New Labor Cost Features in Oracle R12.2

After years of complex custom forms, custom tables and very intricate extensions, Oracle R12.2 Projects can now provide functionality to support the Federal Davis-Bacon Act Requirements.

A ‘Prevailing Wage’ rate can sometimes be very difficult to determine. These ‘Prevailing Wages’ are Government mandated rates that cover a broad range of skills and competencies. Engineering and Construction is a particular vertical area that is impacted by the law. The following table below is an example of how complicated it might be to provide multiple ‘Prevailing Wage’ calculations for one person:

Now comes the more difficult part; in order to determine the ‘Prevailing Wage’, a comparison must be made between the employee’s cost rate in Oracle (for example $24 per hour) and the applicable ‘Prevailing Wage’ rates determined by the Davis-Bacon Act Labor Wage Documents (which are generally published twice a year). The rate the employee is going to get paid will be the higher of the two rates being compared (the employee’s rate in Oracle, or the specific ‘Prevailing Wage’ rate provided within the Davis-Bacon Act Labor Wage Documents). In this particular example, the employee’s work as a Welder (if using the 3rd Criteria of Grade) would pay him $25 per hour, since his Oracle rate is lower at $24 per hour. The same comparison of rates will happen for the other jobs the employee worked (such as Equipment Operator).

So, from the example above, it’s quite obvious that labor costing in Oracle Projects for Prevailing Wages has been a real challenge. In order to accomplish this type of costing in earlier releases, very detailed Labor Cost Extensions, Custom Forms and even custom tables were needed. Now, inrelease R12.2, the functionality is handled in a more standard way. A new rate source option of ‘HR’ has been added to Labor Costing Rules within Projects:

When this option is selected, the labor rates will be derived from HR Rate by Criteria matrices. Rate by Criteria is a new feature within Oracle HR that allows multiple rates to be defined for an employee based on criteria such as the assigned project or type of work (i.e. the Welder) or the location where the work occurred (Location can be used as one of the criteria.)

It’s important to note that ‘Prevailing Wages’ are not just associated with Federal Contracts. ‘Prevailing Wages’ can also apply to State, County and Municipal contracts as well. In short, this type of labor costing, where an employee can have multiple cost rates on the same day is very prevalent. Thankfully, in Oracle Projects Release R12.2, the process and functionality have made this challenging issue much easier to deal with. The added functionality of using HR as the Labor Costing Rule and associating additional rate criteria, ‘Prevailing Wage’ costing will now be a much easier process.