Set up overhead absorption

If you want to apply additional costs to your projects to account for your overheads or Uplift costs, you must choose to Record and track overhead absorption.

Use this if you want to be able to apply additional overhead costs to you projects when direct costs are entered and see these costs reflected in your profitability reports, affecting the Gross profit of your projects.

Note: You can choose whether to include the uplift costs or not when reporting profitability.

If you want to see overheads reported separately to the direct costs, and not to affect Gross Profit, then do not select Record and track overhead absorption. You can then create project items types that are designated as an Overhead Project Item type. This is set on the Default tab for each Project Item type (Utilities > System Setup > Project Structure Settings > ProjectItem Type). The costs posted to these items are reported separately in the profitability reports, affecting Net profit but not Gross profit.

Once you have chosen to use overhead absorption, you then choose how this is applied to each of your project item types. You set the default rules here. You can override these rules for individual project items as long as you choose the Set project specific overhead uplift rates option.

These options allow you to control how uplift costs are applied to your projects and whether these costs are posted to the nominal ledger.

To enter overhead absorption settings

Open: Project Accounting > Utilities > System Setup > Project Accounting Settings | Features.

Enter the following settings:

  1. Choose whether to add additional uplift costs to you projects.

    Record and track overhead absorption

    Select this if you want to add Uplift costs to you projects.

    To enter the type and amount of uplift costs, click Settings.

  2. Enter the Overhead uplift rates for each project item type:

    Modifier

    Select whether the cost will be modified by a Percentage or a specific Amount.

    If the project item type has no uplift rate, set this to Not applicable.

    Value Enter the uplift percentage or amount for the project item type.
    Post overhead absorption journals to the nominal ledger

    Select this if you want to create nominal ledger postings for overhead absorption.

    Once selected, enter the nominal account Code, CC and, or Dep ) for each project item type. The accounts that you select must be posting accounts.

    Set project specific overhead uplift rates Select this if you want to be able to override the defaults you have set here on individual project items.