Labor Allocation Rules

Manage Labor Allocation Rules

Labor planning supports a rules model with which you can define conditional criteria to charge labor expenses to specific general ledger accounts.

1. Enable labor planning features (see Edit the Company Profile).
2. In the left navigation menu, select Configuration > Labor Allocation Rules.
3. Select Export > Export All on the top-right area of the page.
4. Open the downloaded .csv file and update the data values as required:
   • Account - The general ledger account code to charge for this rule. Options available are provided by the Accounts reference data (see Manage Financial Dimensions reference data).
   • Output Value Type - A rule based on one of the following options:
     • Percent of Base Rate - Enter a percentage value.
     • Flat Value - The annual fixed amount.
   • Currency - The common currency for the labor allocation. Required when support for multiple currencies is enabled (see Support for multiple currencies). The department's common currency value should be the three-letter ISO code for the currency. If no currency code is entered, the default common currency is used.
   • Value - Percentage to allocate to the account.
   • Labor Amortization Method - Choose one of the following options:
     • Straight Line Even Period -Select this option to amortize evenly across each months.
     • Straight Line Using Calendar Days - Select this option to amortize according to the number of days in a given month.
     • Straight Line Using Working Days - Select this option to amortize by calculating a weighted average of actual work days per month. See the examples in the following section.
   • Exclude from Labor Calculation –
     • • By default, rules are included from the Labor FY Total calculation. To exclude a rule, check the corresponding checkbox.
       • When a rule is marked for exclusion, it will not impact the FY Total displayed in the Labor tab but will continue to generate a financial line item on the Summary tab.
       • When importing or exporting Labor Allocation Rules data using a .csv file, set "Exclude from Labor Calculation" to FALSE to include the rule in the fully burdened labor calculation, or TRUE to exclude the rule.
5. Optionally, click in the Advanced Rules cell to add advanced logic to your rule. Add additional clauses you want to subsequent rows in the Advanced Rules table, then click Done. This data table includes the following:
   • Employee Type - Determines whether this rule applies to internal or external (such as vendors or contractors) labor resources. • Role - Available options for this dimension are provided by Roles reference data.
   • Location - Available options for this dimension are provided by Location reference data.
   • Vendor - Available options for this dimension are provided by Vendor reference data.
   • Currency Code - The common currency for labor allocation. Required when support for multiple currencies is enabled. The department's common currency value should be the three-letter ISO code for the currency. If no currency code is entered, the default common currency is used.
   • Value - The default annual labor compensation adjustment to apply. If the Rate Type value of the rule is Percentage, you must enter a percentage value here. If the value is Fixed, you must enter a specific amount here.
   • Click Publish to make the labor allocation rules available in planning and spend management.
6. Now, Configuration > Labor Allocation Rules, and then import the updated .csv file.

Labor Allocation Rules and Advanced Rules examples

A basic rule sets the default general ledger charge, and an advanced rule, when its criteria are met by a specific labor resource, supersedes the basic rule's general ledger charge. Accounts with advanced rules appear with number in the Advanced Rules column.

The following are basic rule examples:

• Charge 10% of an employee’s annual base compensation amount to a Payroll Tax Charge general ledger code.
• Charge a fixed $250 per year per employee to a Training and Development general ledger code.

You can define advanced rules. These rules apply labor dimension conditions to determine how costs get charged to specific general ledger accounts. For example, charge a fixed $250 per year per employee to a Training and Development general ledger code. Then, add two clauses to make it an advanced rule:

• If the labor resource's Location is Seattle, increase the Training and Development amount to $300.
• If the labor resource's Location is Boston, increase the Training and Development amount to $400.

The previous examples describe rules as they apply to a single labor resource (or a full-time equivalent), but they also apply in the cases of fractional (part-time) or multiple (fungible) labor resource. For example, charge a fixed $250 per year per employee to a Training and Development general ledger code. Then, add a clause to make it an advanced rule.

For example:

• When the rule is run against a labor resource who works half-time, the resulting charge will be $250 x 0.5, or $125.
• When the rule is run against a labor resource that represents a team of 3 FTE members, the resulting charge will be $250 x 3, or $750.

The Apptio planning application calculates the general ledger charges per month. The sum of the monthly values produces the cost value of the annual labor resource. Although you work with the cost amounts per year of labor resources when managing rules and viewing current and planned labor resources, the general ledger charges are calculated per month.

Labor Amortization Method example

The following example assumes a 365 day calendar year:

The following example assumes a custom work day calendar was used to calculate the amortized expense. January and July have three pay periods while the remaining months have two: