Activities

Once approved, you can activate the indirect cost plan. This will make it ready for use.

Set up ceiling rates and limits for the indirect cost plan of the project contract. These ceiling rates and limits serve as default for manually created projects. The rates are calculated in this sequence: ceiling rate, provisional rate, target rate. If no ceiling rate is defined, the provisional rate is calculated. If no ceiling rate or provisional rate is defined, the target rate is calculated.

Add provisional rates to the indirect cost plan of the project contract. These provisional rates serve as default for manually created projects and project quotations. For more information on provisional rates, please refer to the Information for Contractors Manual published by the DCAA. 

Set up the budgets for ledger accounts and financial dimensions. The indirect costs are unique for the Government contracting solution.

A cost or expense that is not directly traceable to, for example, a department, product, activity, or customer, is considered an indirect cost. Therefore, indirect costs and expenses are allocated to, for example, the department or product. Example: a manufacturing department that molds plastic has some costs that are directly traceable to it.

Direct costs can be the wages and fringe benefits of direct labor working exclusively in that department. However, the heat for the entire building appears only on one utility bill. The heating bill is an indirect cost to the molding department. Generally, the heating bill will be allocated to all departments based on the number of square feet each department occupies.

Cost principles include regulations that require institutions to disclose what costs are charged to sponsored projects and if these are direct or indirect costs. One of the determining factors for a cost to be considered as direct or indirect depends on if the costs are explicitly budgeted and justified in the proposal. Also, that the sponsor accepts the proposed cost as part of the project direct costs. Therefore, it is imperative that the contractor pre-determines the type of cost as allowable and that it can be claimed directly and includes the cost in the budget proposal.

You can create a project quotation with a work breakdown structure. You can add an indirect cost plan to a project quotation and generate the indirect costs for it. This structure contains tasks and estimations, which can be turned into quotation lines. It is important to remember to populate the required financial dimensions so that Government contracting solution calculates the indirect cost allocation correctly. For more information, refer to Work breakdown structures.

You can calculate actual rates based on real system data and indirect cost plan formulas. These actual rates give an updated view of projects in terms of all types of costs. You can calculate one indirect cost plan at a time.

If you lose a project quotation, you can mark it as lost with a reason why it was lost. For more information, refer to Update a quotation. 

To make sure, the indirect cost allocations are correct and up-to-date, you can create an indirect cost allocation adjustment in batch. This can be a debit or a credit adjustment, depending on if you over-invoiced or under-invoiced your customer. The indirect costs that are allocated but not invoiced are also calculated. Prerequisite: Actual rate calculation.

To make sure, the indirect cost allocations are correct and up-to-date, you can create an indirect cost allocation adjustment. This can be a debit or a credit adjustment, depending on if you over-invoiced or under-invoiced your customer. The indirect costs that are allocated but not invoiced are also calculated. Prerequisite: Actual rate calculation.

In D365 FO, a project contract is required for the project. It defines the rules for funding and billing as well. You can add an indirect cost plan to a project contract. The indirect cost plan serves as default to any project that you create manually from a project contract.

Before you create a customer invoice for a project, you can create a preliminary invoice or invoice proposal. In an invoice proposal, you can select project transactions to include in a project invoice. You can choose to not select all lines or make other choices if you need to include records from sales orders. Note that any unallowable indirect cost allocations do not appear in the list of transactions to be invoiced.

The annual budget is often decided upon in a discussion among management team members. Once defined, you can enter the budget in the Budgeting module. If budget controls are used, make sure to include your indirect costs to avoid any budget warnings or stops.

Define which general ledger accounts are unallowable for project contracts and projects. Link these accounts to project categories and set these accounts to be non-billable for project transactions. Unallowable costs are shown on the project indirect cost statement if charged to the project.

You can edit project forecasts and then generate indirect costs. As an example, in this topic, the hours forecast is edited.

Define any changes needed to the current transactions before you continue with your invoice process.

When created, you can post indirect cost journals. If on the Project management and accounting parameters, on the Government contracting tab, the Post indirect cost expense journal field is set to Yes, indirect cost expense journals are posted automatically after creation.

Once the project invoice is considered correct, it is time to post it.

When the actual rates have been calculated, you can review these values. You can view:

• The values currently in the general ledger
• The formulas from the indirect cost plan
• Results of the calculations.

You can use a workflow to approve budgets.

Review the indirect cost allocation adjustment and post to the daily journal as set up in the Project management and accounting parameters on the Government contracting tab.

Before you change the project status to 'In-process', review this project information:

• Work breakdown structure
• Indirect cost allocation
• Budget

Send the project invoice to the customer.

Set up the cost pools that are used in the indirect cost plans.

Note: Direct cost pools do not require a general ledger account for use in the Create cost adjustment process. Therefore, the Offset account for indirect cost adjustment field is not editable.

Before you can use Government contracting, set the default journals and other controls for Government contracting.

Set up the cost pools that are used in the indirect cost plans.

If an indirect cost plan is properly set up, submit the indirect cost plan for approval.

You can use an approval workflow for project quotations. If you do so, submit the project quotation for approval when it is ready.