Project Management and Accounting module in Dynamics 365 Finance and Operations application is a powerful tool for all organizations and suitable for a large variety of industries. The functionality is best suited for a simple to advanced project planning, execution and controlling.
Project management and accounting module is primarily used for an organization that requires to plan, create, manage, control and complete projects. Projects in Dynamics 365 finance and operations are not just for external customer focused, instead can be used for internal projects to manage costs.
The common project management cycle has the following processes
- Initiate Project
- Create and Send project quotations
- Create Project Work break down structure
- Assign Workers and Resources to the Project
- Create a project contract
- Create project forecasts and budgets
- Execute Project
- Manage Project WBS
- Enter Time and Expenses
- Procure and consume materials for Projects
- Manage project forecasts and budgets
- Process Project invoices
- Recognize project revenue and Capitalize costs
- Close the project
- Analyze Project
- Analyze cash flow
- Review costs
- Review revenue
- Analyze Performance
- Analyze Utilization
In Dynamics 365, there are 6 project types that can be used to define a project on the basis of the business needs.
Customer Focused Project Types
Customer focused project types stand for projects executed and managed for external customers which typically involve tracking costs and revenues.
Time and Material
Time and Material project is used when the project billing is made on the actual consumption of resources hours, expenses, materials, or fees on the project. This type is used where costs are matched with the revenue on each transaction and project is invoiced as work progresses. In T&M project, the more the costs, the more the profit.
Fixed Price project is used when the project is billed according to a billing schedule/milestone basis which is set on the project contract. Revenue for a fixed–price project can be posted according to the completed contract method or according to the completed percentage method. In the FP project, the more the costs, the lesser the profit.
Internal project Types
Internal project types stand for projects created for in house projects within the organization and will not have external billing transactions.
Investment projects are internal projects used to track the expenditure on Capital work in progress. Example of such a project can be a building in construction or construction and commissioning of a plant wherein costs are tracked and later transferred to a fixed asset, ledger or a new project.
In investment projects, costs of hours, expenses and materials are registered on profit and loss accounts and transferred to work in progress account when estimates are posted. When the project is completed, the WIP is transferred to fixed asset, ledger or a new project.
In a cost project, only costs such as hours, expenses and items transactions are registered. The key difference that makes cost projects stand apart is the costs are directly posted to profit and loss accounts. They are not capitalized unlike investment projects.
Internal projects are such projects which are financed by the company where no customers are invoiced. Costs posted to profit and loss or balance sheet accounts.
Time projects are internal projects which are used to enter timesheets and track employee hours. No costs are registered and posted to ledger accounts. Examples can be those projects used to track employee leaves or holidays.
Dynamics 365 project management gives the flexibility of following standard standard stages of a project as well as defining user defined stages.
The project stages setup can be accessed through the following path.
Go to Dynamics 365 | Project management and accounting | Setup |
Project management and accounting parameters | Project stage
In the table, the stages include created, Estimated, Scheduled, In-process and Finished stages. There are 3 other user-defined stages besides the given stages. If you’d want to rename the stages, you can just make the changes in the project stage field. The field stage cannot be changed. Mark the project types against the project stages.
Created, Estimated and Scheduled stages are used until the project is in the initiation phase. The project stage would be In process stage during the execution phase and the finished stage after completion phase.
We have so far covered the basic introduction to the project management, project types and project stages that are allowed in Dynamics 365 finance and operations.
In the next lesson, we’ll cover how to create a project contract, project and work break down structure on a fundamental level and proceed to the next topics.