Edit

Share via

Set up labor cost rates

  • Article

Applies To: Project Operations for resource/non-stocked based scenarios

Each price list has a set of labor rates (role prices) that align with the content and date effectivity of the price list.

  1. Create a price list and on the Role Price tab, in the subgrid, select New Role.
  2. On the Quick Create page, select the role and organization unit.
  3. Enter any other required field information.

The following table includes some of the fields that are important when creating labor rates on a cost price list.

Field Location Description Downstream impact
Role General tab and Quick Create pages Select the role that the cost rate applies to. The role on the incoming estimate or actual is matched against this line to default the cost of the role.
Resourcing Company General tab and Quick Create pages Select the legal entity that the role is assigned to. For example, a developer from Fabrikam India or a developer from Fabrikam USA. The resourcing company on the incoming estimate or actual is matched against this line to default the cost rate of the role.
Resourcing Unit General tab and Quick Create pages Select the organizational unit or division of the company from where this role is used. For example, a developer from the Robotics division of Fabrikam India or a developer from the Software division of Fabrikam USA. The resourcing unit on the incoming estimate or actual is matched against this line to default the cost of the role.
Price General tab and Quick Create pages Set up the cost rate for the role, resourcing company, and resourcing unit combination. For example, a developer from Fabrikam India costs 1,000 INR or a developer from Fabrikam USA costs 150 USD. The price is the cost rate that defaults on the per unit cost of the incoming estimate or actual line for the Time transaction class.
Currency General tab and Quick Create pages By default, the currency value comes from the currency on the header of the cost price list but can be overridden. For example, a developer from Fabrikam India costs 1,000 INR. A developer from Fabrikam USA costs 150 USD. This currency defaults on the per unit cost of the incoming actual cost line for the Time transaction class. On a project estimate, the currency value is converted to the project currency and shown on the Time-phased view of the estimate.
Unit Schedule General tab and Quick Create pages The unit schedule defaults to Time and can't be changed on the Role price entity because it's used express rates by units of time. There isn't any downstream impact.
Unit General tab and Quick Create pages By default, the value comes from the Time Unit field on the header of the cost price list. The value can be overridden. For example, a developer from Fabrikam India costs 1,000 INR per India Day. A developer from Fabrikam USA costs 150 USD per US Day. The system uses the system of units and conversion in base units to compute a per unit cost to calculate the default price per unit on an incoming estimate or actual line. For example, an estimate is for 10 India Days worth of work for a developer from India, and the unit, India Day is defined as 10 hours. When costing that estimate line, the application calculates the unit cost on the estimate as: 1,000 INR/ 10 hours = 100 INR per hour which is converted into USD and shown as the unit cost on the Project Estimates page.

In project-based companies, it's common to use employees from different legal entities or divisions on projects. A project can be executed by one legal entity, but the employees or consultants that work on the project could come from the same legal entity or from a different one, or there may be a combination of both. In Dynamics 365 Project Operations, the legal entity that owns the delivery of the project is the Owning Company and the division that owns the delivery is the Contracting Unit. Other legal entities that provide resources are the Resourcing companies and divisions that provide resources are the Resourcing Units. In most countries/regions, companies are required to ensure that the resourcing legal entity or division, charge the owning company and the contracting unit for the use of resources.

For example, the Fabrikam corporation must ensure that Fabrikam India-Robotics has a negotiated a cost rate card with Fabrikam US-Robotics or Fabrikam UK-Robotics.

A developer from Fabrikam India-Robotic charges $100 when lent to Fabrikam US-Robotics and $150 when lent to Fabrikam U-Robotics.

Set up costs for outside resources

  1. Create a cost price list called, Fabrikam US-Robotics cost rates and set a date effective range.
  2. In the cost price list, set up rates using information from the following table.
Role Resourcing Company Resourcing Unit Cost rate
Developer Fabrikam India Fabrikam India-Robotics $100
Developer Fabrikam Philippines Fabrikam Philippines-Robotics $90
Developer Fabrikam US Fabrikam US-Robotics $150
  1. Attach this cost price list to the Fabrikam US-Robotics organization unit.

Set up transfer pricing for a resource in the appropriate currency

In Project Operations, resource pricing can be set up in any currency. The currency defaults to what is on the price list header, but can be changed.

Using the example for transfer price setup, the information could be changed to:

Fabrikam corporation must ensure that Fabrikam India-Robotics has a negotiated a cost rate with Fabrikam US-Robotics or Fabrikam UK-Robotics.

A developer from Fabrikam India-Robotics costs 5,000 INR when lent to Fabrikam US-Robotics and 5500 INR when lent to Fabrikam UK-Robotics.

In the cost price list for Fabrikam US-Robotics, cost rates can be expressed as:

Role Resourcing Company Cost
Developer Fabrikam India 5,000 INR
Developer Fabrikam US 115 USD

In the cost price list for Fabrikam UK-Robotics, cost rates can be expressed below:

Role Resourcing company Cost
Developer Fabrikam India 5,500 INR
Developer Fabrikam UK 115 GBP

The cost price list can provide labor rates in multiple currencies. When you generate a cost estimate on the project, Project Operations converts these cost rates into the project currency and display it to the user. When a time entry is approved and a cost actual is created, the cost actual is priced in the currency of that matching role price line on the cost price list. Cost actuals for time on a single project can be recorded in multiple currencies. However, when rolling up or summarizing the actual labor costs at the project level, Project Operations converts all labor cost amounts into the project currency, which the user can view.