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Understanding Labor Rates

This article explains how labor rates and posting labor costs works in ResourceFirst.

Overview

ResourceFirst allows for establishing default labor rates at a variety of levels, including node, skill, resource, cost category, financial item, or country, as well as rate overrides at the assignment level.

Note that this applies to labor costs only. Non-Labor costs are entered directly on the financial plan via Financial Assignments. See Financial Assignments for more.

IMPORTANT: For all rates entered in ResourceFirst, a zero dollar amount ("$0") is considered a rate value. Be careful to leave the rate field NULL (blank) if you do not want a zero rate to override any other rates for the item.

Note that by default, rates are defined as monthly rates. If hourly rates are desired, contact your PDWare administrator (an "R" appended to your license key will switch the rates to hourly).

Rate Matrix

The rate matrix is used to cost labor assignments. You can define cost rates in the Rate Matrix, which can be found in Administration-->Rates.

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Tips & Tricks

  • The rate matrix is only used for labor costing. Non-labor costing is calculated from the rates located on the Admin>Lists>Financial Items page.
  • Do not use the Financial Item column at this time.
  • ResourceFirst considers rates in the following order of operations
  1. Resource,
  2. Cost Category,
  3. Skill,
  4. Country,
  5. Node
  6. Note: Financial Items field is not used at this time.
  • Specify a time period by which the rate applies. For an indefinite period, use 12/31/9999 as the To date. Should the rate increase, retain the original row and add a new row with the date range that has the revised rate. 

For costing a skill assignment:

  • At a minimum: Populate the Skill field.
  • Most likey: Populate the Skill and the Node fields. For example, a Mechanical Engineer from France may have cost rate different from one located in the US.
  • Use the other fields, other than Financial Items, as needed.

For a named resource assignment:

  • At a minimum: Populate the Resource field.
  • Use the other fields, other than Financial Items, as needed.

For a non-labor assignment:

  • Non-labor costing is calculated from the rates located on the Admin>Lists>Financial Items page.

 

Defining Cost and Bill Rates by Cost Category

If you simply want to define cost and bill rates at the Cost Category level (e.g., Contractor, Employee), you would go to Administration->Lists->Cost Categories. Below is an example of cost categories and their associated cost and billing rates. 

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Order of Operation for how ResourceFirst determines which rate to apply in calculations

In addition to the Rate Matrix and default Cost Category definitions in Administration (which is referenced in the Resources table as a column/field), the Resources table and Assignments table include Cost Rate and Bill Rate override fields, to override the rate at the resource or assignment level, respectively.

Additionally, rates can be defined at the Skill level via the Administration->Lists->Skills page for use with Skill assignments (and as a default rate if no other rates have been defined).

The hierarchy is as follows:

  • Assignment rates override Resource Rates
  • Resource Rates override Skill Rates
  • Skill Rates override Cost Category rates; Skill rates are also used for Skill assignments in calculating labor cost of those assignments.
  • Cost Category overrides Rate Matrix
  • Rate Matrix is the last area checked.

Posting Labor Cost

On the Financials page in the project workspace of a project, there is a Post Labor Cost button in the upper left (see screenshot below). This will post the labor forecast cost to the "labor" financial item, summarized at the Assignment Node Level. (Note: the ResourceFirst system does not natively offer posting labor actuals at this time, though this feature IS available on the Portfolio Desktop tool, and can be automated in ResouceFirst via a stored procedure upon request). 

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The way the labor cost is calculated is as follows:

If you have a monthly rate, let’s say $10,000/month: The calculation simply takes the monthly rate and multiplies by the monthly FTE demand.  So if you were forecasted .75/month on a project, the labor cost would calculate to $7,500 per month or $90,000/year.

For more on posting labor costs, see  Project Financials.

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