Cost Elements are used to categorize and define how labor and ODC costs are accumulated and appear in Project Accounting reports.
Your Cost Elements represent categories of labor and expense, broken out as necessary based upon your application of indirect cost rates and cost formulas. If, for example, you burden offsite labor differently from onsite labor, you will want separate Cost Elements for these entities. Alternately, if you apply your G&A rate to subcontractor labor on some contracts but not others, you will want to separate out the subcontractor labor (typically you will always separate subcontractor labor).
Labor Cost elements are usually set via People > List > List tab > Edit Pencil Icon > Rates > Edit Pencil Icon, but may be overridden at the Project Assignment level. Person Labor always follows either the Person Profile labor cost element or the Project Assignment Labor cost element - not the tab Cost Structure (Project > List > list > Edit Pencil Icon > Accounting).
Navigate to People > List > List tab > Edit Pencil Icon > Rate.
Navigate to Project > List > List tab > Edit Pencil Icon > People Assignments > List > +Assignment.
Expense Cost Elements always follow the Project Cost Structure set on the Project > List > List tab > Edit Pencil Icon > Profile > Accounting tab.
Cost Elements may be selected as an account source for an account category in the Posting Group Posting Defaults setup. If selected in the Posting Group setup, the Cost Elements themselves will then need to have account numbers set for posting purposes.
Navigate to Admin > Setup > Accounting > Cost Elements. Click the Add Accounts for <name of cost element> icon (below) to set up the account relationship for that Cost Element.
Note; It is recommended that descriptive word names be used when creating Cost Elements.
Do not use names such as C<number> or D<number> as this may result in a conflict between pre-defined system names and user-defined names, and can cause errors with formulas and duplication of calculations.
- Create a "dummy" Cost Element to use for expense types that won’t be used for billable projects, so that your left column on the ODC tab of the Cost Structure should always be empty (visual cue).
- Create an “Unallowable” Cost Element for those expenses that are unallowable on billable contracts.
- Create two Posting Groups: Indirect and Direct. However, the two utilize different places for the Labor COA. Many people make G&A and OH Cost Elements for use in Indirect project Assignments for ease of understanding even if they decide to still use the Project itself to route the COA.
Split Cost Elements (labor or expense) into very discrete entities, if the Cost Element is anticipated for future use. It is possible to combine Cost Elements in a cost report, but not to split them.
For example, you may want to split up your G&A Cost Element into G&A Labor and G&A Non-Labor. This would allow you to set up Fee Calculation Methods and Cost Reports using only burdened labor, while also giving you the ability to combine them on other Cost Reports and Customer Invoices as needed.