# Presentation: 113853

## WEEKLY COST REPORTING

- Tim Young
- General Accounting
- August 18, 2005

**Notes:**
I was on the implementation team for weekly cost reporting at Livermore 7 years ago. Weekly closings were successful there, and the RA’s found the weekly cost information helpful, especially in the last quarter. It was really a big help to them in meeting DOE’s accelerated closing deadlines at FYE.

## Weekly Cost Reporting

- Agenda
- Definition of Weekly Cost Reporting
- Benefits of Weekly Cost Reporting
- Objectives of the Project
- Guiding Principles
- Implementation Plan
- Implications of Weekly Cost Reporting

## Weekly Cost Reporting

- Definition of Weekly Cost Reporting:
- Performing a soft-close every week (where week = Sunday through Saturday)
- Feeders included = Labor Distribution, Accounts Payable, Travel, P-Cards, Liens (98% of total costs)
- Updated cost information in BLIS every Tuesday morning
- No reporting to DOE or sponsors on a weekly basis
- Monthly Closing:
- Accounting month will end on the last Saturday of the month
- Includes all feeders
- Basis for reporting to DOE and sponsors

**Notes:**
You can think of weekly closing as like doing a soft-close every week – where the week runs from Sunday to Saturday.
The information in the weekly close will be:
Labor for the latest week
Accounts Payable for the last week
Travel for the last week
Liens for the last week

All the information will be in BLIS by Tuesday morning 
No reporting of weekly information to DOE or sponsors

Then after the last Saturday of the month we’d do the monthly closing with all of the feeders, and report to DOE and sponsors as usual.

## Weekly Cost Reporting

- Benefits:
- Fewer effort resource adjustments because time is reported weekly
- Improved funds management by anticipating/preventing project overruns through more frequent cost reporting
- Indirect rate management is improved

**Notes:**
Three major benefits of weekly reporting:

First - Provides more accurate and timely information that will reduce time consuming resource adjustments. We noticed a drastic reduction in corrected timecards at Livermore when weekly time reporting and costing was introduced because people remembered what they worked on during the week, whereas they had trouble remembering what they worked on the whole month.

Second – Because there is more frequent reporting – overruns can be anticipated and prevented. With weekly cost information and the AFP, you can figure out where you are. 
Overruns can be spotted sooner, and fixed while there is sufficient time to do it correctly.

At this point in time, this is probably the biggest benefit of weekly cost reporting. This is because of the new contract, and the performance measures it has. And if we don’t meet our performance measures, the contract will go out to bid again.

Third -. indirect management is improved, especially in the fourth quarter. Get weekly updates of costs and collections every week, so disruptive rate changes at FYE can be avoided.

## Weekly Cost Reporting

- Objectives
- Accounting weeks run from Sunday to Saturday
- Accounting months end the last Saturday of the month
- Weekly information will contain 98% of total costs
- Use “standardized” labor rates for all employees
- Weekly time reporting and approving for monthly employees
- Employees causing drops are responsible for fixing them via LETS

**Notes:**
We are proposing a modified version of the 4/4/5 schedule. We’d do the weekly closes based on a Sunday to Saturday schedule – time would be due to PR by noon every Monday – GA would process the feeders on Monday and do all the allocations – the data would be there on Tuesday mornings for the RA’s – for month-end – we would close as of the last Saturday of the month –
The weekly ledger would contain approximately 98% of total costs – Labor Distribution – Accounts Payable – Travel –
In terms of programmatic costs it would have about 92% - would not include the recharges – due to monthly invoices, immaterial amounts.

“Standard” Labor Rates – by this I mean –basically use the employee’s compensation rate with a small factor to cover the difference between a 2080 hours year (which the Comp rate is based on) and what the hours for that year will actually be. We want to minimize the variance between standard and actual.

Another objective is have monthly paid employees enter their time weekly, and supervisors approve time weekly.

## Weekly Cost Reporting

- Guiding Principles Used
- Consistency and predictability of costs
- Employ sound internal controls in new processes
- Especially in input data (e.g. time collection)
- Easily understood information
- Charge the specific projects that use overtime, dual rates, etc.
- Reduce the resource analyst re-work related to effort dropouts by involving employees in the correction process

**Notes:**
Want the costs to be consistent and predictable. Currently we don’t have that. Labor rates fluctuate from month to month –– overtime is spread out over all projects an employee work on as opposed to the project that generated to OT, and on and on. 

Want to improve  internal controls over data coming into the ledger. This is especially true in the area of time reporting.

Want the information to be easily understood – (i.e. not fill project cost records with accruals and reversals, not having them have to remember rules for interpreting the data, etc.)

Charge the projects that cause the OT to be generated with the OT premium – same thing for dual rate pay, etc.

Reduce the amount of effort drops by making those who caused them responsible for fixing them. By making them do corrections in LETS and not using resource adjustments for this.

## Weekly Cost Reporting

- Implementation Plan/Milestones:
- Convert identified feeders to weekly
- Revise General Accounting Month-End Processes
- Begin the Modified 4/4/5 Schedule on 1/1/06 (without weekly Labor Distribution)
- Finish system changes for LETS and LDS
- Execute Policy Changes for Weekly Time
- Commence Weekly Time Reporting
- Develop the reporting capability
- Full Weekly Cost Reporting Implementation

**Notes:**
These are the milestones for the project.
First is to convert the identified feeders to weekly – with the exception of the LDS most of the feeders are ready now – few AP related feeders need conversion – developers said to give them one month notice.
Then the GA processes need to be looked at – especially for the month-end closes.
We are proposing to start the weekly ledger processing on Jan 1, 2006 – this would be all the identified feeders except the LDS.
Policy changes for weekly time will have to be finalized before we start doing it.
Before we start reporting weekly time we have to make and test all the system changes to LETS and LDRS. We don’t have the time line worked out yet for these changes. So we can only say that we are shooting for an GY06 implementation date at this time.
Develop the reporting infrastructure – BLIS – the subject of reporting is being looked at by another team that Chuck and Anne Moore are on.
After that’s done we will start reporting time weekly, and start doing complete weekly closes.

## Weekly Cost Reporting

- Implications of Weekly Cost Reporting
- Time reporting and approving issues must be resolved before weekly time begins
- Management buy-in is required to counter* *resistance from employees to enter/approve time weekly
- Anticipated Resource Needs:
- Developer Time –
- Functional User Time –
- Current time reporting issues
- Could spin-off new projects

**Notes:**
We anticipate some resistance to reporting time weekly – mostly from the scientists. Management at all levels has to be committed to weekly cost reporting for it to work effectively. At Livermore a scientist did detailed calculations of how much extra time it would take to enter time weekly, and then projected that out for a year to calculate the time per year and then multiplied that by the exempt population at the Lab, and then sent the data to the director in an e-mail. The Director replied to the e-mail and said Just Do It!
The project is going to require some resources – mostly internal to the CFO and IT – resources for reprogramming LETS and the LDS. As we’ve been working on this project we became aware of several possible new projects related to weekly cost reporting:
Start looking for a new LDS – longer-term project
True standard labor rate system (this has already been assigned – but pushed to the back burner due to other priorities)
Before we can start weekly time reporting, we have to fix all the problems and issues we have with monthly time reporting or they will quadruple. I know there is a group looking at approval issues, but that’s only part of the problem.
A separate facilities system to meet their unique needs
A reporting project (outside of BLIS)
Process improvements – to improve the accuracy and timeliness of feeders, etc.