Imagine that you are bidding to deliver a complex assembly in June and a series of smaller spare part kits of modules in October and November. Each deliverable has a bill of material or indentured part configuration and a range of purchased and in-house produced materials or hardware needed. Costing of these parts is explained in other help articles, however once the costs for each part are determined it is important to know roughly when these costs will be incurred or paid, for cash flow forecasting and calculation of inflation or escalation.

Lead-time offset distribution assumes that costs will be incurred on a "just in time" basis when sub-assemblies and purchased parts are required in order to build up the final end item in time for the promised delivery date.

Assume that the complex assembly contains five sub-assemblies and it takes one month to put it all together. Each sub-assembly takes about three months to assemble, based on a series of purchased parts.

• The lead-time offset for the completed sub-assemblies is one month, so that manufacturing labor hours for the assemblies are in May and June
• The lead-time offset for the purchased parts feeding into each sub-assembly is four months (1 + 3), meaning that the purchased part costs will be incurred in February.

The incurred date for a part's cost based on a lead-time offset is simply the sum of the lead-times for all higher level assemblies or follow-on production activities, deducted from the end item promised delivery date.

The lead time offset is visible and editable in the indentured BOM view of a material estimate, as shown below.

1. The Lead Time for each component within its higher assembly is displayed in the "Lead Time" column. Click on any cell for a component of a proposal-specific BOM to edit its lead time. The lead time initially defaults from the product master, which is typically imported or interfaced from the SAP material master MRP lead-time.
2. The Due Before for each component is the cumulative lead time for all higher level assemblies plus that component's Lead Time. It represents how long before the end item delivery date this part needs to be start being procured or manufactured. Notice how the Due Before for the highlighted part 50100061 SCREW is 45 days, calculated as 10 day lead time on the top assembly + 35 days lead time on this part.
3. If you can't find your part, enter it into the search box or click the filter icon to the right and select "part-code" as a BOM view filter.

The due before lead time represents when that part needs to start being procured, which is not necessarily when its costs would be incurred. Costs are normally incurred on delivery, i.e. in our example 10 days prior to the end item date and not 45 days prior.

The same lead time is also visible in the consolidated material list which the basis for material costs, though it is not editable here. Click here to learn how to add columns such as "Lead Time" if you can see it. The start/end dates in the consolidated material list represents the receipt date (10 days prior to completion).

Distribution curves allow you to profile your material or labor costs over time based on the BOE-WBS dates and a curve profile or best-fit to a distribution curve. The cost for each individual material or Bill of Material (BOM) component still falls into a single month however - it's only the overall cost profile which looks like a distribution curve. This is achieved technically by the system moving the required dates for each material proposal - make or buy parts - into the month which results in the cost of that part "best-fitting" the distribution curve profile.  The highest cost materials are allocated first to the months which should be receiving the highest distribution of cost based on the curve, then mid-range materials are assigned to months where current costs are still too low as compared to the profile, and finally low-cost materials are assigned to any months still open to getting more cost assigned. The following distribution curves are delivered as standard though you can work with your implementation consultant to define any curve:

• Linear
• Bell curve
• Front-loaded curve
• Back-loaded curve
• Stepped (increasing three times over the quarter, then flat and then decreasing to one third over the last quarter).

When you distribute material costs based on a curve, the cost profile will not exactly follow that curve since each individual material component's cost falls into a single month. The distribution curve is applied to the BOE-WBS as a whole, rather than to each material estimate.

Escalation or inflation is calculated up until the date when costs are incurred (expected delivery date) or in certain circumstances, until the date when the purchase order is expected to be placed.

It is also possible to assign a project schedule (WBS elements and even tasks) to your proposal bill of material sub-assemblies and then schedule the costs incurred based on this schedule. This means that costs will be assigned to years and months based on the start and end dates of the WBS elements and tasks assigned to your proposal bill of material assemblies. 

To do this assign a WBS and/or task to each level of your proposal bill of material and select the option (shown below on the far right) to assign costs based on assigned task dates in either your product or service master or the costing run profile parameters when running Cost Consolidated BOM.