Allocation of labor cost means distributing an employee’s salary (or total payroll cost) across different projects and departments.

How to create

To access Project Costs Allocation, go to Project costing → Project Costing documents → Project costs Allocations

Main tab

This tab is used to enter the key details for labor cost allocation, including the date, document number, entity, and the payroll document that will act as the basis.

• Transaction Type - Select the relevant type, such as Labor Cost Allocation.
• Entity - Choose the entity responsible for the costs.
• Basis - Choose the Payroll Calculation document. This is a required field because it provides the actual labor costs. The system uses this payroll data to retrieve employee salary amounts for allocation.

After the basis is selected, the system examines employee timecards for the corresponding period to determine how time was allocated across projects and then distributes the salary costs accordingly.

Allocation of Labor Cost

This tab is available for documents with the Labor Cost Allocation transaction type. The tab contains two tables: Labor Costs and Allocation Results.

The Labor Costs table is automatically filled based on the payroll calculation document chosen on the Main tab. Each employee may appear in one or more rows, depending on the number of accrual types included in the payroll document. Users can remove unnecessary rows and adjust the amounts to be allocated in the upper table.

• Cost Item - The cost category being allocated.
• Employee - The name of the employee whose labor costs are being allocated.
• Accrual Type - Type of accrual per row.
• Expense Item - The GL expense type to which this cost belongs.
• Business Activity - The type of business activity linked to the cost. 
• Department - Shows the department associated with the employee or cost.
• Amount - Total cost for this employee/accrual type that will be allocated to projects or non-project work.
• Amount (National Currency) - The value of this cost in the company’s base currency.

The Allocation Results table shows how labor costs are assigned to projects or tasks. It calculates how much of an employee’s labor cost goes to each project based on allocation factors. If an employee isn’t part of any project team, their cost is shown as <Not related to projects>.

• Project / Project Task - Indicates where labor costs are allocated; costs can be split across projects or specific tasks.
• Project WBS - A hierarchical code used to identify the exact level within the project structure.
• Factor - The proportion of the total labor cost assigned to each project or task.
• Amount - The calculated cost allocated to the project/task based on the factor.
• Amount (National Currency) - The amount value shown in the company’s base currency.
• Remaining Budget Amount - Displays the available budget after allocation
  1. Project - Remaining budget for the entire project
  2. Project Task - Remaining budget for the specific task
  3. Project WBS - Remaining budget for the specific WBS level

If the Show Allocation Results only for the Selected row checkbox is unchecked, the lower table displays all labor cost allocations (for all employees). If the checkbox is checked, the lower table shows allocation results only for the selected employee cost from the upper table.

Allocate by Time card

To distribute costs automatically based on employees’ time cards, click Allocate by Time Card. Labor costs for employees on projects with Active or Proposed status are allocated proportionally to the hours recorded in their time cards, as shown in the Allocation Results table. Employees not assigned to any project appear as <Not related to projects> in the Project column, and their costs are not allocated. Hours not linked to a project remain unassigned, with the corresponding portion of the salary excluded from project allocations

Project costs are allocated based on the time card date. The document date must match the time card date, and only hours within the project’s proposed period are applied. If the dates don’t align, no allocation occurs.

Recognized by Time Cards

The Recognized by Time Cards table reverses entries in the Income and Expense by Projects register that were created by timecards. This tab manages project cost allocation using employee timecards, allowing the system to reverse previous cost assignments with negative amounts and reallocate payroll costs based on actual hours worked. Only timecards from the same accounting period are considered, so costs are applied in the correct period, while any unassigned hours remain as non-project costs.

Additional information tab

On this tab, users can enter optional details for the document, such as the department and the person responsible for the allocation. No fields are mandatory.