Full Sail Partners Blog

The multi-company functionality in Deltek Vantagepoint serves as a tool for sharing and accounting for resources across the companies within an enterprise. Cross charge capabilities in Vantagepoint are based on similar theories as multi-company but are focused on the interaction within a company and its organizational breakdown structure (OBS). Before we dive deeper, here are some links to blogs about multi-company functionality and OBS in case you are unfamiliar with these topics.

High Level Insight into Cross Charge in Deltek Vantagepoint 

It is important to understand that cross charging is a financial tool and is based on the general ledger. It is not an attribute of project reporting since time charged to a project remains on the project for billing and reporting purposes. Cross charge is labor-focused and occurs after the timesheet is posted. 

By default, Vantagepoint is built to be project-centric, which simply means that the process of entering and posting timesheets determines where the labor charges are assigned. If the cross charge process is not configured or run, the cost will remain on the “books” of the organization where the project is assigned. 

Why Use Cross Charge? 

As financial and operational managers, we must always remember that revenue can only be earned once and a cost incurred once. For this reason, cross charge allows businesses to move revenue and cost from one “bucket” within their organization to another. When a combined income statement is run, all cross charge entries zero out and the original revenue and cost will remain. 

The cross charge process is used when firms loan and borrow labor at the lowest OBS level, which could be: 

• Office
• Department
• Discipline
• Market Sector 

A good example is a civil engineer where projects live in the various disciplines. The survey department would loan their staff to the engineering projects and cross charge would be the financial component to drive and manage the accounting for the labor. 

There are two internal pricing options to choose from when configuring cross charge: 

1. Project Centric – This is when labor remains on the books of the organization where the project resides. A multiplier is then used to account for some portion of operational/overhead (OH) costs. This factor could be limited to a fringe benefit rate, could represent a breakeven OH rate or even include some profit. The purpose is to ensure that the loaning organization has an incentive to keep their staff busy, but they also need to be careful so as not to overextend their resources. 
2. Employee Centric – This works by adjusting labor back to the employee’s organization. Using typical billing rates, although a multiplier can be used, the revenue is moved from the project’s organization to the employee’s organization. The purpose, again, is to ensure the loaning organization doesn’t lose the ability to show a profit by sharing their staff. 

Real-life Application of Cross Charge in Deltek Vantagepoint 

Here is a success story where the operational process and projects are built on the premise that fee and scope drives work breakdown structure (WBS) in a clients’ Deltek Vantagepoint database. Under this model, high accountability becomes the first option where phases and tasks within a project are assigned to different organizations based on the portion of the work. Employees then charge the phase/task that is assigned to the organization they “live” in. This results in more closely managed projects because the profit accountability is shifted back to the organization supplying the labor. This process eliminates the need for cross charge. 

But wait…realizing that to run successful projects, there is a necessity to anticipate unplanned needs. This means that the firm must have the ability to borrow an employee from another department for a short-term assignment or a last-minute need. For example, the base building studio decides it needs input from the interiors studio. In this scenario, the client falls back on the project centric method noted above as a mechanism to facilitate resource sharing and not impede project progress. Furthermore, this is a prime example of a need for cross charge. 

Gain Control of Resources with Cross Charge 

Whether your current OBS is solid or you are considering a change, cross charge can provide the functionality required to ensure an open and smooth process of resource sharing. With a thorough understanding and effective implementation, cross charge can provide another dimension in managing your business.

Interested in more information about using cross charge and how it can help unlock the full potential of Deltek Vantagepoint? Want to learn other ways of ensuring your project-based firm is running as efficiently as possible? If so, Full Sail Partners is happy to offer your firm a Navigational Analysis.