Monday, April 4, 2016

ELR (Effective Labor Rate) and its complexities


After i started working with the ELR concept i came across following complexities, which i thought i should just note down before i forget.

Split Week

If the ELR is turned on for an employee AND if the employee is entering the time-sheet wherein the time sheet period is split between two months (last week where 2 days are in one month and 3 days are in other month) AND the split week feature is turned on.

ELR behavior - ELR does the calculation separate for 2 days of the week in the previous month and 3 days of the week in the next month. The ELR calculation does not take into consideration the full week, as it takes for the other weeks, where the entire week lies in one month.

Example: 

ELR price setup in the Cost price setup = 100.

Last week of May 2016 is of Mon (30) and Tue (31). Time is entered for both the days. Cost price for this split week should be 1600 (8*100*2). As the time is entered for two days of the week, the cost price per day for the split week is 800 (8*100) per day and hence the ELR is 100 (1600/16).

First week of June 2016 is Wed (1), Thu (2) and Fri (3). Time is ONLY entered for Web and Thu. Cost price for this split week should be 2400 (8*100*3). As the time is entered for two days of the week out of 3, the cost price per day for the split week is 1200 (8*100*3/2) per day and hence the ELR is 150 [(2400 / 16) OR (1200 / 8).


Time-sheet period of 2 weeks (Bimonthly time-sheet .i.e. time-sheet every 2 weeks .i.e. 2 time-sheets per month) 

If ELR is setup for an employee and if the time-sheet period is of 2 weeks, then the ELR calculation takes into account the entire two weeks ( 10 working days of two weeks, instead of 5 working days of each week).

Example: 

ELR price setup in the Cost price setup = 100.

For week 1 of the 2 week time-sheet period, time is entered for Mon and Tue and for the week 2 of the 2 week time-sheet period, time is entered for Mon, Tue and Wed. In such a scenario the ELR calculation are as below:

8000 / 40 = 200 (ELR)

** 8000 comes from 8 hours per day * 10 days * GBP 100
** 40 comes from 5 days (2 days in first week and 3 days in second week)  of 8 hours booked.

However if this would not have been the case and if ELR would have behaved on a per week basis, then the calculation would have been as follows:

For first week:

4000 / 16 = 250 ((ELR)

** 4000 comes from 8 hours per day * 5 days * GBP 100
** 16 comes from 2 days of 8 hours booked for first week.

For second week:

4000 / 24 = 166.67 ((ELR)

** 4000 comes from 8 hours per day * 5 days * GBP 100
** 24 comes from 3 days of 8 hours booked for second week.

Working calendar 'Closed' days and ELR

For a working calendar, even if Saturday and Sunday are termed as closed, if the time is entered for those days, then ELR calculation takes into consideration that time and the ELR value is changed.

Example: 

ELR price setup in the Cost price setup = 100.

Time entered on Mon-Sat is 8 hours.

My expectation was that ELR will not take into consideration the time entered on Saturday and the ELR will be standard, 4000 / 40 = 100 (ELR)

However i was wrong and the calculation was like this:

4000 / 48 =  83.33 (ELR)

** 4000 comes from 8 hours per day * 5 days * GBP 100 (Numerator did not take into consideration the hours entered for Saturday)
** 48 comes from 6 days of 8 hours booked for week.

Thanks
Sarang