment Value
(Company Code)
|
| Add: Europe
| 03
|
| Name
| Organization to Cost Center
|
| Description
| Map organization to the appropriate cost center code
|
| Segment Value Lookups
|
| Intermediate Value
(Organization)
| Segment Value
(Cost Center Code)
|
| Add: Europe
| 306
|
17. Modify Client Extensions
Modify any client extensions impacted by the change.
