3.1.32 Contracted Cost

Contracted Cost represents the cost calculated by multiplying contracted unit price and the corresponding Pricing Quantity. Contracted Cost is denominated in the Billing Currency and is commonly used for calculating savings based on negotiation activities, by comparing it with List Cost. If negotiated discounts are not applicable, the Contracted Cost defaults to the List Cost.

ContractedCost adheres to the following requirements:

• ContractedCost MUST be present in a Cost and Usage FOCUS dataset.
• ContractedCost MUST be of type Decimal.
• ContractedCost MUST conform to NumericFormat requirements.
• ContractedCost MUST NOT be null.
• ContractedCost MUST be a valid decimal value.
• ContractedCost MUST be denominated in the BillingCurrency.
• When ContractedUnitPrice is null, ContractedCost adheres to the following additional requirements:
  • ContractedCost of a charge calculated based on other charges (e.g., when the ChargeCategory is "Tax") MUST be calculated based on the ContractedCost of those related charges.
  • ContractedCost of a charge unrelated to other charges (e.g., when the ChargeCategory is "Credit") MUST match the BilledCost.
• ContractedCost MUST equal the product of ContractedUnitPrice and PricingQuantity when ContractedUnitPrice is not null and PricingQuantity is not null.

Cost calculated by multiplying contracted unit price and the corresponding Pricing Quantity.

Aggregation: When aggregating Contracted Cost for savings calculations, it's important to exclude either Charge Category "Purchase" charges (one-time and recurring) that are paid to cover future eligible charges (e.g., commitment discount) or the covered Charge Category "Usage" charges themselves. This exclusion helps prevent double counting of these charges in the aggregation. Which set of charges to exclude depends on whether cost are aggregated on a billed basis (exclude covered charges) or accrual basis (exclude Purchases for future charges). For instance, charges categorized as Charge Category "Purchase" and their related Charge Category "Tax" charges for a Commitment Discount might be excluded from an accrual basis cost aggregation of Contracted Cost. This is because the "Usage" and "Tax" charge records provided during the commitment period already specify the Contracted Cost. Purchase charges that cover future eligible charges can be identified by filtering for Charge Category "Purchase" records with a Billed Cost greater than 0 and an Effective Cost equal to 0.