Larger bids involving several countries / continents require costs and revenues to be managed across multiple currencies. The following currencies are needed to create a proposal cost estimate with global reach:

• The bid or customer currency, the currency in which the prospect or customer wants to view costs and prices
• The internal or company currency, the currency used internally by your business unit which is leading the proposal or delivery effort
• Individual business unit or company/country currencies for basis of estimate WBS elements (BOE currency) within the bid. For example if you have a subsidiary in the UK doing a portion of the work when the main proposal is being delivered from the US
• Individual transaction or source currency such as historical pricing documents like purchase orders from suppliers in other countries, or resources whose labor rate uses a different currency to basis of estimate or company currency

For example if you are pricing a material using a purchase order from the UK, on a basis of estimate or WBS delivered out of France, for a customer in Canada, when the business unit leading the bid is in the US then customer currency is CAD, company currency is USD, basis of estimate currency is EUR and source transaction currency is GBP.

In order to manage your proposal across these numerous currencies it is necessary to maintain exchange rates in the CLIENT tab of your proposal.

1. Select the currency you wish your customer to view your bid in. You can scroll up and down the list, type in part of the description or type in the ISO-standard currency code to search for it
   • The most common currencies (USD, EUR, GBP) always appear at the top so don't search for them alphabetically
2. If currency is maintained on the customer record it will default (this is however rare)
3. The company currency is set automatically based on the primary business unit leading your proposal selected in the SET-UP tab. It is not changeable from here; if it looks wrong check the primary business unit in the SET-UP tab
4. Click the "Edit Exchange Rates" link to view or edit the exchange rates or conversion factors from source to company, and from company to customer, currency

After clicking the link to "Edit Exchange Rates" you will see the popup shown below. It is essentially a list of conversion factors from source to company, and from company to customer currency. Rates are derived from SAP's exchange rates with the option to over-ride them manually, or by applying a fixed conservative "buffer %".

Notes:

1. Once rates are defined in this popup they are "frozen" for the remainder of this specific proposal. This is important to prevent cost and margin "creep" on a day by day basis after the proposal costs and margins have been approved by management
2. The exchange rate "buffer %" is designed to accommodate unplanned fluctuations in exchange rates between now and the award date. Exchange rate fluctuations post-award should be managed through effective use of currency hedges or currency insurance policies
3. The exchange rate buffer % works as follows:
   • It increases the cost in the customer's currency as compared to the same company currency amount, to make the bid look less competitive
   • It increases the cost in the company currency as compared to the source currency amount, to again make the bid look less competitive.

For example if a source document cost is 1000 GBP based on today's exchange rate of 1.26 USD to 1 GBP the company currency amount would be 1260 USD. Adding a 2% buffer increases this cost to $1285.20.  If the customer's currency is CAD then based on today's exchange rate of 1 USD to 1.3 CAD, $1285.20 equates to 1670.76 CAD. With the same 2% buffer the CAD bid amount comes to 1704.18 CAD. The buffer was in effect applied twice.

• Buffers cannot be applied to the same currency pair twice. For example, if the source transaction was in Canadian CAD and the company currency was USD, converting this to a customer currency of CAD would give the original cost again not original cost + buffer % twice over.

Clicking on the "Edit Exchange Rates" link above gives the popup shown below:

1. The external customer and internal company currency codes are displayed again. You can change the customer currency from this popup
2. Enter an exchange rate date which is used anytime rates are automatically updated from SAP to get the current rate, or technically the exchange rate set-up in SAP valid on the exchange rate date. It is recommended to enter either the RFX receipt or the response due date here:
   • Since exchange rates are frozen for this proposal it does not matter if the exchange rate date is before or after you generate your cost estimate
3. Optionally enter or click the up/down arrows to specify a currency buffer. Exchange rates from source to company currency (rows 1-4) and exchange rates from company to customer currency (the last row) are increased by the % input when rates are updated from SAP
4. Click the + button to add a new rate and select the "from" currency. The "to" currency is always the company currency with the exception of the last row which is "from" company currency "to" the customer's currency and appears automatically
5. If you wish to adopt the rate from SAP then leave "Rate Type" as "SAP exchange rates". Rates will be set automatically based on the SAP rate valid as of the exchange rate date plus the buffer %.
6. Click "Update Rates" button to reset the SAP exchange rates based on the latest information from SAP
7. If you wish to set rates manually then select "Rate Type" as "Manual negotiated rate" and enter the rate manually, as the value of 1 "from currency" in the "to currency". For example 0.6325 means that 1 USD = 0.6325 GBP.  The buffer % is added to manually entered exchange rates, if you do not wish to buffer manual rates simply edit the manual rate after editing the buffer %

Notes:

1. If the conversion is in reverse e.g. from GBP to USD then the rate is the inverse e.g. 1 / 0.6325 or 1.5810
2. If an exchange rate is not defined here then the SAP rates are automatically adopted into that cost estimate without any buffer