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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 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

You can define cost rates in the Rate Matrix, which can be found in Administration-->Rates.

Rates can be defined by Node, Skill, Financial Item, Cost Category, Country. You'll need to specify a time period by which the rate applies. For an indefinite period, used 12/31/9999 as the To date.

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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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Rate Hierarchy

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 Cost Category rates, as well as the Rate Matrix.
  • If no Resource, Matrix, or Cost Category Rates have been defined, then the Skill rate for the Assignment's skill will be used.
  • Skill rates are also used for Skill assignments in calculating labor cost of those assignments.

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 offer posting labor actuals at this time, though this feature IS available on the Portfolio Desktop tool, and can be automated 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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