9.2 Labour Order Creation (09030m)

This selection allows you to create Labour Orders allowing the processing of payroll costs to a particular job and cost allocation. It is in effect a job costing system for labour.  All employees being paid through the payroll system must be charged to one or more project Labour Orders.

The concept of the Labour Order (Order with a prefix "L") is no different to any other order raised on an external Organisation, except it is raised on the internal payroll organisation. If no order has been raised then the system is not able to process a project timesheet against the relevant cost allocation, and therefore the employee cannot be paid!

Types of Labour Orders - Effectively a labour order is one of three types.

1. NORMAL Labour Order - where the real journal value allocated from payroll is applied as a cost. (As used with Lump Sum Contracts)

2. A RECHARGE Labour Order - which collects the cost difference between the real labour cost and the chargeout cost (calculated as hours x charg-out rate - see [9.10.1].  This facility may be utilised to obfuscate cost differences between different employees and/or charged costs on a management project.  This order is never the direct timesheet pay item. (As used with Management Projects for Construction Management Contracts)

C. A Labour Order LINKED to a Recharge Order - where the labour will be charged the hours x applicable recharge rate with the difference being posted to the recharge order. (As used with Client Projects for Construction Management Contracts).

NOTE: Unlike external orders, such as Purchase Orders, there is no control to ensure the approved value does not exceed the committed value  - so a one dollar order could have a million dollars processed against it.

While the standard information such as budget, committed, and short descriptions are required, so are committed hours so you have a basis for ongoing labour cost reporting.

1. Payroll Company

   There may be more than one company providing employee services to another group company.  Be aware if personnel are provided by different companies (legal entities in Group Database) then separate Labour Orders are required.  If there is only one company, the Organisation Code is defaulted in and cannot be changed.

   $PAYX where 'X' is equal to the payroll providing company Code. This is not changeable. All labour orders raised are for the purposes of the payroll only and therefore will all appear as $PAYX. This organisation code is set up automatically in background. As a company could be utilising the services of a number of payroll companies in the group, you may have to select from available payroll providers, requiring the setup of two or more labour orders.

2. Project #

   The project for which the employee services are required.

3. Allocation #

   Enter the allocation code you wish to charge the payroll costs to. (A different labour order must be raised for each allocation on a project.) eg. 1210, 5500.

   The 'Allocation Review' button will display the budget details in a similar format to the Project review.

4. Stage

5. Order Package

6. Allocated Budget

7. Committed Value

   The amount of money the project manager believes he will need to complete the contract scope allowed in the budget.

   Muli believes that the project manager needs to have completed the overall target schedule and from this assess a realistic “team by duration” estimate of the cost to cover the scope of work for employee services provided.(This is a burdened rate)

   By entering the committed value and hours, the project manager is telling senior management that there is a realistic belief of the cost and can no longer blame the estimator!

8. Committed Hours

   Because this is a labour order you are required to also provide a quantification of hours worked to complete the scope of work covered by the labour order. This can be calculated as:

   Number of people x Hours worked per week x Number of weeks duration.

   This then displays an implied rate per hour allowed.(This is a fully burdened standard rate not the base pay rate)

9. Order date

   Order date is defaulted

10. Note Order 210

    Ensure the Scope is well defined as this becomes the default on payroll entry.

11. Is this a Recharge Order? - Yes/No    If 'Yes' selected, cursor goes to Item 14.  A recharge order is a recipient of the financial difference between cost and value changed to the project.  These are normally only raised by the Pay Controller. 

12. Link to Recharge Order - Yes/No    The recharge order that may be entered at this field is displayed with the [F3] button and is only available to an already raised Labour Order that has been flagged in Question 11 as a recharge order for the applicable company.

    Sometimes you will agree to charge your staff to the projects at agreed rates that include an administration and profit component (See [9.10.10] for rates).

    Note: The principle between earlier version of Muli and Muli version "N" has changed. So as a payroll timesheet is processed, it is directed to the ultimate destination Labour Order where cost is to be incurred. If modified cost is to be incurred between real payroll cost and project charged cost, this will be achieved by linking a recharge labour order. The on-costing difference will be the result of the recharge order

    This may be used to obfuscate the employees actual costs being shown on a project (thus enabling a person to work out relative salaries). Management may group employees into employment groups and charge a common rate per group to projects with differences collected in a Recharge Labour Order in the General Ledger/Repository averaging account for the profit centre or company. (Normally Allocation 0085)

    Also, in construction management you may have agreed with the client that supplied labour will be charged at labour payment schedule 'W' See [9.10.11] (you even provided an extract report noting the current rates and which are subject to change)

13. Recharge Order

    This can only be a previously raised Recharge Order in this Company as authorised in Item 11.

14. Chargeout 531
    

    For a detailed discussion of Rates, see [9.10.10] Charge-out Rate Maintenance.

    The appropriate code is selected from your master Oncost Chargeout Code Report [9.10.11] that you set up earlier.

    F3 Enquire gives you summary selection criteria.

    The system will allow you to change the information you have entered so far. If a change is required, select the relevant field number, type in the new information and press return.

    At the conclusion you may print a Short Report showing the details of the Labour Order just created.