Real Property / Costs / Background Data

Cost Categories: The Nine Chargeback Definitions

Organizing costs by cost category enables you to roll up and prorate costs to categories meaningful to your organization such as the line items on your cash flow or income statements, so that you can charge back these costs.

You specify which of the domain’s roll up and proration scenarios to use by selecting the appropriate value from the Chargeback Definitions section of the Define Cost Categories by Class task.

For more information on working with cost categories, see About Cost Categories.

Area Field for Proration

Chargeback calculations that proportionately distribute costs use an area field as the basis for the proration; this field differs based on the entity to which the cost is prorated. For example, the three chargeback definitions that prorate costs to leases (Buildings - Properties - Leases, Buildings - None - Leases, and Properties - None - Leases) use the Area Negotiated Rentable. The Area Neg. Rentable is entered on the Leases tab of the Portfolio Edit Wizard. This field is not based on a CAD inventory of your space.

Other chargeback scenarios require measured area to perform their calculations. See the Area Field for Proration column of the table in The Chargeback Definition Scenarios section for a description of the area required for each chargeback proration.

The Chargeback Definitions

The following table summarizes the chargeback definitions you can select when defining cost categories. The table includes the area field for proration and required data for each chargeback scenario. The table describes the nine possible values for the Assigned To - Rolls Up To - Prorates To selection in the Chargeback Definitions section of the Cost Categories by Class task.

Assigned To	Rolls Up To	Prorates To	When to Use This Chargeback Definition	Area Field for Proration	Prerequisites
All	None	Direct Bill	When you are billing a cost directly to the item it is added for (lease, building, property, or account), with no need to roll up or prorate the cost.	N/A as costs assigned to this scenario are neither rolled up or prorated; rather they are billed directly to the entity to which they are assigned.	N/A
Buildings	Properties	None	When you track costs by building, but you budget on a per-property basis. For example, use this selection if you have buildings that are part of a property and you want to sum building costs, such as maintenance, for the property as a whole.	N/A	The building you add the cost for must be associated with a property; this adds the Property Code for the rollup.
Buildings	Properties	Leases	When you track costs for buildings that are part of a property, and you want to divide the building costs among all leases on the property.	Area Neg. Rentable	The building you are adding the cost for must be associated with a property; this adds the Property Code for the rollup. The buildings you are adding the cost for should also have leases connected with them; the Lease Codes for these leases are used for the proration. You must add the Area Neg. Rentable for the lease.
Buildings	None	Leases	When you track costs on the building level, and want to divide the costs among the leases for the building.	Area Neg. Rentable	The buildings you are adding the cost for should have leases connected with them; the Lease Codes for these leases are used for the proration. You must add the Area Neg. Rentable for the lease.
Leases	Buildings	None	When you want to roll up lease costs to buildings to determine the costs for operating a building. For example, this method is useful for accounting for lease brokerage commissions. This strategy presumes that no leases span multiple buildings.	N/A	The Leases you add this cost for must be associated with a building. This adds the Building Code.
Leases	None	Department	When you want to charge back lease costs to departments based on the measured area information you have developed. For example, you might want to distribute lease renewal costs among departments assigned to that lease.	Based on the measured areas for either groups or rooms. You specify which of these by selecting the Lease Area Method. See Chargeback Proration Calculations	Lease Code and Department Code You enter the Lease Code and Department Code when you define a group or room. Note: This scenario does not work when you select Suite for the Lease Area method. If you need to perform internal chargeback to your departments, you should develop groups or rooms. See Select Proration and Lease Area Method.
Leases	Properties	None	When you want to summarize rental income and expenses according to the properties on which leased buildings reside.	N/A	Lease Code and Property Code The Leases you select must be associated with a property or with a building that is associated with a property. This adds the Building and Property Codes. Note: This method rolls up costs associated with both leases for properties and leases for the property's buildings.
Properties	None	Buildings	When you need to budget costs and/or rate profitability on a building-by-building basis. For these cases, you need to break out costs assigned to the property as a whole, and apply them to your individual buildings. Landscaping and tax costs might be prorated in this manner.	Building Rentable Area: This is the sum of the Rentable Areas of all floors located in this building. The area for suites, groups, or rooms is used depending on whether you choose Suites, Group, or Room for your Lease Area Method.	The property you select should have buildings associated with it.
Properties	None	Leases	When you need to proportionately distribute (prorate) costs that are incurred at the property level to leases.	Area Neg. Rentable	Property Code, Building Code, and Lease Code. The property you add the cost for must have buildings associated with it, and these buildings must have leases. You must add the Area Neg. Rentable for the lease. Note: This scenario prorates only to leases connected to the buildings for the 'Assigned To' property, not to leases for the property (as these would not have a negotiated rentable area).