Explore project cost tracking capabilities

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Contoso is a company that produces e-bikes. Last year they signed a contract with a government agency for a nationwide e-bike rental program. They delivered the e-bikes and the citizens loved them. The program was a national success. With so many Contoso e-bikes being used in all major cities, it was just a matter of time before some started needing repairs. Contoso now needs a solution to track the labor costs for technicians performing the repairs. The technicians sometimes travel outside of their home city to repair the bikes, incurring expenses. Some of the e-bikes need to be contracted out for repair and materials, and Contoso needs to track those costs as well.

Once a project is started, various hours, item consumption and fees will begin to accumulate. This results in costs being applied to the project, which can be initiated from various transactions.

In this section, we will explore the project cost tracking transactions available to apply to projects.

The most common costs come from resource hours and expenses. We will explore those capabilities first.

Project time entry

As part of their daily work, project resources are often on-site or traveling. The Project time entry mobile workspace lets users enter their billable or non-billable time against a project on the mobile device of their choice. Therefore, project resources can record time entries anytime and anywhere. They can also view time entries that have already been recorded.

Specifically, in the Project time entry mobile workspace, users can perform these tasks:

  • For any selected date, enter the number of hours that you spent on a specific task.
  • Search by project name or customer to find the project to enter time for.
  • Specify the category and activity for the time that you spent.
  • Record the time as billable or non-billable for the project.
  • Optionally enter any external or internal comments.

Expense management

In Expense management, you can store information about payment methods, travel requisitions, expense reports, policies, and more.

Many of the decisions that you make when you plan your configuration for Expense management are based on your organization’s hierarchy and financial structure, so you must refer to the planning documents for those areas.

Per diems

You must define the employee per diems that your organization provides. Because per diems are typically used to cover expenses such as meals, lodging, and other incidental expenses, you can create rules for the per diem allowances that your organization offers. per diem rates can be based on the time of year, the travel location, or both. When you define a per diem rule, you can specify that a percentage of the per diem rate will be withheld if a worker receives complimentary meals or services. You can also define per diem rate tiers to set the minimum and maximum number of hours that the per diem rate can be applied to a worker’s travel.

Considerations:

  • Default per diem rules for the first and last days:

    • Is there a reduction in the amount that is offered for meals for the first day and last day? If there is a reduction, what is the percentage of the reduction?
  • Default per diem rules:

    • Is there a percentage reduction in the per diem allowance for each meal if, for example, the meal is complimentary? If there is a reduction, what is the reduction percentage for each meal?
  • Per diem rules that are based on location:

    • Do per diem rates vary according to location? What locations are included?

Payment methods

When you allow employees to incur expenses on behalf of your business, you must define the payment methods that employees are allowed to use. For example, you might allow employees to use cash or a corporate credit card. You might also allow employees to use personal credit cards, and then reimburse the employees. You must make the following decisions for each payment method that you allow.

Intercompany expenses

Project Operations comes with the ability to schedule and manage resources across legal entities. This feature allows legal entities and employees to incur expenses on behalf of another legal entity, and collect payment from the legal entity of employment within your organization.

For example, an employee in Contoso Canada completes an e-bike service project for Contoso United States, and the project incurs travel-related expenses. When intercompany expenses are enabled, the employee can then file an expense report that will post the expense to the legal entity Contoso US, and the expense must then be paid by Contoso Canada. If your organization doesn’t have multiple legal entities, you don’t have to enable intercompany expenses.

Explore project cost on a time and materials project

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Watch this video to learn more about project cost for time and materials projects.

Other costs may be incurred using production orders or item consumption that might be in the form of a sales order, inventory journal, item requirement, or purchase order. The project type and supply chain process will determine which option is best suited for each project use case.

Create production orders

Production orders can be created as part of the project lifecycle when a product required for the project must be manufactured. This might be for internal investment project use such as improvements required within a facility.

You might also create production orders when a customer requires a product to be manufactured as part of an installation project that might be fixed price or time and materials.

The production order serves as the document that will, upon completion, apply costs against the project and track against the project completion.

The following list provides different methods that can be used to create production orders:

  • Finished item/link to order – Link the project to a sales order or an item requirement. When you use this method, actual project costs are posted when the sales order is invoiced or when the packing slip is updated for the item requirement. The cost is posted as a finished item.
  • Finished item/no link to order – Actual costs can’t be posted until the production cycle for an item has a status of Ended. The cost for the finished item is posted as a single transaction.
  • Consumed item/link to order – Link the project to an item requirement. By using this method, you can view actual project costs when the production has a status of Started or is reported as finished. The costs are posted as multiple project item transactions for raw materials and hours consumed for production. When the packing slip is updated for the item requirement, no project costs are posted. You can also define the level in the bill of materials (BOM) hierarchy at which the projects in the production are tracked.
  • Consumed item/no link to order – Link the project to an item requirement. By using this method, you can view actual project costs when the production has a status of Started or is reported as finished. The costs are posted as multiple project item transactions for raw materials and hours consumed for the production. You can also define the level in the BOM hierarchy at which the projects in the production are tracked.

Item consumption for projects

The following table lists the methods for ordering items and describes how the items are consumed.

Method

Purpose

Consumption of item transactions

Sales order

Enter a transaction directly on a time and material project.

You can order items from the company’s inventory for consumption on a project. Sales orders also allow the ability to reserve items for future use.

Item transactions are consumed when the customer invoice is posted.

Inventory journal

Quickly enter and maintain item records. If, for example, you want to enter an item requirement based on a printed list, the inventory journal can be applied.

Item transactions are consumed when the journal is posted.

Item requirement

Enter items that won't be consumed immediately. This method lets you track the number of items that have been consumed in a single item requirement record.

Item transactions are consumed when the packing slip is updated. In other words, the item requirement is created when the packing slip is posted.

Purchase orders

Enter transactions in one of three locations, depending on the purchasing method.

See the purchase order for projects table below for more details.

Item transactions are consumed when the packing slip is updated, or when the customer or vendor is invoiced.

Purchase orders for projects

Method

Purpose

Consumption of item transactions

Create a purchase order directly.

Purchase items from an external vendor for consumption on a project. You can create the purchase order in the following ways:

From the project itself. In this case, the project is already defined for the purchase order.

By navigating to the project purchase order. You must select both the vendor and the project to create the purchase order for.

Items are consumed when the vendor invoice is updated.

Create a purchase order from a sales order.

Purchase items when you create a sales order from a project.

Items are consumed when the sales order is invoiced to the customer.

Create a purchase order from an item requirement.

Purchase items when you create an item requirement from a project.

Items are consumed when the item requirement packing slip is updated.