Workday Project Billing Rules for Time and Expense

Time and materials is supposed to be the easy one. No milestones to argue about, no percent complete to defend. You bill what you incurred. Its the details that get you.

Then the first invoice comes out wrong. The Denver airfare went out at cost when the contract says cost plus ten, the senior consultant premium never applied, and finance wants to know why the rate correction did not move revenue. Workday project billing rules are doing exactly what you configured. Pricing a T&M contract runs through three objects and up to seven rules. Getting it right can be the difference between a clean invoice and a margin leak.

Let's walk through the areas to look out for.

The contract line has to be set up before the rate sheet exists

On the customer contract line, select a Billable Project, a Project Transaction Source, and a Line Type of Project Time and Expense. That combination enables the Contract Rate Sheet prompt. Until all three are set, you have nowhere to put rates. If your project bills for time and expenses, you need a contract line for each. If your project has multiple phases with different rates, you need a contract line for each phase.

One decision on that line has a long tail: worktags. Fixed Fee revenue follows the contract worktags designated on the project. Transaction-based lines for time and expense follow the worker worktags or the project worktags. If you report revenue by practice or region and your consultants sit in a different org than the project, settle which side wins before the first invoice.

Rates are copied down the chain, not looked up

Your standard rate card is a project billing rate sheet. It is selected on a contract based on pricing categories such as project type, customer size and a combination of worktags. The match is made on the contract line level.

The contract rate sheet is the priced deal. Select the project billing rate sheet, click Update Contract Rates, and Workday populates the rates matching the effective date and the rate category members. An Adjustment Percentage, positive or negative, then applies to every line on the sheet, which handles a flat concession without touching individual rates.

Two rules govern timing. The billable transaction date determines which contract rate sheet and billing rate rule set apply, so October approval of September work bills at September's rate. And a contract rate sheet effective date cannot be moved into the past once a billable transaction is attached to it. Plan the effective dating on day one, because you cannot retrofit it later.

Seven rule types, and four of them are about expenses

Billing rate rules sit on the contract rate sheet and do the actual pricing work. There are seven types, and you can have only one of each type in a rule set, though you can have multiple rules within a type and order them. Workday applies override rules first and cap rules last.

For time:

• Override Rate (Time): A percentage markup or discount, or a specific rate, by Project Phase, Project Role, Project Task, or Worker. This is where the 10% senior consultant premium lives
• Project Cap (Time): A limit by dimension or across the project: 2,000 hours, 250,000 EUR, or 500 hours on the design phase
• Tiered Rate (Time): Rates that change by hours or amount. First 50 hours free, 20% off after 500 hours

For expenses, which is where the margin usually leaks:

• Override Rate (Expense): Markup, discount, or a fixed amount by expense type. Hotels billed at 250 USD per night, meals capped at 100 USD per day
• Override Rate (Misc Expense): The same, priced by Item, Project Phase, Project Task, Spend Category, Supplier, or Worker
• Override Rate (Supplier Invoice): Markup or discount on billable supplier invoices by expense category. The 15% premium on subcontracted professional services belongs here, not in a spreadsheet
• Expense Caps (Expense): A ceiling on total expenses or on one category: airfare limited to 2,000 USD

Expense Caps, Project Cap (Time), and Tiered Rate support a Reset Option, so a cap negotiated as annual resets annually instead of exhausting itself in year one

What goes wrong in the tenant

• The rate sheet is not in the prompt. Company, customer, and worktags on the project billing rate sheet have to match the contract line. A mismatch does not error, it just hides the sheet from the person building the contract.
• A new rate card does not reprice live contracts. Contract rates are populated, not linked. Updating the project billing rate sheet changes nothing until someone creates the next effective-dated contract rate sheet and runs Update Contract Rates.
• Revenue does not follow the rate fix. Changes to a contract rate sheet are not reflected on revenue recognition installments. You have to run Schedule Revenue Installments for Billable Transactions. Skip it and billing and revenue quietly diverge.
• Mutually Exclusive Rules got cleared. Selected, it applies only the first matching rule per rule type. Cleared, more rules apply than the deal desk intended. It inherits from the project billing rate sheet and can be turned off on any contract rate sheet.
• Day rates on ad hoc transactions. Is Daily Rate plus the Time Definition tab converts hours to days, but Workday does not support daily rates for ad hoc project transactions. On a day-rate contract, that one-off item prices unlike the rest of the invoice.

Where to start

Review your T&M contract rate sheet and read the rule set against the signed agreement. Check whether time liones and expense lines are set up. Compare the actual legal contract and identify rules that need to be set up. If nothing else, this is a sanity check on your contract setup.

Working through a T&M contract that will not bill cleanly? Let's talk.