How do Effective and Standard cost rates interact with each other in Project Financial Management?

Background:

We use Job Named Person assignments for resource assignments to tasks. We also have a Job Rate schedule in the system which is updated by the HCM feed once a year. The planning cost rates for individual jobs are updated as and when the information is available through HCM. Please note that this is an observation for subcontractors who do not have a HCM fed cost rate. Their cost rate is determined based on the Purchase Order we have with the vendor.

Here are the definitions for 'Standard' and 'Effective' cost rate from Oracle documentation.

What's the difference between standard cost rate and effective cost rate?