Blended Overtime

There are situations where employees are assigned to multiple work assignments where different payment rates are applied based on the assignment. In such situation, if an employee works more than the scheduled hours then that overtime could be rated using an average rate. This allows a common overtime rate calculation that accounts for which kind of work was performed during the overtime period.

Example:
An employee is working as an electrician and as a painter. During a week the employee is supposed to work 40 hours (8 hours x 5 days), but sometimes overtime is needed. The painter is paid $10 per hour while electrician is paid $12 per hour.
At the end of the week, this employee has reported the job hours as follows. All reported time needs to be reported on correct assignment, and the overtime needs to be added as a separate transaction. The blended overtime rate is calculated as an average of the hourly rate of all reported hours during the period” .

	Resource	Monday	Tuesday	Wednesday	Thursday	Friday
Job hours	Painter			8	8	8
	Electrician	8	8	4

When overtime is paid, it is required to pay an average rate for extra 4 hours worked on Wednesday.

Procedure:

Below are the steps to follow to calculate Job Cost Details with blended overtime rates.

• Define Job Cost Time Types that is to be used for blended overtime calculation. Set the Time Type Basis (the basic Job Cost Time Type) for the Job Cost Time Type with category overtime, in order to identify the correct line for the basic rate in the Rate Agreement. The mapping is usually done with both Report Codes and Time Types, but to keep this example as simple as possible only Report Code is considered.
  

  Job Cost Time Type ID	OT
  Category	Overtime
  Blended OT	YES
  Time Type Basis	BASIC
  Source Value Mapping
  Report Code	OT

  Job Cost Time Type ID	BASIC
  Category	Basic
  Blended OT	NO
  Source Value Mapping
  Report Code	T1

• Mark the Job Cost Type that should be considered for blended overtime calculation. Only the Job Cost Types that are defined as Direct payment type can be marked as Included in Blended Overtime Calculation.

  Job Cost Type ID	Payment Type	Included in Blended Overtime Calculation
  BASE	Direct	YES

• Setup Rate Agreement with details including base rates and overtime rates. Enter the relevant Job Cost Time Types as parameters.

  RATE AGREEMENT
  Job Cost Type	Rate	Percentage	Percentage Calculation Basis	Payment Interval	Override Basis	Parameters
  						Resource	Job Cost Time Type
  BASE	10.00			Hourly	No	Painter	BASIC
  BASE	12.00			Hourly	No	Electrician	BASIC
  OT		200%	BASE	Hourly	Yes		OT

  Note:
  For Overtime Job Cost Type, the Rate should always be defined as a percentage value.
  There can be multiple "Basic" Job Cost Types that contributes to calculate the Blended Overtime Rate. By setting Override Basis to YES on the Overtime Job Cost Type, all those "Basic" Job Cost Types will be overridden by the Overtime Job Cost Type.
  
  
• Below is the Job Transactions and Job Transaction Parameters breakdown of above example. The Report Codes are added when the time is reported and based on the mapping in the Job Cost Time Type above, the correct Job Cost Time Type is fetched as a parameter.  

  Transaction Sequence	Internal Quantity	Parameters
  		Resource ID	Report Code	Job Cost Time Type
  100	8	Electrician	T1	BASIC
  101	8	Electrician	T1	BASIC
  102	8	Painter	T1	BASIC
  103	4	Electrician	OT	OT
  105	8	Painter	T1	BASIC
  106	8	Painter	T1	BASIC

• When Calculate Job Cost is done, the result will be below rates per each job transaction.
  
  Note:
  In order to calculate correct Blended Overtime Rates, the calculation needs to cover the whole week.
  

  Transaction sequence	Job Cost Type	Qty.	Rate	Amount
  100	BASE	8	12	96.00
  101	BASE	8	12	96.00
  102	OT	4	21.82	43.64
  103	BASE	8	10	80.00
  105	BASE	8	10	80.00
  106	BASE	8	10	80.00

• The Overtime rate is 21.82 is calculated using weighted average as follows.
  
  Group the job transactions based on the Parameters. Exclude Report Code and Time Type during grouping.
  In this example, there are three groups as marked in different background colors.
  

  Transaction Sequence	Internal Qty.	Parameters
  		Resource ID	Report Code	Job Cost Time Type
  100	8	Electrician	T1	BASIC
  101	8	Electrician	T1	BASIC
  102	8	Painter	T1	BASIC
  103	4	Electrician	OT	OT
  105	8	Painter	T1	BASIC
  106	8	Painter	T1	BASIC

  
  
  Then calculate the weighted average rate as below.
  
              (Applicable Base Rate on each group * No. of Job Hours for the group) * Overtime %
                                                          Total No. of Job Hours
  
  

  = [(12*16) + (12*4) + (10*24)] * 200%

                            44

   

  = 21.82