In ServiceNow PPM, Rate Models are used to define the cost rates for resources working on projects and demands. Rate Models help calculate the costs associated with resources based on their roles, skills, or other factors. Rate models can be useful when you want to accurately estimate and track costs associated with human resources in your organization.

Creating a new Rate Model:

1. Navigate to Project Administration > Rate Models in ServiceNow.
2. Click "New" to create a new rate model.
3. Provide a Name and Description for the rate model.
4. Save the new rate model by clicking "Submit."

Relationship between Rate Models and Projects/Demands:

Rate Models are associated with Resource Plans created for Projects or Demands. When a Resource Plan is created, you can select a Rate Model to apply. This Rate Model will be used to calculate the costs associated with the resources in the Resource Plan.

Configuration based on the out-of-box approach:

Out-of-the-box, ServiceNow provides a default Rate Model called "Standard Rates." This model includes predefined rates for different roles, like Project Manager, Developer, or Business Analyst. You can modify these rates or create new ones based on your organization's needs.

Examples:

1. Different rates for internal and external resources: Suppose your organization works with both internal employees and external contractors. You can create two Rate Models: "Internal Rates" and "External Rates." Each Rate Model can have different cost rates for various roles or skills to reflect the different costs associated with internal and external resources. When creating Resource Plans for Projects or Demands, you can select the appropriate Rate Model based on whether the resources are internal or external.

2. Different rates based on geographic location: If your organization has resources working in different geographic locations with varying costs, you can create Rate Models for each location (e.g., "US Rates," "UK Rates," "India Rates"). Each Rate Model will have different cost rates for roles or skills based on the location-specific costs. When creating Resource Plans for Projects or Demands, you can select the Rate Model corresponding to the location of the resources.

By using Rate Models, you can better estimate and track resource costs for your projects and demands, leading to more accurate budgeting and financial management in your organization.

et's use some numbers to illustrate the examples mentioned above.

Example 1: Different rates for internal and external resources

Suppose you have the following cost rates for internal and external resources:

Internal Rates:

• Project Manager: $80/hour
• Developer: $60/hour
• Business Analyst: $50/hour

External Rates:

• Project Manager: $120/hour
• Developer: $90/hour
• Business Analyst: $70/hour

Now, let's say you have a project that requires 100 hours of work for each role, and you're using a mix of internal and external resources. The Resource Plan and associated costs would look like this:

Internal Resources:

• Project Manager: 100 hours * $80/hour = $8,000
• Developer: 100 hours * $60/hour = $6,000
• Business Analyst: 100 hours * $50/hour = $5,000 Total cost for internal resources: $19,000

External Resources:

• Project Manager: 100 hours * $120/hour = $12,000
• Developer: 100 hours * $90/hour = $9,000
• Business Analyst: 100 hours * $70/hour = $7,000 Total cost for external resources: $28,000

Example 2: Different rates based on geographic location

Suppose you have the following cost rates for different locations:

US Rates:

• Project Manager: $100/hour
• Developer: $80/hour
• Business Analyst: $60/hour

India Rates:

• Project Manager: $40/hour
• Developer: $30/hour
• Business Analyst: $20/hour

Now, let's say you have a project that requires 200 hours of work for each role, and you're using resources from both the US and India. The Resource Plan and associated costs would look like this:

US Resources:

• Project Manager: 200 hours * $100/hour = $20,000
• Developer: 200 hours * $80/hour = $16,000
• Business Analyst: 200 hours * $60/hour = $12,000 Total cost for US resources: $48,000

India Resources:

• Project Manager: 200 hours * $40/hour = $8,000
• Developer: 200 hours * $30/hour = $6,000
• Business Analyst: 200 hours * $20/hour = $4,000 Total cost for India resources: $18,000

By using the appropriate Rate Model for each resource, you can accurately estimate and track the costs for your projects and demands based on the resource type (internal or external) or geographic location.