What is ASJC (Adjust Salaried Job Costing) and why is it important?

(this article is pretty technical, but from an accounting point of view, not a programmer’s point of view)

NOTE: As of March 2015 I offer a custom written ASJC module you can implement which is better than the Vision standard ASJC process.  You can read about it here:
http://saundersconsultinggroup.com/2015/03/03/asjc-adjust-salaried-job-cost-a-re-write-for-deltek-vision/
and here:
http://saundersconsultinggroup.com/2015/04/16/custom-asjc-process-completed-link-to-how-to-documentation/

Deltek Vision really keeps 2 databases of your revenues and expenses (labor, direct, indirect, consultant etc) in your enterprise.

The first database:
The first one is in your General Ledger.  The data from here is accessed by running reports in the reporting/ General Ledger section of reports.  You can run income statements, account analysis, balance sheets etc.  The general ledger is the part of Vision that most accountants will feel comfortable with.  The general ledger is also often a reflection of the real cash flowing in and out of your company (in most cases) and show you the real bottom line.

The second database:
This is the projects database.  The projects database is an accounting of all of the projects your company is undertaking… whether they are regular, overhead or promotional.  The great thing about Deltek Vision is how it can connect these two databases together and come up with a “project based accounting” solution.  To access these project-based reports, you go to Reporting/Projects…

Through the connection between these two databases Vision assigns revenues and expenses to the actual projects, which gives you great visibility into whether the projects you are undertaking are actually profitable, worth-while etc.  You can run profitability and utilization reports on individual projects, entire offices, departments or lines of practice (or companies in a multi-company environment).  However, there are a few necessary things you need to do in order to make sure that your project data (and reports that depend on it) is actually correct.


One of those processes is called Adjust Salaried Job Costing.

The purpose of ASJC is to assign the correct cost to each hour of work that employees bill to projects. The reason you need to run this process, is because if you don’t then your labor costs for projects will be incorrect, most of the time over-stated.

Let’s examine a simple example:

Let’s say you have a salaried employee Bob Smith.  Bob Smith is a mechanical engineer, is billed out at $175/hour and is paid a salary of $120K per year.

Let’s say you have project 2011-ENG-ABC.00 and Bob is working on that project.  How do we assign a cost amount to each hour he works on that project? (for this example we’ll use an unburdened rate, meaning without taking into account his over-head like insurance, office space etc.)

Let’s do a little math.  Bob’s salary is 120K per year, which works out to about $60/hour if he works the normal 2,000 hours in a calendar year.

So if Bob works for 40 hours on this project  2011-ENG-ABC.00 then the cost for that time is $2,400.  Easy right?

What if he works 60 hours on that project in one week?… is the cost $3,600?  No, it’s not.  It’s not because he’s salaried, so your firm pays him the same amount for that week as any other week, whether he works 20 hours, or 60 hours.

But Vision will assign the project $3,600 in cost at first, because Vision first establishes an hourly cost rate for his labor to make things simple.  This is because Vision can only know how many hours an employee worked on a particular project and for a particular week historically.  Vision is not able to look into the future to calculate how much an hour of labor will cost, only look back and figure out how much past hours have cost.

So what your accounting department needs to do every period is run ASJC to correct the cost amount for labor assigned to projects for all employees.  What basically does is this:


1. Figure out how much an hour of labor costs in one pay period by dividing the amount of hours by the real cost of that labor.  (The real cost of that labor is how much the employee was actually paid during that period).


2. Spreads that cost out over all the hours for that employee for that pay period.

So an hour for Bob Smith where he works 60 hours a week will cost $40/ an hour… but if he works 40 hours that week, it’s $60 an hour.. .and if he works only 20 hours that week, then it’s $120/hour… because you still pay him the same amount each week.

So that’s what ASJC does… it assigns a more accurate amount to the hourly cost for employees for each labor hour on projects.

Couple thoughts to end with:

1. the difference in cost between what is distributed to projects and what is actually paid to employees is stored in your Job Cost Variance account.  After you run your ASJC process, this account should be 0 or close to 0.

2. all of the reports under the Reporting/projects section in Deltek Vision run off this data, so it’s very important to have this data correct.

NOTE: As of March 2015 I offer a custom written ASJC module you can implement which is better than the Vision standard ASJC process.  You can read about it here:
http://saundersconsultinggroup.com/2015/03/03/asjc-adjust-salaried-job-cost-a-re-write-for-deltek-vision/
and here:
http://saundersconsultinggroup.com/2015/04/16/custom-asjc-process-completed-link-to-how-to-documentation/

If you want to know more about my work or get my attention on a project you have, you can look me up here:
www.saundersconsultinggroup.com