Understanding Labor Rates

This article explains how labor rates and posting labor costs works in ResourceFirst.

Overview

Labor cost calculation is very simple once a rate has been determined. If you have a monthly rate, let’s say $10,000/month: The calculation simply takes the monthly rate and multiplies it by the monthly FTE demand.  If the forecast demand is .75 / month on a project, the labor cost would be $7,500 per month.

The order of operations for finding the rate to use in calculating labor cost is:

1. Use the cost rate field on the assignment, if none,
2. Use the resource or skill cost rate, if none,
3. Use the Cost Category rate on the assignment, if none,
4. Use the Cost Category rate on the resource, if none,
5. Use the variable rate table (see below).

Note that this applies to labor costs only. Non-Labor costs are entered directly on the Financial Assignments pages. See Financial Assignments for more.

IMPORTANT: For all rates entered in ResourceFirst, a zero dollar amount (“$0”) is considered a rate value. Be careful to leave the rate field NULL (blank) if you do not want a zero rate to override any other rates for the item.

Note that by default, rates are monthly rates. If hourly rates are desired, contact your PDWare administrator.

Variable Rate Table

The rate matrix has labor assignment attributes that define specific rates for specific time periods.

See the article Administering the Rate Table for how to create and edit rate table items.

When evaluating an assignment for a rate table value, the algorithm takes all relevant values from the assignment and does a best fit match on all relevant rate table rows. The best fit row provides the rate to be used in the appropriate time periods.

Note: In this example, rates are configured as hourly.

For example, if there are two assignments with

node = “Acme”, Country = “”, period date 5/2024

node = “Acme”, Country = “UK”, period date 5/2024

Given the following Rate Matrix rows:

The first assignment gets rate $150 from row 1 and the second gets $175 from row 2.

Defining Cost and Bill Rates by Cost Category

If you simply want to define cost and bill rates at the Cost Category level (e.g., Contractor, Employee), you would go to Administration->Lists->Cost Categories. Below is an example of cost categories and their associated cost and billing rates.

Order of Operation: How a Rate is Determined

Explicitly defined rates take precedence over the rate.

Rates can be defined for:

• Individual assignment records
• Individual resource records
• (Assignment) cost category
• (Resource) cost category
• Skills

The hierarchy of use is as follows if a value is present:

• Assignment rate
• Resource rate (for resource assignments)
• Skill rate (for skill assignments and for resource assignments if no previous value found)
• Cost Category rate
• Rate Matrix rate

Including Labor Cost Rows on the Financials Page

Labor costs can be posted automatically to the Financial Assignments or they can be posted manually for each project.

For instructions on including labor costs on financial pages, see Displaying Labor Cost on Financial Pages.