Project Advanced - Ax2012 PDF

COURSE: 80317
PROJECT ADVANCED IN
MICROSOFT DYNAMICS AX 2012
Microsoft Official Training Materials for Microsoft Dynamics

Your use of this content is subject to your current services agreement
Last Revision: August 2011

This courseware is provided as-is. Information and views expressed in this courseware, including URL and other
Internet Web site references, may change without notice.
Unless otherwise noted, the examples depicted herein are provided for illustration only and are fictitious. No real
association or connection is intended or should be inferred.
This courseware does not provide you with any legal rights to any intellectual property in any Microsoft product.
Complying with all applicable copyright laws is the responsibility of the user. Without limiting the rights under
copyright, no part of this courseware may be reproduced, stored in or introduced into a retrieval system, or
transmitted in any form or by any means or for any purpose, without the express written permission of Microsoft
Corporation.
Copyright 2011 Microsoft Corporation. All rights reserved.
Microsoft, Microsoft Dynamics, Microsoft PowerPoint, Microsoft SQL Server data management software
and Microsoft Dynamics AX are trademarks of the Microsoft group of companies. All other trademarks are
property of their respective owners.
This course content is designed for Microsoft Dynamics AX 2012.

Table of Contents
Introduction
0-1
Welcome ............................................................................................................ 0-1

Microsoft Dynamics Courseware Contents ........................................................ 0-2
Documentation Conventions .............................................................................. 0-3
Student Objectives ............................................................................................. 0-4
Chapter 1: Project Validation
1-1
Objectives ........................................................................................................... 1-1

Introduction ......................................................................................................... 1-1
Concepts ............................................................................................................ 1-2
Project Validation Parameters ............................................................................ 1-3
Enable Validation for Workers ............................................................................ 1-5
Validation Groups ............................................................................................... 1-6
Lab 1.1 - Create a New Validation Group........................................................... 1-8
Enabling Project Assignments .......................................................................... 1-10
Summary .......................................................................................................... 1-15
Test Your Knowledge ....................................................................................... 1-16
Quick Interaction: Lessons Learned ................................................................. 1-17
Solutions ........................................................................................................... 1-18
Chapter 2: Project Forecasting
2-1
Objectives ........................................................................................................... 2-1

Introduction ......................................................................................................... 2-1
Concepts ............................................................................................................ 2-2
Forecast Models ................................................................................................. 2-3
Enter Forecasts .................................................................................................. 2-4
Lab 2.1 - Edit a Forecast .................................................................................. 2-14
Forecast Scheduling ......................................................................................... 2-15
Lab 2.2 - Add a New Resource ........................................................................ 2-22
Forecasting Hours ............................................................................................ 2-23
Summary .......................................................................................................... 2-34
Solutions ........................................................................................................... 2-38
Chapter 3: Advanced Project Invoicing
3-1
Objectives ........................................................................................................... 3-1

Introduction ......................................................................................................... 3-1
Project Invoicing Parameters ............................................................................. 3-2
Funding Sources ................................................................................................ 3-3
Funding Limits .................................................................................................... 3-5
Funding Rules .................................................................................................... 3-7
Lab 3.1 - Manage Contract Funding Sources and Limits ................................... 3-9
Fixed-Rate Agreements ................................................................................... 3-13
Grant Management .......................................................................................... 3-15
Lab 3.2 - Manage Grants ................................................................................. 3-18
Invoice Approval ............................................................................................... 3-20
Summary .......................................................................................................... 3-21

Project Advanced in Microsoft Dynamics AX 2012

Solutions ........................................................................................................... 3-24
Chapter 4: Advanced Internal Projects
4-1
Objectives ........................................................................................................... 4-1

Introduction ......................................................................................................... 4-1
Internal Projects with WIP .................................................................................. 4-2
Internal Project with WIP Example ..................................................................... 4-6
Lab 4.1 - Run an Internal Project with WIP ...................................................... 4-13
Investment Projects .......................................................................................... 4-14
Investment Project Example ............................................................................. 4-16
Lab 4.2 - Run an Investment Project ................................................................ 4-20
Summary .......................................................................................................... 4-22
Solutions ........................................................................................................... 4-25
Chapter 5: Advanced Time and Material Projects
5-1
Objectives ........................................................................................................... 5-1

Introduction ......................................................................................................... 5-1
Time and Material Project with WIP ................................................................... 5-2
Example: Time and Material Project with WIP ................................................... 5-5
Lab 5.1 - Run a Time and Material Project with WIP........................................ 5-11
gfPost Costs Form ............................................................................................ 5-13
Lab 5.2 - Using Post Costs ............................................................................... 5-14
Time and Material Project with Accruals .......................................................... 5-15
Example: Time and Material Project with Accruals .......................................... 5-20
Lab 5.3 - Run a Time and Material Project with Accruals................................. 5-28
Reversing Accrued Revenue ............................................................................ 5-30
Lab 5.4 - Using the Accrue Revenue Form ...................................................... 5-33
Summary .......................................................................................................... 5-34
Solutions ........................................................................................................... 5-38
Chapter 6: Advanced Fixed-Price Projects
6-1
Objectives ........................................................................................................... 6-1

Introduction ......................................................................................................... 6-1
Concepts ............................................................................................................ 6-2
Completed Contract Assessment Principle ........................................................ 6-2
Completed Percentage Principle ........................................................................ 6-4
The Estimate Process ........................................................................................ 6-6
Period Types ...................................................................................................... 6-8
Cost Templates ................................................................................................ 6-10
Lab 6.1 - Create a Cost Template .................................................................... 6-16
Estimate Projects ............................................................................................. 6-18
Creating Estimates ........................................................................................... 6-20
Lab 6.2 - Create and Post an Estimate ............................................................ 6-31
Summary .......................................................................................................... 6-32
Solutions ........................................................................................................... 6-35
ii

Table of Contents
Chapter 7: Fixed-Price Project with Completed Contract
7-1
Objectives ........................................................................................................... 7-1

Introduction ......................................................................................................... 7-1
Fixed-Price Project with Completed Contract Example ...................................... 7-2
Lab 7.1 - Run a Fixed-Price Project with Completed Contract ........................... 7-9
Summary .......................................................................................................... 7-14
Solutions ........................................................................................................... 7-17
Chapter 8: Fixed-Price Project with Completed Percentage
8-1
Objectives ........................................................................................................... 8-1

Introduction ......................................................................................................... 8-1
Fixed-Price Project with Completed Percentage and Sales Value ..................... 8-3
Fixed-Price Project with Completed Percentage and Sales Value Example ...... 8-4
Fixed-Price Project with Completed Percentage and Production Plus (+) Profit8-14
Fixed-Price Project with Completed Percentage and Production Plus (+) Profit
Example ........................................................................................................... 8-16
Lab 8.1 - Create and Run a Fixed-Price Project Using Completed Percentage8-24
Summary .......................................................................................................... 8-28
Solutions ........................................................................................................... 8-31

iii
iv

Introduction
INTRODUCTION
Welcome
We know training is a vital component of retaining the value of your Microsoft
Dynamics AX 2012. investment. Our quality training from industry experts
keeps you up-to-date on your solution and helps you develop the skills necessary
for fully maximizing the value of your solution. Whether you choose Online
Training, Classroom Training, or Training Materials; there is a type of training to
meet everyone's needs. Choose the training type that best suits you so you can
stay ahead of the competition.
Online Training
Online Training delivers convenient, in-depth training to you in the comfort of
your own home or office. Online training provides immediate access to training
24 hours-a-day. It is perfect for the customer who does not have the time or
budget to travel. Our newest online training option, eCourses, combine the
efficiency of online training with the in-depth product coverage of classroom
training, with at least two weeks to complete each course.
Classroom Training
Classroom Training provides serious, in-depth learning through hands-on
interaction. From demonstrations to presentations to classroom activities, you
receive hands-on experience with instruction from our certified staff of experts.
Regularly scheduled throughout North America, you can be sure you will find a
class convenient for you.
Training Materials
Training Materials enable you to learn at your own pace, on your own time with
information-packed training manuals. Our wide variety of training manuals
feature an abundance of tips, tricks, and insights you can refer to again and again:
Microsoft Dynamics Courseware

The Microsoft Dynamics Courseware consists of detailed training manuals,
designed from a training perspective. These manuals include advanced topics as
well as training objectives, exercises, interactions and quizzes.
Look for a complete list of manuals available for purchase on the Microsoft
Dynamics website: www.microsoft.com/Dynamics.

0-1
Microsoft Dynamics Courseware Contents

Test Your Skills
Within the Microsoft Dynamics Training Materials you find a variety of different
exercises. These exercises are offered in three levels to accommodate the variety
of knowledge and expertise of each student. We suggest you try the level three
exercises first, if you need help completing the task look to the information in the
level two exercises. If you need further assistance each step of the task is outlined
in the level one exercise.
Challenge Yourself!
Level 3 exercises are the most challenging. These exercises are designed for the
experienced student who requires little instruction to complete the required task.
Need a Little Help?

Level 2 exercises are designed to challenge students, while providing some
assistance. These exercises do not provide step by step instructions, however, do
provide you with helpful hints and more information to complete the exercise.
Step by Step
Level 1 exercises are geared towards new users who require detailed instructions
and explanations to complete the exercise. Level 1 exercises guide you through
the task, step by step, including navigation.
Quick Interaction: Lessons Learned

At the end of each chapter within the Microsoft Dynamics Training Material, you
find a Quick Interaction: Lessons Learned page. This interaction is designed to
provide the student with a moment to reflect on the material they have learned.
By outlining three key points from the chapter, the student is maximizing
knowledge retention, and providing themselves with an excellent resource for
reviewing key points after class.
0-2

Introduction
Documentation Conventions
The following conventions and icons are used throughout this documentation to
help you quickly and effectively navigate through the information.
CAUTION: Cautions are found throughout the training manual and are preceded by
the word CAUTION in bold. Cautions are used to remind you of a specific result of a
specific action which may be undesirable.
HINT: Hints are found throughout the training manual and are preceded by the word
HINT in bold. Hints are used to suggest time-saving features or alternative methods for
accomplishing a specific task.
NOTE: Notes are found throughout the training manual and are preceded by the word
NOTE in bold. Notes are used to provide information which, while not critical, may be
valuable to an end user.
BEYOND THE BASICS: Advanced information found throughout the training manual
is preceded by the words BEYOND THE BASICS in bold. Beyond the Basics provides
additional detail, outside of standard functionality, that may help you to more optimally
use the application.
EXAMPLE: Examples are found throughout the training manual and are preceded by
the word EXAMPLE in bold. Examples bring to light business scenarios that may better
explain how an application can be used to address a business problem.

0-3
Student Objectives
What do you hope to learn by participating in this course?
List three main objectives below.
1.
2.
3.
0-4

CHAPTER 1: PROJECT VALIDATION

Objectives
The objectives are
Explain project validation.
Set up project validation parameters.
Enable validation for workers.
Set up validation groups.
Set up project validation category assignments.
Introduction
This chapter discusses the project validation system.

1-1
Concepts
Project validation is an optional feature of the Project management and
accounting module that is used to control the recording of project transactions.
You can use project validation to control lists of workers, projects, and categories
that are available in the hour, expense, fee, and item journals, item tasks, and
timesheets. You can also use project validation to set up detailed restrictions to
control the costs allowed on a project. The rules limit the values presented in the
forms and prevent the posting of records that violate the validation setup.
To make setting up validation easier you can establish validation groups. You
can use:
1-2
Worker/project groups to determine one or more projects and a

limited set of workers that can register their time against these
projects.
Project/category groups to determine one or more projects and a

limited set of cost categories that can be registered against the
projects.
Category/worker groups to combine a set of one or more workers

and a set of one or more cost categories used for the validation setup.


The following diagram displays how the combinations can be set up.
FIGURE 1.1 VALIDATION DIAGRAM
Project validation is controlled by setting up:
Parameters in the Project parameters form.
Validation groups.
Assignments for individual workers and projects.
Assignments for employees, categories, and projects.
Project Validation Parameters

Open Project management and accounting > Setup> Project management
and accounting parameters to open the Project parameters form. Validation is
set up on the General tab for one or more of the following validation
combinations:
Project/category
Worker/project
Category/worker

1-3

A field must be set to Lookup or Mandatory for validation to be activated for
the specific combination.
FIGURE 1.2 PROJECT PARAMETERS FORM VALIDATION
There are three options available that control the validation in the journals:
None
Lookup
Mandatory
The following table provides the option name and description.
1-4
Option
Description
None
Overrules the definitions set in the validation system. No

limitations are applied and the validation system is turned
off.
Lookup
The choices displayed at lookup are limited to what is

defined in validation groups. However, other options are
accepted upon entry even though they do not display on the
lookup list in the journals.
Mandatory
Only available choices upon entry in journals are the

combinations specified in the validation system.

Enable Validation for Workers

By default, workers are not constrained by the project validation system. You
must enable this for the workers you select. To do this, follow these steps.
1. Open Human resources > Common > Workers > Workers.
2. Select a worker.
3. On the Action Pane, on the Project management tab, in the Setup
group, click Project setup.
4. In the Project setup form, select the Category check box, the Project
check box, or both.
o A selected Category option enables the Employee/category
validation for this employee.
o A selected Project option enables the Employee/project
validation for this employee.
o If the check boxes are selected, the project parameters apply; if
they are cleared, the project parameter settings are ignored.
FIGURE 1.3 WORKER VALIDATION
Any project validation can now be applied to the selected worker.

1-5
Validation Groups
Microsoft Dynamics AX provides three validation groups to make the project
validation system easier to use. When you create validation groups, give each
group a group name and description, and select available options from two lists
as indicated in the following table.
Group types
List of
List of
Project/category
Projects
Categories
Worker/project
Workers
Projects
Worker/category
Workers
Categories
Procedure: Create Worker/Project Validation Group

To create the worker/project validate group, follow these steps.
1. Open Project management and accounting > Setup> Validation >
Worker/project validation groups.
2. Click New and specify a group name in the Name field and an ID in
the Worker/project field.
3. Under the Worker tab, locate and select workers in the Remaining
workers table and then click the < sign to move the workers to the
Selected workers table.
4. Under the Projects tab, locate and select projects in the Remaining
projects table and then click the < sign to move the projects to the
Selected projects table.
5. Click Close.
FIGURE 1.4 WORKER/PROJECT VALIDATION GROUPS
1-6


NOTE: Use the standard windows functions for selecting multiple rows. To
highlight a range, select the first row then press and hold the shift key while at
the same time selecting the last row in the range. Press and hold the CTRL key
while at the same time selecting a row to toggle a record between selected and
unselected.
The setup for worker/category and project/category validation groups and
individual assignments works the same. Combine the validation groups to
achieve a strict limitation of what workers can enter in project transactions.

1-7
Lab 1.1 - Create a New Validation Group

In this lab, you will validate marketing team activities.
Scenario
The Project team in the Contoso Entertainment Company organization is not the
only team to use the Project module regularly to keep track of costs, expenses
and revenue. To calculate the return of investment (ROI) on larger marketing
activities such as campaigns, the Marketing Department runs internal cost
projects associated with the campaigns. All Marketing employees are only able to
post costs on these internal costs projects.
Challenge Yourself!
Create a new worker/project validation group named Marketing that includes
these employees:
Jodi Christiansen (000065)
Shannon Dascher (000080)
Ted Howard (000098)
Tricia Summers (000116)
Benjamin Martin (000132)
David Hamilton (000144)
These Sales and Marketing employees are only able to post costs to the following
projects:
60001 Marketing Campaign
60002 Entry to Consumer Market Research'
Activate the validation for the worker/project in the journals.
Need a Little Help?

Create a new worker/project validation group and add the selected employees.
Step by Step
To create a new worker/project validation group and add the selected employees,
follow these steps.
1. Open Project management and accounting > Setup> Project
management and accounting parameters.
2. On the General tab, under the Validation group, select "Mandatory"
from the drop- down box for the Worker/project field.
3. Click Close.
1-8


4. Open Project management and accounting > Setup> Validation >
Worker/project validation groups.
5. Click New and use Marketing in the Name field and in the
Worker/project field.
6. Under the Worker tab, in the Remaining workers pane on the right
side, single-click while holding the CTRL button each of the
following workers:
o Jodi Christiansen (000065)
o Shannon Dascher (000080)
o Ted Howard (000098)
o Tricia Summers (000116)
o Benjamin Martin (000132)
o David Hamilton (000144)
7. Click the < sign on the center of the form, to move the workers to the
left pane Selected workers.
8. Under the Projects tab, locate and select project 60001 Marketing
Campaign and 60002 Entry to Consumer Market Research in the
Remaining projects table and click the < sign to move the projects
to the Selected projects table.
9. Click Close.

1-9
Enabling Project Assignments

Once you have defined worker/project and project/category validation groups,
you can define validation assignments for a selected project.
To assign categories for the project, follow these steps.
1. Open Project management and accounting > Common >
Projects >All projects.
2. On the Action Pane, on the Plan tab, in the Validation group, click
Assign categories.
FIGURE 1.5 CATEGORY ASSIGNMENTS VALIDATION LIST
The first tab in the form displays a summary of the categories assigned to the
project. Categories that are the result of a group assignment will have a value in
the Project/category group column. Individual category assignments will have
no value in this column.
1-10


Also visible is a summary of the ledger posting setup for the selected category.
FIGURE 1.6 GROUP ASSIGNMENTS TAB
You can use the Group assignments tab to assign a project/category group to the
project.
FIGURE 1.7 CATEGORY ASSIGNMENTS TAB

1-11

You can use the Category assignments tab to assign specific categories for the
project.
Once you are finished assigning groups and categories, return to the Validation
list tab to view the summary of any changes that you made.
Assigning individual workers and project/worker validation groups to the select
project individual assignments work the same. On the Action Pane, on the Plan
tab, in the Validation group, click Assign workers.
1-12

Lab 1.2: Enable an Employee for a Single Project

In this lab, you will enable an employee for a single project.
Scenario
John Emory, the Team Leader of the Sales team targeting large customers, is
asked to help in the annual negotiation of the service contract running with
customer 10002 Colorado Airport. The costs for having John Emory spend
time on the renewing of the service contract must be recorded on the project.
Challenge Yourself!
Make sure that John Emory (000090) can post hours on project 10002. If not, set
up a one-to-one validation for John Emory on the project.
On the 10002 project, for John Emory, record 12 Sale non-chargeable hours.
Verify the 12 hours are recorded on the project, and that they are not chargeable
to the customer.
Need a Little Help?

Select John Emory from the Worker table and add validation for the project.
Create an Hours journal to charge the hours to the project.
Step by Step
To create an Hours journal and charge hours to the project, follow these steps.
Projects > All projects.
2. Click project 10002. On the Action Pane on the Plan tab in the
Validation group, click Assign workers.
3. Click the Worker tab. Select employee 000090 and click the <
button. Click Close.
4. On the Action Pane on the Project tab in the Journals group, click
Hour.
5. Click New.
6. Enter a line for 12 Hours for Worker 000090 and click the Post
button.
7. Click OK.

1-13

8. Click Close to close the Infolog.
9. Click Close to close the Jounral lines for hours form.
FIGURE 1.8 CREATE HOUR JOURNAL LINES
1-14

Summary
The Project Validation chapter discussed the optional setup needed to run
advanced features in the Project Management and Accounting module. The
chapter focused on the project journal validation feature. This feature controls
which workers and transactions can be posted to specific projects.
The next chapter will cover the advanced project control.

1-15
Test Your Knowledge

Test your knowlege with the following questions.
1. What are validation rules used for?
2. Which of the following journals can you not set up validation for?
( ) Budget
( ) Hour
( ) Expense
( ) Fee
3. What are the types of validation groups? (Select all that apply)
( ) Project/category
( ) Worker/project
( ) Worker/journal
( ) Category/worker
1-16


Take a moment and write down three key points you have learned from this
chapter
1.
2.
3.

1-17
Solutions
Test Your Knowledge
1. What are validation rules used for?
MODEL ANSWER:
Use the validation rules to limit the values presented in the lookup forms and
prevent the posting of records that violate the validation setup.
2. Which of the following journals can you not set up validation for?
() Budget
( ) Hour
( ) Expense
( ) Fee
3. What are the types of validation groups? (Select all that apply)
() Project/category
() Worker/project
( ) Worker/journal
() Category/worker
1-18

CHAPTER 2: PROJECT FORECASTING

Objectives
The objectives are:
Review concepts of project budgeting and forecasting.
Use forecast models.
Enter forecasts for hours, expenses, fees, items, and on-account

payments.
Set up forecast scheduling.
Define forecasting on hours.
Introduction
This chapter discusses forecasting within the Project management and accounting
module. It describes how the concepts are closely linked within this module and
how they can be used in all types of projects.

2-1
Concepts
Project forecasting is a process used to forecast expected labor, machines,
expenses, and cash flow that is needed to run projects. Project forecasting is
expected to help optimize the running of a project by using resources effectively,
and by controlling expenses so that a reasonable profit margin can be earned.
In the Project management and accounting module project forecasts can be
entered against the following transaction types:
Expenses
Fees
Items
Hours
NOTE: Entering revenue forecasts does not equal the handling of cash flow
forecasts. It is just a listing of expected revenue outside the ordinary invoicing or
revenue recognition process. This is revenue in the sense of direct income, not
the sales value of activities and material consumed.
Budgeting versus Forecasting

Project forecasting is closely related to project budgeting. You can build project
budgets from forecast models. Additionally, the project budget amounts are
maintained as two specified forecast models for control and reporting purposes
and Microsoft Dynamics AX supports a cost control mechanism called forecast
reductions.
Project budgeting is described in the Project management and accounting
Essentials course.
2-2

Forecast Models
Open Inventory and warehouse management > Setup > Forecast > Forecast
models.
FIGURE 2.1 FORECAST MODELS FORM
When you set up forecasts you can create a new record for each forecast model to
use, and create submodels if a model hierarchy must be built. The model
hierarchy can only contain two levels.
You can use the Stopped check box to block the forecast model for any
additional changes or editing of the forecast lines. This applies only if there is a
plan to have a forecast model for each project. If so, when the model is stopped,
you can work with estimating on fixed-price projects by using the initial forecast
model as a baseline for comparison.
NOTE: To use a default forecast model, specify the model ID in the Project
management and accounting parameters form on the Forecast tab. The model
specified in the parameters is then suggested when entering project forecasts.

2-3
Enter Forecasts
After you have defined forecast models, you can enter forecasts for hours,
expenses, fees, items and on-account payments.
Open Project management and accounting > Common > Projects > All
projects. Select a project. On the Action Pane, on the Plan tab, in the Forecast
group, you can click a specific type of forecast.
FIGURE 2.2 FORECAST OPTIONS
2-4


Hour Forecasts
You can use the hour forecasts to forecast expected hour consumption and to
schedule time allocation for workers.
FIGURE 2.3 HOUR FORECASTS
To forecast hours, you can enter a worker (although this is not a required field, it
must be entered), a category, and the number of hours. You cannot enter a total
currency amount. Be as precise on the hours forecast as needed by entering
individual workers, activities and categories. Forecast at a less detailed level, if it
is necessary.
Although worker is not a required field, to use the hours forecast functionality,
you must have a cost price to use to calculate the dollars for the forecast. So you
might have to set up generic workers with a blended cost price if there is
insufficient information to forecast each worker.
For example, you can set up a generic worker called Consultant with a cost price
of 50.00 United States dollars (USD) to use as the forecasting worker. By doing
this you do not have to know who the person is working on each project
forecasting the hours.

2-5

Expense Forecasts
With expense forecasts the expenses can be in the company currency or in a
foreign sales currency.
FIGURE 2.4 EXPENSE FORECAST FOR PROJECT 20002
When you forecast expenses, you will enter the forecast model, category and the
cost price.
You will need to enter a quantity to have the forecast picked up in the estimate
process. This quantity relates to the number of transactions for this category. For
example, if there are three transactions for airfare, enter three as the quantity. To
capture markup information, enter a sales price.
Open Project management and accounting > Inquiries > Forecasts >
Expense.
2-6


Fee Forecasts
You can use fee forecasts to forecast expected fees on time and material projects.
Fee forecasts cannot be entered on fixed-price projects because the on-account
payments serve the purpose of recording expected installments or revenues for
these types of projects. You can forecast fees with sales prices and a break-down
of the fees for a specific time.
Open Project management and accounting > Inquiries > Forecasts > Fee.
FIGURE 2.5 FEE FORECASTS FORM
To forecast fees, you will enter the forecast model, category, and sales price.
The fee forecast shown in the previous figure is revenue that is outside the
regular billing and revenue recognition process. These are additional revenue
items such as bonuses or fees.
Item Forecasts
Unlike hour, expense and fee forecasts, item forecasts are part of the inventory
forecasts and also part of the forecast scheduling from the Master planning
module.
When you enter item forecasts on a project, you must make sure that the system
considers these forecasts when forecast scheduling is run, and that planned
purchase or production orders are effectively achieved and suggested for the
forecasted items.

2-7

If you forecast sales on projects they can then be included as part of item
coverage.
Open Project management and accounting > Inquiries > Forecasts > Item
forecast.
FIGURE 2.6 ITEM FORECASTS FORM
To forecast items, you will enter the forecast model, quantity, and cost price.
You can also forecast by individual item if that level of detail is known.
Otherwise, leave the item number blank and forecast by currency amount. Enter a
quantity of at least one to have the item forecast included in the estimating
process.
2-8


On-Account Forecasts
You can use on-account forecasts to forecast expected on-account payments for
both fixed-price and time and material projects.
FIGURE 2.7 ON-ACCOUNT FORECASTS FORM
For on-account forecasts, you will enter the project date, forecast model, and the
sales price.
The description entered is optional. However, including a description will
provide a more detailed identification of the transaction that is in the forecast. If
the on-account payment is in a time and materials project, enter the offsetting
line.

2-9

Edit Forecasts
You can use the edit forecasts to edit current forecasts if the forecast model has
not been stopped. You can copy, update or delete the forecasts lines. You can
also use the edit forecasts to create new forecast models that are based on
previous forecast models, or to adjust an already existing forecast by updating it
with new values.
FIGURE 2.8 EDIT FORECAST TRANSACTIONS FORM
To use the Edit functionality, follow these steps.

1. Select the forecast line and then click Edit from the specific forecast
form.
2. Select those elements to include in the change by clicking the check
box and what their new value is in the field next to it.
3. Manipulate the quantity and amount fields by using a multiplication
factor and, or an addition constant in the Changes in amount group.
2-10


NOTE: Edit forecast transactions
A forecast for January is made for 100 hours at a sales price of 20.00 USD for
each hour. The forecast must shift to May and it is now for 150 hours, with a
sales price increase of ten percent.
By specifying an update of the forecast model and applying a date factor of four
months and a quantity of plus 50 (the 50 hour increase) with an additional
amount factor of .10 (ten percent increase), the result wanted is achieved.
You can edit forecasted transactions to easily adjust and update estimates when
you work with fixed-price projects. This makes it easier to evaluate the estimates
against actual consumption.
Copy Forecasts
You can copy individual forecast lines by using the edit button, and you can also
copy entire forecasts by using the Copy functionality. This function will copy an
entire forecast model and move the transactions to a new forecast model.
The copy function can be run for an individual project or group of projects if the
include subprojects box is checked.
Open Project management and accounting > Inquiries > Forecasts > Item
forecast. Click Copy.
FIGURE 2.9 COPY FORECAST FORM
Allocate Forecasts
The period allocation keys available in the Item forecasts resemble those that are
available in the General ledger for budgeting. You can use the allocation keys to
duplicate data.

2-11

To simulate financial information within a specific period, you can use a
repetitive frequency known as the allocation method.
FIGURE 2.10 ALLOCATE FORECASTS
You can apply any of the three different allocation methods.
None: Indicates nothing is allocated, because the specified amount or

quantity is considered as a total.
Period: Used to specify a desired length to divide the allocations

into. The Quantity, Unit, and the End fields determine the total
length of the period, and the frequency.
Key: Requires a predefined key definition be applied.
You can view the allocation by pressing Forecast balances or Inventory

forecast.
2-12


Procedure: Convert Forecasts to a Ledger Budget
To convert a forecast to a ledger budget, follow these steps.
1. Open Project management and accounting > Periodic >
Forecast > Copy forecasts to ledger.
FIGURE 2.11 COPY FORECASTS TO A LEDGER
2. In the Copy forecasts to ledger form, on the General tab, under

Include statement, select the statement types Profit and loss and
WIP from which to transfer the forecast transactions.
3. Under Project date, select the date range of 1/1/2008 to 4/1/2010 for
the project forecast transactions you want to copy.
4. Under Ledger date, select the date range of 1/1/2008 to 4/1/2010 in
the General ledger to include the transferred updates.
5. In the From forecast model, select the Annual budget you want to
copy.
6. In the To ledger budget model, select a Total you want to copy the
forecast to.
7. Click OK.
Transferring Project Quotation Lines to a Forecast

Once a quotation is accepted, you can use it to create a new project or add to the
forecast of an existing project. The advantages of doing this are that the quotation
transfer function brings the quotation lines into the project as forecast lines. Also,
the list of transactions that consist of both the quotation and the forecast must be
created one time only.

2-13
Lab 2.1 - Edit a Forecast

In this lab, you will edit a forecast.
Scenario
The project manager for project 10005 Service Valley Hotel is forecasting the
hours that he or she will be spending on project management for the month of
July. The project manager expects the month of July to be twice the hours that
have been forecasted for March. The project manager wants to use the forecast
from the "Annual" forecast model for March to create the Hour forecasts for July.
Challenge Yourself!
Create the new budget using the Edit functionality.
Need a Little Help?

When you edit transactions make sure that the functions are set to copy and the
date is marked to change by four months.
Step by Step
To create the new budget using the Edit functionality, follow these steps.
2. Select project 10005.
3. On the Action Pane, on the Plan tab, in the Forecast group, click
Hour forecasts.
4. Click a line that occurs in March and has the Forecast model
"Annual" and a Category "PM."
5. Click Edit.
6. Under Change of period check the Quantity box. Change the
Period to "Months."
7. Enter "2" in the Quantity field.
8. Click OK.
2-14

Forecast Scheduling
Project managers can use the Microsoft Dynamics AX Project management and
accounting module to group forecasted hour consumption by worker. To plan and
schedule hours, this module uses work center groups and work centers. You can
use the hour scheduling function to perform job scheduling and operations
scheduling.
Because the scheduling function resembles the production scheduling function, a
complete setup is not required to perform the scheduling routine from the Project
management and accounting module.
Scheduling Workflow
To perform the scheduling process, follow these steps.
1. Create working times and calendars.
2. Set up work center groups and attach individual work centers to do
operations or job scheduling.
3. Define which basic parameters to consider when you perform the
scheduling routine.
4. Create forecast models and enter forecasted hours on projects
alongside work centers.
5. Perform an operations or job scheduling run.
6. Review capacity load and display this in a Gantt chart.
7. Perform rescheduling.
Working Times and Calendars

Planning involves a timeframe, so you will need to create a calendar for
scheduling. When setting up calendars:
Both the Production control and Project management and accounting

modules share the same calendars.
Attach all workers subject to scheduling to a calendar.
There is no limit to the number of calendars to create.

o
Use multiple calendars to differentiate between different types of

hours on a project. For example, different calendars could be set
up for project consultants and production workers.

2-15

This New Calendar Flowchart shows how to create a new calendar including
working times.
FIGURE 2.12 NEW CALENDAR FLOWCHART
This sequence is necessary to complete the final calendar set up. The set up
includes basic To and From time fields, and includes the insertion of breaks by
specifying new From and To times.
You can use the efficiency percentage to specify how the set up and processing
time is determined. For example, a specification of 200 percent doubles the
scheduled available time.
You can use a property linked to a working time only when you are running
scheduling relative to productions. This is a sharing principle that is used to
schedule productions at the same time.
Procedure: Create a Working Time Template

To create a working time template, follow these steps.
1. Open Organization administration > Common > Calendars >
Working time templates.
2. Press CTRL+N to create a new line.
3. In the Working time template field, enter an alphanumeric
identifier of up to ten characters in length.
4. In the Name field, enter a descriptive name for the template.
5. Select the tab that corresponds to the day of the week for which
working hours are to be set.
6. Press CTRL+N to create a new line to input operation hours.
7. In the From field, enter the starting time for the day or period.
8. In the To field, enter the ending time for the period. This can be
defined as a day, a shift, or a temporary cease in operation such as a
lunch period.
2-16


9. In the Efficiency field, type the efficiency percent.
10. In the Property field, select the property for the selected day's
working time template.
11. Repeat steps 7 through 10 for each period to be included in the
template for a particular day and for each day of the week.
Procedure: Create a Working Calendar

To create a working calendar, follow these steps.
1. Select Basic > Calendar.
2. Press CTRL+N to create a new line in the Calendar form.
3. In the Calendar field, type an alphanumeric identifier of up to ten
characters in length.
4. In the Name field, type a descriptive name.
5. In the Base calendar field, select the base calendar that the current
calendar is based on.
6. Click Working times to create or update working times for the
current calendar.
7. From the Working times calendar form, click Compose working
times to set up automatic creation of working times.
8. In the Compose working times dialog box, under Calendar, select
the new calendar name that you just created. (If relevant, you can
also select a different calendar.)
9. In the From date field, enter the date that you want to begin using
the calendar. The field contains the current date as the default date.
10. In the To date field, enter the date you want the calendar to end. The
field contains a default date of one year from the current date.
11. Select the Use base calendar check box if you want to create this
calendar from a base calendar.
12. In the Working time template field, select the appropriate template.
13. Click OK.
14. From the Working times calendar form, click Copy calendar to set
up automatic creation of working times.
15. In the Copy calendar dialog box, select the calendar you want to
copy in the From calendar field.
16. In the To calendar field, select the calendar to which the original
calendar is being copied.
17. Select the check box Copy property if you want to include
properties when you copy the calendar.
18. Click OK to save the calendar and close the form.

2-17

Resource Groups
Scheduling involves work centers, not workers. With the Project management
and accounting module you can use the type of resource and the capacity-related
options to determine the project schedule. When you use work centers, you can
schedule all resource types, and schedule whole processes, since it is not limited
to only human resources.
Both the Production Control and Project management and accounting modules
share resource groups and resources.
The General Setup Process Flow Diagram shows the relation to resources.
FIGURE 2.13 GENERAL SETUP PROCESS FLOW DIAGRAM
You can group resource groups to bundle resources. An individual resource

group can only be for one type of resource. However, four types of resources are
available:
Vendor
Human resource
Machine
Tool
Only the Vendor and Human resource types require links to a record in the
tables. For example, the resource group that has the type Vendor could contain
all the different resource roles related to a specific vendor invoice account.
Resource groups are set up in the Basic module.
2-18


Open Organization administration > Common > Resources > Resource
groups.
FIGURE 2.14 RESOURCE GROUPS FORM
When you set up resource groups, you must specify the:
Resource group ID and description.
Main type of resources the resource group collects.
Default calendar used to create related resources.
Default vendor account that is used for the resources, if the type is
Vendor.
Resource Assignments
You can use this form to view a list of workers who are assigned to a project or
an activity. You can display worker assignments for a specified time period, for a
project, for a specific worker, or for a commitment type (a tentative or a firm
commitment).
Open Project management and accounting > Inquiries > Assign resources >
Resource assignments.
Working Time Variances

A calendar controls the actual working times available for the different
resources/work center groups or work centers, and the system automatically
reserves capacity based on the time defined. However, you might need to block
the system from reserving capacity on a whole group of resources or on a specific
resource.

2-19

The working time for the related calendar can be recomposed, although it might
be difficult especially if most of the resources are using the calendar and the
results should not affect everyone. Rather than recompose working times, use the
working time variances. Define variances for the whole resource group or for a
specific resource.
To set up variances, from the resource group or the individual resource, follow
these steps.
1. Click Calendar deviations on the Resource groups form.
FIGURE 2.15 GROUP CALENDAR DEVIATIONS FORM
2. Create and manage calendar deviations by date for the current

resource or resource group.
3. In the From date, specify the starting date in the window.
4. The default calendar appears for each resource and day. However, it
can be overruled. To change the calendar for a particular resource
and day, make the change from the default calendar.
Scheduling Parameters
Different parameters can control the outcome of scheduling. These parameters
are set up in different modules.
The following table provides an overview of the parameters that affect the hour
scheduling when it is performed from the Project management and accounting
module.
2-20


Parameter
Module
Purpose
Efficiency
percentage
Basic/Work center
Groups and work
centers
Reduces or increases the time

reserved for completing the job.
Formula:
Required working time * 100 /
efficiency percentage
Operations
scheduling
percentage
Basic/Work center
Groups and work
centers
When you perform operations

scheduling, the maximum percentage
of the daily capacity of the work
center.
Finite
capacity
Basic/Work center
Groups and work
centers
Marked:
Reserve capacity and do not allow to
reserve more than available.
Unmarked:
Reserve capacity and exceed reserved
capacity limits.
Exclusive
Basic/Work centers
Marked:
Reserve work center capacity
exclusively for a job.
Unmarked:
If capacity is not used 100 percent,
reserve the work center for other jobs,
if it is necessary.
Capacity
planning
production
Project/Parameters
Consider derived capacity

reservations from productions when
calculating the available capacity.
Capacity
planning
planned
orders
Project/Parameters
Consider derived capacity reservation

from planned orders when calculating
the available capacity.

2-21
Lab 2.2 - Add a New Resource

In this lab, you will create a new resource in an existing resource group.
Scenario
The project manager for a company has just completed purchasing and installing
a new drilling machine. He or she wants to make the new machine available for
use in the production schedule.
Challenge Yourself!
Create a new resource in an existing resource group.
Need a Little Help?

Select a resource group, and then click the Resource tab.
Step by Step
To select a resource group, follow these steps.
1. Open Organization administration > Common > Resources >
Resource groups.
2. Click the Drilling Work Center Group, Resource group 006.
3. Click the Resource tab.
4. Click Add.
5. Select a Resource and Calendar.
6. Verify the Ledger accounts have been copied from the resource
group.
7. Click Close.
2-22

Forecasting Hours
Once you have entered all the base data, you can forecast hours on the project;
forecasting on hours does not require scheduling.
Open Project management and accounting > Common > Projects > All
projects. Select or open a project. On the Action Pane, on the Plan tab, in the
Forecast group, click Hour forecasts.
FIGURE 2.16 HOUR FORECASTS FORM
When you forecast hours to schedule project resources, you should be aware of
whether to use activities. This forecast model to use, what category should be
scheduled and the number of hours, and the scheduling parameters.
Activities
Activities facilitate the grouping of different types of categories and provide an
additional method to segment project tasks.
When using activities for hour scheduling, specify the activity number and
description, default category to use, percentage of completion and the order of
the activities. It is optional to use activities for scheduling.
Budget Model
When you forecast in the Project management and accounting module, it is
mandatory to use the budget model. The project manager uses the budget model
to gather forecasted transactions to compare the forecasted transactions against
realized transactions later in the process. However, as for scheduling, it does not
serve any real purpose. The system schedules the forecasted hours without any
direct reference to the budget model.

2-23

Category
When scheduling on hours, you must specify an hour category, and use this
category as a reference only.
Scheduling Options
Some of the important capacity parameters that relate to work center groups and
work centers are located in the Required Base Data section. However, there are
additional important options regarding the tasks to consider when forecasting
hours.
These options are located on the General tab in the Hour Forecast form.
FIGURE 2.17 GENERAL TAB OF HOUR FORECASTS FORM
The following table describes the parameter and purpose located in the General
tab of the Hour Forecasts form.
2-24
Parameter
Purpose
Link
The interdependency of the tasks, when will the next task

start.
Link Type
The acceptance of the interdependency of the tasks; if

overlaps are allowed.
Working
Time
Selected: Defined working time on the work center calendar is

used.
Unselected: An error message occurs that indicates the
parameter set up is incorrect, because project scheduling only
can reserve capacity for working hours.
Note: The parameter is always selected to use the working
time.


Parameter
Purpose
Capacity
Selected:
Reserve work center capacity.
Unselected.
No capacity is reserved.
Notice: Select the parameter default even if the work center
finite capacity option is not selected.
Interdependency of Tasks
If more tasks/hours are scheduled, the system uses the two parameters to reserve
capacity in the specified order of link first and then link type.
You can use one of the following methods to link the tasks:
None
StartStart
EndEnd
EndStart
StartEnd (default link method displayed by the system)
The link type can be Soft (the default link type that is displayed by the system) or
Hard.
If a method is not specified that equals the value None in the previous list, the
system returns an error message "Unrecognized attachment between jobs"
regardless of the link type you select. Do not use this value.
You can use the Soft methods for necessary time lags between the tasks, thereby
optimizing capacity usage and decreasing lead-time.
You can use the Hard methods for a now delay, because the relation between
tasks is strict. This causes increased lead-time and the optimization of capacity
can be poor.
The Scheduling Routine

You can run the scheduling routine after you set up the required base data and
specify the scheduling parameters. To do this, follow these steps.
2. Open a project from the project list.

2-25

3. On the Projects page, on the Action Pane, on the Plan tab, in the
Forecast group, click Hour forecasts.
4. Click the Scheduling tab.
FIGURE 2.18 SCHEDULING TAB ON HOUR FORECASTS FORM
The routine consists of four parts:
Identification
Date and time aspects
Scheduling methods and capacity parameters
Update of references
The system automatically transfers default information from the hour forecasts to
the Project and Model fields.
The Scheduling Routine Continued

You can overrule the project if it is necessary, and you can also change the
project reference so that the hierarchy level specified is considered when you are
scheduling.
Additionally, you can change the budget model, if it is necessary. When
scheduling on a new budget model the system removes the reference to the old
budget model and attaches the new one.
You can use the date and time entered for the project date and start time of the
first task to be scheduled. Even though they are applied, the actual scheduled date
and time can vary for the next tasks according to the link and link type parameter
settings that are specified for the tasks.
2-26


This method uses the capacity available for the whole resource group. The
example illustrates how to schedule a task for completion from today's date.
FIGURE 2.19 RESOURCE GROUP CAPACITY AVAILABILITY
The system reserves the first work center in the group that has available capacity.
If this work center cannot finish the task, the system reserves the next work
center in line with free capacity, continuing until the task is completed.
This method uses the available capacity of the individual work center. This
example illustrates how the system schedules a task to be completed from today's
date.
FIGURE 2.20 RESOURCE CAPACITY AVAILABILITY
Since the resource in question is not available for the task until the end of the
third period and the beginning of the fourth period, you cannot reserve the
capacity. As a result, the task is completed at a later point than first expected.
A final option is to specify whether the scheduling routine should consider
limited capacity reservation.
The parameter in the scheduling routine is set to recognize capacity limitations
by default. By deselecting the option, the system ignores all previously selected,
finite capacity parameters.
Tasks are not ordinarily scheduled individually they are combined in an overall
plan. To make sure that there is the interdependency of the tasks in the project
hierarchy and the task order, two methods are available:
Schedule references
Synchronizing of references

2-27

Use Schedule references to consider the forecasted hours in the whole project
structure. The system searches for the project ID, and related subproject IDs.
Enter all the hours to forecast for the whole project hierarchy on the parent
project. After scheduling, the system moves the forecasted hours to their
respective subprojects, leaving the parent project with the forecasted hours for
the project itself.
EXAMPLE: Schedule references
On a project, forecast 10 service hours. At the same time, forecast five
installation hours for a subproject of the project.
When you run the scheduling routine and selecting to schedule references, the
system takes all hours forecast into consideration. This gives a capacity
reservation for 10 service hours and five installation hours. If references are not
scheduled, only the 10 service hours for the main project are reserved. The five
installation hours transfer to the subproject 9013-1 and there is no capacity
reservation.
When you decide to synchronize references, the scheduling takes the order of the
forecasted hours into consideration.
When rescheduling in a project hierarchy, either by changing the order of the
individual tasks/forecasted hours or by adding/deleting the hour forecasts, the
system automatically recognizes the change and takes appropriate action. The
action could be to change the reservation of capacity for a task that moves
forward in time.
EXAMPLE: Synchronize references
On the subproject from the previous example, forecast six project management
hours. However, complete the project management hours before you do the
actual installation hours, as stated in the previous example.
Prioritize the newly added forecasted hours higher than the installation hours
when the scheduling routine is run again and the synchronize references option
is selected.
The system changes the capacity reservation for the installation hours to start
after the project management hours are completed.
Display Reserved Capacity

Microsoft Dynamics AX offers a basic overview of the reserved project
resources. Two main overviews exist:
2-28
Capacity Load: This is a detailed overview and does not offer a

graphical visualization.
Gantt Chart: The Gantt chart offers a general graphical overview

and the ability to reschedule by dragging and dropping information.


Open Organization administration > Common > Resources > Resource
groups. Select a resource group, and on the Action Pane, click Capacity load.
FIGURE 2.21 CAPACITY LOAD FORM
The capacity load overview consists of three main parts:
Work center related information.
A general overview of capacity.
Specific reference to the scheduled task.
The resource related information includes:
Which resource group or resource is scheduled.
The ID and the name displayed in the form.
Which calendar the system applied to calculate capacity. The

calendar is set up on the resource group/resource.
The name of the current plan that is used.
NOTE: The Plan field depends on the License code Master planning. If the
license code is not available, the field itself and the references on the References
tab page do not display.
In Microsoft Dynamics AX, both the Production control and Project

management and accounting modules share the Capacity Load and
that is why the Plan field is displayed.

2-29

Resource Related Information
The following table describes the field and purpose for the columns located on
Capacity load form.
Field
Purpose
Day
The date.
Week
The calendar week number.
Capacity
Total available capacity for the work center group/ work

center.
Oper.
reserved
Reserved capacity in hours from operation scheduling.
Job reserved
Reserved capacity in hours from job scheduling.
Reserved
Reserved capacity in hours.

Note: This field is always populated with a value
regardless whether operations or a jobs scheduling is
performed.
Job
remaining
Remaining capacity in hours, because of job scheduling,

and before the task is completed. It is the total capacity
minus the reserved capacity.
Remainder
Remaining capacity in hours.

Note: The value is calculated when an operation
scheduling is performed. It is the total capacity minus the
reserved capacity.
For job scheduling, the value is the same as in the job
remaining field.
The Reference tab contains a reference for each individually detailed capacity
reservation. The reference consists of:
2-30
Date and time: The date and time are indicators of the exact date,
start, and end time for the reserved capacity.
Plan and type: The plan contains the name of the dynamic master
plan that is used by the scheduling tool. The type indicates whether it
is the operations scheduling or the job scheduling method performed.
Reference type and number: The reference type refers to the

module where the scheduling originated. The number indicates the
main record related to the scheduling. When scheduling in the
Project management and accounting module, this number equals the
project ID.

Hours: The number of hours scheduled on the specific date is finally

displayed.
FIGURE 2.22 REFERENCE TAB OF CAPACITY LOAD FORM
When you work with the Gantt chart, consider the following:
The Gantt chart provides graphical information whereas the capacity

load provides detailed information about the reserved capacity.
The only difference between the Gantt chart and the capacity load is
the Gantt chart's lack of information about remaining hours. This
occurs because the Gantt chart displays tasks as fully scheduled it
does not show any remaining unscheduled hours for each day.
To view a Gantt chart open Project management and accounting >

Inquiries > Forecasts > Hour. In the menu bar, click Scheduling >
Gantt chart.
The middle of the form displays the actual tasks/hours scheduled. If

some of the bars split, this is caused by non-working days displaying
with a white color. This behavior is caused by a parameter set up.
When you set up the Gantt chart, consider the following:
Modify certain aspects of the Gantt chart set up when you view it for
projects. From the Gantt chart, click Setup > Setup.
Make sure that you select the parameter Load hour forecasts when
you use the Gantt chart for the first time. By not selecting this
parameter, Project information does not show in the Gantt chart.
By selecting the parameter Load calendar, select whether the Gantt

chart should display non-working time, for example, weekends.
Use the color option of the Setup button to change the default
coloring setup.

2-31
Several different color codes can change, but only some have an
effect when you work with project scheduling. This list provides the
name and visual display of color codes to change effectively:
o
o
o
o
Background
Table, Passive
Table, Active
Passive Node
Some additional features that you should be familiar with when you work with
the Gantt chart include the following:
It offers a variety of interaction options that you can use to change

the visual appearance of the chart and also drill-down on the
scheduled tasks/hours. Use the right-click with the mouse on various
parts of the chart to aid navigating in the Gantt chart.
The date overview displays in days and follows the calendar year by
default. Selecting another year is possible by right-clicking the time
bar on top of the Gantt chart.
In the timescale at the top of the diagram, right-click, and then select
the Timescale interval dialog box. Enter from and to dates to define
the time interval that is displayed in the grid.
Timescale unit. Click to select the unit of time that you want to
display in the diagram.
Grid to display a demarcation of time in the diagram. The grid
markings are aligned with the Timescale unit that you select.
o
o
o
o
o
2-32
Minutes are demarcated by hours.

Hours are demarcated by days.
Days are demarcated by weeks.
Weeks are demarcated by months.
Months are demarcated by years.
In the timescale at the top of the diagram, you can select and drag the
timescale grid to resize the scale that is displayed. If you drag to the
right side, you increase the size of the scale. If you drag to the left,
you decrease the size of the scale. This feature facilitates scheduling
with accuracy.
3D layout to display the time scale in three-dimensional format.

There are two ways to display the available jobs data.

o
You can use the order view to display the jobs that are scheduled
for a particular production order, or you can use the resource
view to display the jobs that are scheduled for a particular
operations resource.
When you use the chart, you can switch between the different
views. For example, you can group all operations by order,
regardless of the operations resource, and then sort the
operations by start time. This might be useful if you want to see
how a set of orders flows through various resources before
rescheduling the orders because of a delivery date change from a
customer.
The detailed criteria for the different views can be set up in the
Views form.
The following scheduling activities can be performed by using the

Gantt chart:
o
o
o
o
Reschedule an operations resource.

Reschedule a job or operation.
Reschedule an order.
Cancel scheduling changes.
Click Print to print the Gantt chart. Before printing, preview and
adjust the layout.
Rescheduling
You might need to reschedule a resource because the sequence of operations for
a particular item might no longer be practical or optimal if the orders are
scheduled over a period of time. Also, if a particular resource is becoming a
constraint, you might want to move some of the scheduled jobs or operations to a
different resource.
To Reschedule a Resource
To reschedule a resource, follow these steps.
1. Open Organization administration > Common > Resources >
Resource groups. Select a resource group, and then click the
Resources tab. Select a resource, and then click Gantt chart.
2. In the Gantt chart dialog box, enter a start date and an end date to
define the time period that you want to view in the Gantt chart. Click
OK.
3. In the Gantt chart, select a job and right-click, and then click Open
job scheduling form.
4. The Job scheduling form opens, and you can reschedule the
resource. After rescheduling, you can make additional manual
changes in the Gantt chart.

2-33
Summary
This chapter discussed the use of project forecasts. The use of these functions is
important in the tracking of the profitability of a project. The chapter also
discussed hour forecasts scheduling.
2-34

Test Your Knowledge

Test your knowledge with the following questions.
1. In which module(s) do you find the Forecast model form? (Select all that
apply)
( ) Project management and accounting
( ) Inventory and warehouse management
( ) Human resources
( ) Master planning
2. On-account forecasts are used to forecast expected on-account payments for
which of the type of projects? (Select all that apply)
( ) Variable cost
( ) Time and material
( ) Fixed-price
( ) Variable cost with WIP
3. Describe why someone might decide to reschedule a resource.
4. Scheduling involves work centers.

( ) True
( ) False
( ) Only sometimes

2-35

5. Which types require links to a record in the tables when you work with
resource groups? (Select all that apply)
( ) Vendor
( ) Project
( ) Production control
( ) Human resource
6. What are the methods to link tasks to forecasting hours? (Select all that
apply)
( ) StartStart
( ) EndEnd
( ) EndStart
( ) StartEnd
2-36


chapter
1.
2.
3.

2-37
Solutions
Test Your Knowledge
1. In which module(s) do you find the Forecast model form? (Select all that
apply)
() Project management and accounting
() Inventory and warehouse management
( ) Human resources
( ) Master planning
2. On-account forecasts are used to forecast expected on-account payments for
which of the type of projects? (Select all that apply)
( ) Variable cost
() Time and material
() Fixed-price
( ) Variable cost with WIP
3. Describe why someone might decide to reschedule a resource.
MODEL ANSWER:
Someone might decide to reschedule a resource if orders are scheduled over
a period of time, or if the sequence of operations for a particular item is no
longer practical or optimal.
Another reason someone might decide to reschedule a resource is if a
particular resource is becoming a constraint, you might want to move some
of the scheduled jobs or operations to a different resource.
4. Scheduling involves work centers.
() True
( ) False
( ) Only sometimes
2-38


5. Which types require links to a record in the tables when you work with
resource groups? (Select all that apply)
() Vendor
( ) Project
( ) Production control
() Human resource
6. What are the methods to link tasks to forecasting hours? (Select all that
apply)
() StartStart
() EndEnd
() EndStart
() StartEnd

2-39
2-40

CHAPTER 3: ADVANCED PROJECT INVOICING

Objectives
The objectives are:
Set up project invoicing parameters.
Set up funding sources.
Set up funding limits.
Set up funding rules and allocations.
Set up fixed-rate agreements.
Manage grants.
Approve or revoke invoice proposals.
Introduction
This chapter describes advanced features of project invoicing in the Project
management and accounting module of Microsoft Dynamics AX 2012. This
includes funding sources, funding limits, funding rules and allocations. The
chapter also covers grants, which are most often used by the public sector and
research facilities.
This chapter builds on the features presented in the Project Invoicing chapter in
the Project Management and Accounting Essentials class.

3-1
Project Invoicing Parameters

The setup that controls the advanced features of project invoices is on the
Invoice tab of the Project management and accounting parameters form.
Most of these settings are discussed later in the chapter.
FIGURE 3.1 PROJECT INVOICING PARAMETERS
The following table shows the setting and descriptions for the project invoicing
parameters.
3-2
Setting
Description
On-account
invoicing
Specifies behavior around on-account invoices. Select this

checkbox if you want the invoice to only be reduced by
paid on-account amounts.
Project contract
Select this check box to receive a prompt before customer

information is automatically transferred to the project
contract.
Credit rating
Select whether a warning or an error message is delivered

if the customer credit limit is exceeded. The process can
continue after a warning message is displayed. But the
issue must be resolved before the process can continue if
an error is selected.
Invoice
approval
Select this check box to require approvals for invoice

proposals before updating invoice proposals.
Funding
allocation order
Specify the order in which funding rules are evaluated on

project contracts.


Number Sequence Setup
Several number sequences must be set up before you run an invoice proposal and
subsequently posting an invoice.
The most important number sequences are as follows:
Invoice
Invoice voucher
Invoice proposal
NOTE: It is a best practice to let the invoice voucher reference follow the project
invoice. This makes it easier to track because the internal and external reference
number will be the same.
Funding Sources
A funding source is a party responsible for payment based on the terms of the
project contract. Every project contract must have at least one funding source.
Some project contracts might specify that more than one party will share funding
responsibilities for the project costs. For example, a large customer might request
split funding of a project by its multiple divisions or your company can share the
costs of a large customer project with an internal organization. In the public
sector, a bridge might be funded by a government grant and a private
corporation.
Funding sources make it possible for you to split the billing for a single
transaction or an entire project among multiple customers, grants, or
organizations.
A newly created project contract will have a single funding source but you can
add additional ones. After a customer, organization, or grant is added as a
funding source, it can then be assigned to one or more funding rules. Funding
rules contain the criteria for how to allocate charges to different funding sources
for a project.
Procedure: Adding a Funding Source

To add a funding source, follow these steps.
Projects > Project contracts.
2. Create or open a project contract, and then select the Funding
sources tab.

3-3

3. Click Add.
4. In the Funding type column, select whether this funding source is a
customer, an internal operational organization, a grant, or an on hold
source.
NOTE: On hold funding is a funding source into which you can record
transactions until additional funding can be obtained or until you decide to bear
the costs internally. They are covered later in the chapter.
5. In the Customer column, select the entity that you want to use as a
funding source for the project contract.
6. In the Funding source ID column, enter the name that you want to
use to identify this funding source. The name can be the same as a
customer identification number or name, or any other name that you
want.
NOTE: The content of this field is displayed on transactions and in reports to
identify the funding source.
7. To change the default address and language specified when you
make a selection in the Customer field, change the selections in the
Invoice address and Language fields.
After you designate a customer, grant, or internal organization as a funding
source, it can be included in the funding rules and funding limits that you create
in the Funding limits and Funding rules tabs.
Procedure: Editing a Funding Source Details

To view funding source details or create additional funding sources on the
Project contracts details form, follow these steps.
Projects > Project Contracts.
2. Create a new project contract or select an existing project contract,
and then click the Funding sources tab.
3-4


3. Click Details
FIGURE 3.2 FUNDING SOURCE DETAILS
Funding Limits
Once you have defined at least one funding source, you can set up funding limits
on the Project contract details form. For example, you can set limits for hotel
expenses or worker hours.
When you specify limits at multiple funding levels (for example, at the funding
source and/or an individual project) then limits for all levels are applied on each
transaction.
For example, this table shows that you specified the following initial funding
limits, shown in the (United States dollar (USD).
Funding source
Project ID
Customer
Amount
Spent Amount
8,000.00 USD
0.00 USD
Customer
P1
5,000.00 USD
0.00 USD
Customer
P2
6,000.00 USD
0.00 USD
If you enter an hour transaction for 4,000.00 USD for project P1, the following
will be visible:
Funding source
Project ID
Customer
Amount
Spent Amount
8,000.00 USD
4,000.00 USD
Customer
P1
5,000.00 USD
4,000.00 USD
Customer
P2
6,000.00 USD
0.00 USD
This means that a new transaction in project P2 for 5,000.00 USD would not be
allowed because it would exceed the amount for the funding source.

3-5

Procedure: Adding a Funding Limit
To add a funding limit, follow these steps.
2. Create a new project contract or select an existing project contract,
and then click the Funding limits tab.
3. Click Add, select a project ID and funding source, enter a limit in the
Amount field.
4. In the additional columns, enter options to define the scope of the
funding limit.
5. Repeat steps 2 through 4 for each funding limit that you want to
apply to the project contract.
FIGURE 3.3 PROJECT CONTRACT FUNDING LIMITS
NOTE: Funding sources are not ordered. Therefore a transaction will consume
funds from all applicable limits simultaneously. To change the order in which
funds are consumed you will need to specify a funding rule, described later in
this material.
On Hold Funding Source

Each project contract can have a single, additional funding source called the on
hold funding source. When this is present on a contract, any transaction amount
that exceeds the total funding limit for all other sources will be allocated to this
source. If an on hold funding source is not specified, the transaction will not be
allowed.
If the limits change, you can later use the Adjustments form to re-allocate funds
on selected transactions to other funding sources.
3-6


NOTE: The on hold funding source is actually implemented as an internal
funding source. To use an on hold funding source, you will first need to define a
business unit in Organization Administration > Common > Organizations >
Internal organizations.
Funding Rules
Funding rules determine how billing is allocated between multiple funding
sources. Some project contracts might specify that more than one party will share
funding responsibilities for the project costs.
For example, a large customer might request split funding of a project by its
multiple divisions, or your company can share the costs of a large project with an
external organization. With project contracts you can split the billing for a
category or an entire project among multiple funding sources (customers, grants,
or organizations).
FIGURE 3.4 PROJECT CONTRACT FUNDING RULES
When you create a new project contract, you will get a single funding rule. It will
allocate all funds for all transactions to the initial funding source defined on the
contract. If you add additional funding sources to a contract, they will not be used
unless you reference them in a funding rule.
Procedure: Adding a Funding Rule

To add a funding rule, follow these steps.
2. Select a project contract with multiple funding sources and then click
Edit on the Action Pane.

3-7

3. On the Project contract details form, open the Funding rules tab.
4. Select an existing rule or create a new rule and then click
Allocations.
5. Change the allocation percent. The total allocation must add up to
100 percent and one source must be designated for rounding.
6. Click Close.
You can choose optional start and end dates to define the period of time for
which each funding rule is valid.
NOTE: The funding allocation order parameter in the Project management and
accounting parameters form determines the order in which funding rules are
evaluated when a transaction is applied to a project associated with a project
contract. You will probably not want to change this parameter value once you
begin entering transactions because it will result in inconsistent allocations.
3-8

Lab 3.1 - Manage Contract Funding Sources and Limits

In this lab, you will create an on hold funding source and create an invoice
proposal.
Scenario
Contoso has contracted on a project to perform some equipment maintenance
work for Owl Wholesales. Owl wants the invoices to be split between Owl and
the sister company, Sunset Wholesales (50 percent to each). The work will be
done on a time and materials basis but the total amount billed for the project
should not exceed 2,000 USD.
The project takes 40 hours of time. The account manager reviews the invoice
proposals and asks Owl to raise the cap on the project to 2,500 USD. They agree
and the account manager adjusts the invoice to reflect the updated amount.
Challenge Yourself!
Create the project contract and project. Enter an hour journal for the work that is
performed. Update the contract and adjust the hour transaction to consume the
additional cap. Create the resulting project invoice proposals.
Need a Little Help?

Create an on hold funding source on the project contract to handle the amount
that is charged over the cap. Use the Adjustment form to adjust the transaction
before you create the new invoice proposals.
Step by Step
2. On the Action Pane, on the Project contract tab, in the New group,
click Project contract.
3. In the New project contract form, enter OWL01 for the Project
contract ID.
4. In the Name field, enter Owl Equipment Maintenance.
5. In the Funding source drop-down, select Owl Wholesales (1202).
6. Click OK. The Project contract details form appears.
7. Open the Funding sources tab, click Add on the toolbar.
8. Select Sunset Wholesales (1102) in the Customer drop-down.
9. Click Add on the toolbar to add another funding source.
10. Select On hold for the Funding type.
11. Select Services for the Customer drop-down.
12. Open the Funding limits tab.
13. Click Add on the toolbar.

3-9

14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
3-10
Select Owl Wholesales for the Funding source drop-down.

Enter 1,000 for the Amount field.
Click Add on the toolbar.
Select Sunset Wholesales for the Funding source drop-down.
Enter 1,000 for the Amount field.
Open the Funding rules tab.
Make sure that the first funding rule is selected and then click
Allocation on the toolbar.
In the Funding rule allocations form, Owl Wholesales will be
allocated at 100 percent. Change the allocation to 50 percent.
Click New.
Select Sunset Wholesales in the Funding source drop-down. The
allocation will be set to 50 percent. Close the allocation form.
On the Action Pane of the Project contract details form, on the
Project Contract tab, in the New group, click Project.
Select TM1 for the Project group field.
Enter OWL001 for the Project ID field.
Enter Owl Equipment Maintenance for the Name field. Project
contract ID should default correctly.
Select Owl Wholesales for the Customer drop-down. Since there
are multiple customers on the project, no default is chosen.
Click OK.
On the Project details form, on the Project tab, in the Maintain
group, set Project stage to In process.
On the Project tab of the Action Pane, in the Journals group, click
Hour.
A new journal should be created. Click Lines.
Select Service for the Category drop-down. Select Julia
Funderburk 000131 for the worker. Enter 40 for the Hours.
Click Post on the toolbar and then click OK on the confirmation
dialog box.
Click Close on the Journal lines and Journal forms.
On the Action Pane of the Project details form, on the Manage tab,
in the Related information group, click Posted transactions.
The hour transaction should be selected in the list. On the Action
Pane in the View group, click Transaction.


39. On the Hour transactions form, click the Sales tab. The Hour
transaction form shows that the transaction is split with an
allocation of 1,000 USD for both Sunset Wholesales and Owl
Wholesales and another allocation of 600 USD to the on hold
funding source (Services).
FIGURE 3.5 HOUR TRANSACTIONS FORM
40. Click Close.

41. Return to the Project contracts details form for the contract created
earlier.
42. Open the Funding limits tab. You might need to refresh the form to
view the amounts consumed for each source.
43. Change the Amount field for the Owl Wholesales funding source
to 1,250 USD.
44. Change the Amount field for the Sunset Wholesales funding
source to 1,250 USD.
45. On the Action Pane of the Project contract details form, on the
Maintain tab, in the Process group, click New adjustment.
46. Click Select on the Adjustments form.
47. In the selection dialog box, check the Hour check box in Include
transaction types and the On-hold only check box in Funding
sources. Click OK.
48. The previously entered transaction selected in the list should be
visible. If you click the Sales tab for the original transaction, the
Sales price shown for the two funding sources is 25.00 USD.
49. Click Adjust in the toolbar.

3-11

50. Click OK in the Adjust transactions form (use all defaults).
51. If you click the Sales tab, the Sales price for the two funding sources
has changed to 31.25 USD.
52. Click Post.
53. When the Project contract details form appears, press F5 on the
keyboard to refresh the form. The Spent amount is now 1,250 USD
for each funding source.
54. On the Action Pane, on the Maintain tab, in the Bill group, click
Invoice proposals.
55. Click New > Invoice proposals. Make sure Hour transactions are
selected. Click OK in the Create invoice proposals form.
56. Two project invoice proposals are created, one for each funding
source. Select both proposals and then click Post.
3-12

Fixed-Rate Agreements
Projects can have a long time span, and because billing is performed periodically
large time spans can exist in the payment plan. This can create exchange rate
fluctuation risks if the project is being billed in a currency other than the
accounting currency.
The risk of changes in the exchange rate can be covered by selling the expected
currency forward. You can inform the bank that based on the signed project
contract, a certain sum is expected to be received in a foreign currency on a
certain date, and then you can establish a forward contract with the bank. The
bank will quote a rate at the start of the project at which it will buy the currency
on the agreed upon date. By doing this, the exporting company will know the
exact amount of money expected to be received in the companys currency when
the payment is made.
For this purpose, set up fixed exchange rates from the Project contract. Open
Project management and accounting > Common > Projects > Project
contracts. On the Project contracts list page, select a project contract for which
you want to set up a fixed rate agreement. On the Project contract tab on the
Action Pane, in the Setup group, click Fixed rate agreement.
Procedure: Fixed Rate Agreements

To set up fixed rate agreements, follow these steps.
2. On the Project contracts list page, select a project contract for which
you want to set up a fixed rate agreement.
3. On the Project contract tab, on the Action Pane, in the Setup group,
click Fixed rate agreement.

3-13

4. Click New.
FIGURE 3.6 FIXED RATE AGREEMENT FORM
5. On the General tab, enter a Sales currency and if applicable, a

Forward cover number.
6. Click Close.
Set up the following fixed-rate agreements form:
Sales currency
Exchange rate
Forward cover number
When you create a new fixed-rate agreement, the system uses the current
exchange rate for the sales currency you choose. Override this proposed rate with
the new fixed exchange rate that applies when you issue invoices.
The forward cover number from the bank is not required and only serves as a
reference. By setting this up, the system uses a fixed exchange rate when foreign
customers are invoiced.
3-14

Grant Management
You can easily enter and track grants and define relationships to new or existing
projects and project contracts. Grant information is stored in a centralized
location in Project management and accounting so that you can quickly and
easily find information that you need for reporting and informational purposes.
Grant Overview
A grant is a fund designated for a specific purpose or project. Usually, there are
restrictions on how a grant can be spent. In Project management and accounting,
you can enter and track grants and define their relationships to projects and
project contracts.
For example, you can:
Enter and track changes to a grant as it transitions from one status to

another.
Enter and track costs, requested amounts, and awarded amounts.
Create master grants and associate sub-grants with them.
Associate grants with projects and funding sources through links to

the Project form and Project contract details form.
Create a grant by entering all the details into a new record, or copy
and modify the details from an existing grant.
To access the list of grants, open Project management and accounting >
Common > Grants > Grants.
FIGURE 3.7 GRANT LIST

3-15

Use the Grant details form to create new grants or maintain the details for
existing grants. Grant details include project statements, dates and deadlines,
information about the organization that provided the grant and the staff members
who manage it, and other information.
Procedure: Create a Grant

To create a grant, follow these steps.
1. Click Project management and accounting > Common >
Grants > Grants.
2. On the Action Pane, on the Grant tab, in the New group, click
Grant.
3. In the Grant details form, on the General tab, in the Grant ID
field, enter an alphanumeric identifier for the grant.
4. For Grant name, enter a name for the grant.
5. Add details about the new grant.
Procedure: Copy Details from Existing Grant

To copy details from an existing grant, follow these steps.
Grants > Grants.
2. Select the grant that you want to copy.
3. On the Action Pane, on the Grant tab, in the New group, click Copy
from grant.
4. Enter an alphanumeric identifier and a name for the new grant, and
then click OK.
5. In the Grant details form, review the details of the copied grant and
make changes as necessary.
Procedure: View or Modify Details for an Existing Grant

To view or modify details for an existing grant, follow these steps.
Grants > Grants.
2. Select the grant that you want to modify.
3-16


3. On the Action Pane, on the Grant tab, in the Maintain group, click
Edit.
4. Review the grant details and make changes as necessary.
FIGURE 3.8 GRANT DETAILS
NOTE: You can set up grant types, grant customer types, and matching types in
the Project management and accounting module through the Setup > Grants
menu.

3-17
Lab 3.2 - Manage Grants

In this lab, you will create an invoice proposal for a grant customer.
Scenario
Contoso Research has applied for a 100,000 USD grant from Stone University
for a new building construction project. The grant is awarded in the amount of
75,000 USD. Contoso initiated the project and billed Stone University for an
initial amount of 10,000 USD.
Challenge Yourself!
Create a grant, project contract, and a project and issue an invoice for the first
milestone.
Need a Little Help?

Create a new grant and a new project contract that references the grant as the
funding source. Use a fixed-price project and an on-account transaction to
generate an invoice proposal for the grant customer.
Step by Step
To create a new grant and a new project contract that references the grant as the
funding source, follow these steps.
Grants > Grants.
2. On the Action Pane, on the Grant tab, in the New group, click
Grant.
3. In the Grant details form, on the General tab, in the Grant ID
field, enter STU01.
4. In the Name field, enter Stone University Building Grant.
5. Set Grant type field to Sponsored.
6. In the Requested amount field enter 100000 USD.
7. In the Awarded amount field, enter 75000 USD.
8. Set the Grant status to Active.
9. Under the Contact information tab, in the Grant customer field,
select Stone University (2031).
10. Click Close.
12. On the Action Pane, on the Project contract tab, in the New group,
click Project contract.
13. In the New project contract form, enter STU01 for the Project
contract ID.
3-18


14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
Select Grant for the Funding type drop-down.

In the Name field, enter University Building Contract.
In the Funding source drop-down, select STU01.
Click OK.
On the Action Pane, on the Project Contract tab, in the New group,
click Project.
Enter STU001 as the Project ID.
Select Fixed-price for the Project type field.
Select FP1 for the Project group field.
Enter University Building Project for the Name field.
Click OK.
On the Action Pane, on the Project tab, in the Maintain group, set
Project stage to In process.
On the Action Pane, on the Manage tab, in the Bill group, click Onaccount transactions.
Click New.
Enter 10,000 USD for the Sales price.
Click Close.
On the Project details form, on the Action Pane, on the Manage tab,
in the Bill group, click Invoice proposals.
Click New > On-account Invoice proposals.
Click OK.
Click Post.
Select the Print invoice check box to view the actual invoice.
Click OK.

3-19
Invoice Approval
The project invoice approval setup determines who can invoice update, post and
print a project invoice for a customer.
To activate invoice approval, open Project management and accounting >
Setup > Project management and accounting parameters, and then click the
Invoice tab. Select the Active check box and select the appropriate user group. If
this is checked, Approve will be active on the Invoice proposal form, and
proposals must be approved by a member of the specified user group before they
are posted.
FIGURE 3.9 PROJECT INVOICING PARAMETERS
Additionally, the user role assigned in the System Administration module

restricts whether a user can or cannot approve an invoice.
Procedure: Approve an Invoice Proposal

To approve an invoice proposal, follow these steps.
Projects > Project contracts or Project management and
accounting > Common > Projects > All projects.
2. Select the project contract or project that will be invoiced.
3. On the Action Pane, on the Maintain or Manage tab, in the Bill
group, click Invoice proposals.
4. In the Invoice proposals form, select the invoice proposal that you
want to approve and invoice.
5. Click Approve, and then select Approve.
3-20


Procedure: Revoke Approval for an Invoice Proposal
To revoke an approval for an invoice proposal, follow these steps.
Projects > Project contracts or Project management and
accounting > Common > Projects > All projects.
2. Select the project contract or project that is associated with the
invoice proposal that you want to revoke.
3. On the Action Pane, on the Maintain or Manage tab, in the Bill
group, click Invoice proposals.
4. In the Invoice proposals form, select the approved invoice proposal
for which you want to revoke approval.
5. Click Approve, and then select Revoke approval.
Summary
This chapter discussed the advanced features for invoicing projects. This includes
funding sources, funding rules, funding limits, and grants.

3-21
Test Your Knowledge

1. What properties are relevant for grants? (Select all that apply)
( ) Funding sources
( ) Funding rules
( ) Funding process
( ) Funding limits
( ) Status
( ) Sales currency
( ) Awarded amount
( ) Ledger status
3-22


chapter
1.
2.
3.

3-23
Solutions
Test Your Knowledge
() Funding sources
() Funding rules
( ) Funding process
() Funding limits
() Status
( ) Sales currency
() Awarded amount
( ) Ledger status
3-24

CHAPTER 4: ADVANCED INTERNAL PROJECTS

Objectives
The objectives are:
Explain internal projects with work in progress.
Track the financial effects of an internal project with WIP.
Explain investment projects.
Track the financial effects of an investment project.
Introduction
The Project Management and Accounting Essentials course discussed the three
specific internal project types (cost, time, and investment). This chapter shows
how internal projects are configured to include work in process (WIP) and it also
shows the use of investment projects that use the estimate project to track WIP
and to capitalize costs. The chapter will also describe the accounting principles
involved with running these advanced internal projects in the Microsoft
Dynamics AX Project Management and Accounting module.

4-1
Internal Projects with WIP

Unlike a simple internal project where all costs post to the profit and loss
accounts, an advanced internal project can use work in process to post costs to
the balance accounts before transferring them in the profit and loss accounts.
This financial accounting principle controls when project costs affect the
company's financial statement by controlling when these costs are transferred to
the profit and loss accounts. The project costs are accrued in balance accounts
where they are not included in the income statement, until the costs are
recognized and transferred to profit and loss accounts.
An example of an internal project that can benefit by using this kind of project
control is an Information Technology (IT) company developing a new
application. The development can take several years therefore to determine when
the company wants to post development costs. The costs are not directly
connected to the expected sales revenue, and the company might not be able to or
want to accept the costs when they occur. Therefore, it can be determined when
to post and assess the value of WIP on internal projects.
Project Accounting Cycle

The Project Accounting Cycle displays the main events you work with on an
internal costs project with WIP.
FIGURE 4.1 PROJECT ACCOUNTING CYCLE
4-2


The three main events include the following:
Posting costs.
Populating balance accounts.
Moving costs to profit and loss.
Ledger Posting Setup

You can set up the following Cost accounts to run a standard internal project
with WIP. Click Project management and accounting > Setup> Posting >
Ledger Posting Setup.
FIGURE 4.2 LEDGER POSTING SETUP
The following table explains the type of account, the ledger it affects, and how
the ledger is affected.
Account
Ledger
Purpose
Cost
Profit and loss
Debit all costs.
Payroll
allocation
Profit and loss or

balance
Credit hour costs.
WIP cost
Balance
Debit costs.
Credit when moving costs to profit
and loss.
Cost item
Profit and loss
Credit item costs.

Debit when moving costs to profit
and loss.

4-3

Account
Ledger
Purpose
WIP cost item
Balance
Debit item costs.

Credit when moving costs to profit
and loss.
Ledger Principles
When you set up a project group for an internal project to track WIP, select
Balance for each type of cost to handle as WIP. In the following example,
hour, expenses and item costs are handled as WIP.
FIGURE 4.3 PROJECT GROUP LEDGER PRINCIPLES
Once the group is set up, the system will automatically post the cost amounts on
the specified balance accounts.
NOTE: You can choose not to specify a ledger account in the Post costs - hour
field. This causes the system not to post hour costs to the General Ledger. The
hours are still charged to the project for time tracking purposes. Because the
hour costs are still charged to the project, use the periodic Post costs form to
move the costs to the balance or the profit and loss account.
Posting Costs
The registering of the project costs occurs in their respective journals; hour, item
and/or expenses.
Once the respective journals are posted, the system will automatically post the
costs on the balance accounts.
4-4


All costs post to a balance sheet account. Later they can be moved to profit and
loss (P&L) accounts by setting up the project group in this manner.
NOTE: For costs to be capitalized, Capitalize costs must be selected on the
transaction line property.
The following example shows the ledger posting of hours when they are posted
to a balance account.
FIGURE 4.4 LEDGER UPDATES
Notice the costs are posted to balance account number 160100. This is the
Project-WIP Cost account.
Moving Costs
Once the project is completed for internal projects with WIP, the costs posted to
the balance accounts must be moved back to a profit and loss account.
Therefore, they can be recognized as cost on the profit and loss statement.
You can use the Post costs form to move costs that are posted to WIP accounts to
profit and loss accounts. This form is designed to move posted costs to and from
balance and profit and loss accounts as needed throughout the project. The Post
costs form is used by both internal and time and material projects.
Click Project management and accounting > Common > Projects > All
projects. On the Action Pane, on the Manage tab, in the Process group, click
Post costs. Click Select.

4-5

With the necessary selections made in the dialog box, the system locates costs
ready for transfer to other accounts. The following figure is an example of the
selection results,
FIGURE 4.5 POST COSTS
You can modify the transactions before the ledger accounts are updated by
deleting the cost lines in the top grid that should not post, or use the Select button
again. Click the Post button to specify the posting date. After confirming the date
in the dialog box, the selected transactions transfer.
After the transactions are posted, an additional entry will appear on the voucher
for the adjusted transaction to show the offset and the posted WIP amount.
Internal Project with WIP Example

The following example shows a small internal project that uses WIP. The actual
posting to the ledger accounts are displayed.
The example is based on the following transactions:
4-6
Transaction type
Amount
Hour consumption (cost price)
2000 - (A)
Expenses (cost price)
800 - (B)
Item consumption (cost price)
1000 - (C)


Transaction amounts:
Transaction Account
Debit
WIP cost
2,000 - (A)
WIP cost expense
800 - (B)
WIP cost item
1,000 - (C)
Cost
1,000 - (C)
Credit
Payroll allocation
2,000 - (A)
Travel expense
800 - (B)
Inventory issue
1,000 - (C)
Item costs
1,000 - (C)
NOTE: Item costs by default post to the profit and loss account. But a copy of
the value posts to the WIP cost value items account, to reflect the item value in
the balance account.
Hour Consumption
Hours on an internal project are posted from the hour journal or a timesheet.
Depending on how you select to set up the internal project group, the costs will
or will not, post to the General Ledger.
For hours posted to the project (A), follow these steps.
Transactions > Posted project transactions.

4-7

2. On the Action Pane, on the Project transaction tab, in the View
group, click View Voucher. This shows that costs are credited to
Project - payroll allocation (603100) and are debited to the Project WIP costs (160100).
FIGURE 4.6 HOUR VOUCHER TRANSACTIONS
Expense Consumption
You can use the same method to post expenses for internal projects and other
project types.
When you enter the cost lines you can specify an offset account before posting
(or use the default offset accounts set up in the Default offset accounts for
expenses form. The following example uses the Travel expense.
For Expenses posted to the project (B), follow these steps.
Transactions > Posted project transactions.
2. Select the expense transaction.
4-8


group, click View Voucher, this shows the costs are credited to the
Travel expenses and are debited to the Project - WIP costs.
FIGURE 4.7 EXPENSE VOUCHER TRANSACTIONS
The voucher for this cost shows the offset account entered for the expense is
Travel expense account (601500) and the debit is to the WIP expense cost
account (160300).
Item Consumption
You can post item consumption in the same manner for internal projects and
other project types.
For Item costs posted to the project (C), follow these steps.
Transactions> Posted project transactions.
2. Select the item transaction.

4-9

group, click View voucher.
FIGURE 4.8 ITEM VOUCHER TRANSACTIONS
The voucher for this cost shows the offset account entered for the expense is
Project COGS - Items offset account (540500) and the debit is to the WIP item
cost account (160200). There are two additional journal entries for the inventory
issue.
Post Costs Form

You can use the Post costs form to transfer transactions posted as WIP on
balance accounts to profit and loss accounts.
From the Project list, on the Action Pane, on the Manage tab, in the Process
group, click Post costs.
The Select button on this form displays the following dialog box. The selected
project is automatically included in the selection criteria.
4-10


In this example, the parameters specified in the dialog box identify all costs that
occurred on this project within the specified period that might be moved to profit
and loss accounts. Additionally, the selected transactions will be limited to hour
transactions for internal projects.
FIGURE 4.9 THE RESULTS ARE POPULATED IN THE POST COSTS FORM
FIGURE 4.10 POST COSTS

4-11

In the following example, the Voucher transactions form shows all the resulting
ledger transactions from transferring the hour costs to profit and loss accounts. In
addition to the original postings, the original Project WIP account (160100) is
reversed and the Project COGS (540100) account is debited.
FIGURE 4.11 VOUCHER TRANSACTIONS FROM POST COSTS
The costs are now posted. This eliminates the accumulated WIP, and the project
profit and loss report shows the project costs.
4-12

Lab 4.1 - Run an Internal Project with WIP

In this lab, you will create and run an internal project with WIP.
Scenario
The Contoso Company wants to track the costs of a long term Marketing effort.
Because it is a longer term project, costs need to post to a WIP account and later
be moved to a profit and loss account. Create the new project and then charge 40
Sales hours to the project. Then move the costs to a profit and loss account.
Challenge Yourself!
Create the project and charge hours to it. Then move the costs to a profit and loss
account.
Need a Little Help?

Use the project group Internal2 to charge costs to WIP.
Step by Step
To create the project and charge hours to it, follow these steps.
2. On the Action Pane, click the Project tab, and then in the New
group, click Project.
3. Select Internal as the Project type, Internal2 as the Project group,
and enter the Project ID, Project name, and Customer as needed.
Then press OK to create the project.
4. From the Project record, on the Action Pane, click the Project tab,
and then in the Journals group, click Hour.
5. Click New to create a new journal. Enter a line for 40 Sales hours.
Click Close.
6. Go back to the Project record and, on the Action Pane, click the
Manage tab, and then in the Process group, click Post costs.
7. Click the Select button.
8. Ensure that profit and loss is selected and that the proper transaction
and project types are selected. Click the OK button.

4-13
Investment Projects
Another advanced type of internal project is the investment project. The
investment project is used for a long term research and development project that
occurs over several periods.
The key difference with an internal project with WIP is that at the end of the
project the costs can be eliminated to a fixed asset in addition to a ledger account
or to another project. The investment project:
Uses the estimate project functionality to estimate the progress of the

project and to move costs to WIP.
Can have a provision for accrued losses on projects.
Can have costs be setup to post initially to profit and loss accounts or
balance accounts. If setup to initially post to profit and loss accounts,
costs will be moved to WIP during the estimate process.
Can have costs capitalized to WIP accounts. But the line property
must be set up to allow for it.
Ledger Accounts
The following ledger accounts are used to run an investment project.
Account (Cost Price)
Ledger
Purpose
Cost
Profit and loss
Debit all costs.
Payroll allocation
Profit and loss or

balance
Credit hour costs.
WIP cost
Balance
Debit costs.
Cost item
Profit and loss
Credit item costs.
WIP cost items
Balance
Debit item costs.
Accrued loss
Profit and loss
Debit costs when

eliminating.
WIP accrued loss
Balance
Debit costs.
Ledger Principles
Create a project group that uses the following ledger settings to run an
investment project. There is an option as to whether to post costs to a balance
account or a profit and loss account.
4-14


Click Project management and accounting > Setup> Posting > Project
groups.
FIGURE 4.12 PROJECT GROUPS
Processing Investment Projects

The investment project follows a simple flow. When you post costs in the
journals, the system automatically posts amounts to the configured profit and loss
or balance accounts.
At the end of each predefined period the estimate process is run to determine the
percentage complete of the project. If costs are designed to post to profit and loss
accounts initially, they will post to a WIP account during the estimate process.
After the project is complete, the estimates are eliminated and the costs are
moved from WIP accounts to either a fixed asset, ledger account or to another
project as an expense.
How the project will be eliminated must be indicated on the General tab of the
Estimate form.
NOTE: Decide whether to specify No ledger in the Post Costs form that
causes the system not to post hour costs to the ledger, but only record them for
time tracking.

4-15
Investment Project Example

The following example shows an investment project and the table shows the
actual posting on the ledger accounts.
The example is based on the following transactions:
Transaction type
Amount
Hour consumption (cost price)
2,000 - (A)
Expenses (cost price)
800 - (B)
Item consumption (cost price)
1000, (C)
Transaction amounts:
Account
Debit
WIP cost
2,000 - (A)
WIP expense
800 - (B)
WIP cost item
1,000 - (C)
Cost
1,000 - (C)
Credit
Payroll allocation
2,000 - (A)
Expense offset
800 - (B)
Inventory issue
1,000 - (C)
Cost item
1,000 - (C)
Hour Consumption (A)

You can post hours on an investment project from either the hours journal or a
timesheet.
To use WIP, as specified in the Project Management and Accounting module, the
hours costs post to the WIP cost value balance sheet account.
4-16


The following form shows the voucher transactions from the hours transaction.
FIGURE 4.13 HOURS VOUCHER TRANSACTIONS
Expense Consumption (B)

Use the same method to post expenses in an investment project as in other project
types. Provide the offset account to use for the project expenses on each line
recorded in the expense journal. This example uses account 211100, flight
expense.
2. Select a line with Transaction type of Expense for an Investment
type project.
FIGURE 4.14 EXPENSE VOUCHER TRANSACTIONS

4-17

Item Consumption (C)
This shows how the item costs by default post to the profit and loss accounts. It
also posts the cost value to the WIP cost items balance account to track the
project's WIP.
2. Select the line for the item transaction.
3. On the Action Pane, on the Project transactions tab, in the View
FIGURE 4.15 ITEM VOUCHER TRANSACTIONS
The voucher shows the item costs as:

Type of cost
P&L / Balance
Transaction
Inventory issue (140750)
Balance
Credit
WIP cost item (16020)
Balance
Debit
Cost item (540500)
P&L
Credit
Cost (540200)
P&L
Debit
Estimate and Elimination Process

As revenue is not recognized for investment projects, the estimate process does
not use the accounting principles (completed percentage or completed contract)
as in fixed-price projects. The estimate process is only used for capturing WIP
during the project and eliminating the estimates at the end of the project.
After the project is complete, the elimination process is used to move the
remaining WIP to a fixed asset, project, or ledger account.
4-18


For ledger account and fixed asset, the corresponding account or asset must be
specified. If project is selected, the project, category, and line property must all
be specified. An activity or a quantity can also be specified. But these are
optional.
After posting the final estimate, you can complete the elimination by clicking the
Eliminate button in the Estimate form or by using the periodic form accessed
through Project management and accounting > Periodic > Estimates >
Eliminate.
Use this form to eliminate all estimates for a given estimate date. To eliminate a
project, it must be 100 percent complete.
For more information about estimate projects, see the chapter on Revenue
Recognition for Fixed-price Projects.

4-19
Lab 4.2 - Run an Investment Project

In this lab, you will create and run an investment project.
Scenario
The Contoso Company wants to track the costs associated with the research and
development of a new product. Create an investment project to track these costs.
Charge 100 Design hours to the project and run the estimate process. The costs of
the project are eliminated to a fixed asset.
Challenge Yourself!
When running the estimate, use Set cost to complete to zero as the Cost to
complete method before running posting the estimate and elimination.
Need a Little Help?

When you run the estimate, use Set cost to complete to zero as the Cost to
complete method.
Step by Step
To create and run the investment with estimates, follow these steps.
1. 1. Click Project management and accounting > Common >
2. On the Action Pane on the Project tab, in the New group, click
Project.
3. Select Investment as the Project type.
4. Enter INV001 as the Project ID.
5. Select Investment as the Project group.
6. Check New estimate project.
7. In the Cost template field, select a cost template of Contoso.
8. In the Period code field, select a period code of EstMonth.
9. Click OK.
10. On the Action Pane, on the Project tab in the Journals group, click
Hours.
11. Click New to create a new Journal.
12. Enter 20 in the Hours column and Design in the Category field.
13. Click Post.
14. Click OK.
16. Close the Hours journal form.
17. Click Close.
4-20


18. On the Action Pane, on the Manage tab, in the Process group, click
Estimates.
19. In the Estimates form, click New.
20. Enter an Estimate date of a future date.
21. Set Cost to complete method to Set cost to complete to zero.
22. Set Completion method to Automatic and then click OK.
23. On the General tab, select Fixed asset for the Eliminate to field
and a fixed asset number under the Investment tab.
24. Click Post.
25. Click OK.
26. Click Eliminate.
27. Click OK.

4-21
Summary
This chapter discussed different types of advanced internal projects and also
showed how they are run. The Internal Project with WIP is used to track internal
projects over several periods by moving costs to WIP accounts. Investment
projects are used to capitalize internal costs to a fixed asset, ledger account or to
another project.
4-22

Test Your Knowledge

1. From where are hours on an internal project are posted?
( ) Hours journal
( ) General ledger
( ) Projects journal
( ) Contracts form
2. Which of the following is not a type of consumption?
( ) Item
( ) Hour
( ) Variable
( ) Expense
3. When you post costs for an internal project with WIP where are all costs
posted?
( ) Balance sheet account
( ) Profit and loss account
( ) General journal
( ) Cost account
4. Which form is used to transfer costs between balance accounts and profit and
loss accounts?
( ) Accrue revenue
( ) Adjustments
( ) Post costs
( ) Create estimate
5. What are the types of estimation processes? (Select all that apply)
( ) Completed percentage
( ) Percentage contract
( ) Fixed contract
( ) Completed contract

4-23

chapter
1.
2.
3.
4-24

Solutions
Test Your Knowledge
1. From where are hours on an internal project are posted?
() Hours journal
( ) General ledger
( ) Projects journal
( ) Contracts form
2. Which of the following is not a type of consumption?
( ) Item
( ) Hour
() Variable
( ) Expense
3. When you post costs for an internal project with WIP where are all costs
posted?
() Balance sheet account
( ) Profit and loss account
( ) General journal
( ) Cost account
4. Which form is used to transfer costs between balance accounts and profit and
loss accounts?
( ) Accrue revenue
( ) Adjustments
() Post costs
( ) Create estimate
5. What are the types of estimation processes? (Select all that apply)
() Completed percentage
( ) Percentage contract
( ) Fixed contract
() Completed contract

4-25
4-26

CHAPTER 5: ADVANCED TIME AND MATERIAL

PROJECTS
Objectives
The objectives are:
Describe a time and material project with WIP.
Run a time and material project with WIP.
Describe post costs form.
Describe time and material project with accruals.
Run a time and material project with accruals.
Reversing accrued revenue.
Introduction
This chapter describes the accounting principles involved with running advanced
time and material projects in the Microsoft Dynamics AX Project management
and accounting module.
There are two types of advanced time and material projects:
Time and material projects with Work in Progress (WIP cost)
Time and material projects with accruals (WIP sales)
This training material includes a description and setup of each project type, and
an accounting example with a graphical overview of each project type.

5-1
Time and Material Project with WIP

The handling of time and material projects with WIP resembles an internal
project with WIP. The main difference between the two is that a time and
material project includes an invoice procedure that moves costs originally posted
to the balance accounts to the profit and loss accounts.
Generally, you would use this kind of project if there is an extended period of
time between when the costs are incurred and when the costs are invoiced. If so,
a company can then match the cost and revenue to the period in which the
invoice is posted.
For example, a company that provides energy cost savings to its customers
agrees to provide services on a time and material basis with payments depending
on reduced consumption. By using the time and material project with WIP the
company can track the costs in balance accounts until the customers reduced
consumption is verified and invoiced.

The following diagram displays the main events when you work with a time and
material project with WIP.
5-2


The main events are as follows:
Posting costs and fees.
Posting project transactions to balance accounts.
Moving costs to profit and loss (P&L) accounts upon invoicing.
Manually posting costs (if necessary).
NOTE: This project type does not dictate how customer advances (on-account
transactions) are handled. Decide to enter on-account transactions in balance or
profit and loss.

The time and material project with WIP provides the option to track hour,
expenses, item consumption and fees. All costs post to balance accounts as WIP.
Some characteristics of a time and material project with WIP include the
following.
Use WIP on time and material projects to track the project costs in
balance accounts until the customer is invoiced.
Track project costs in WIP accounts until the invoicing period. The
invoice update causes the cost prices to be moved from the balance
accounts to the profit and loss accounts.
The invoice update also causes the sale prices to post to the project's
profit and loss accounts so that costs can be matched with revenue in
the invoicing period.
Use the Post costs form to manually move project costs.
To capitalize costs to WIP accounts, the line property must be set up

to allow for it.
Set up the following cost accounts to run a time and material project that uses
WIP.
Cost Account
Ledger
Purpose
Payroll allocation
P&L or Balance
Credit hour costs.
Cost
P&L
Debit all costs.
WIP cost
Balance
Debit costs.
Credit when invoice updating.
Cost item
P&L
Credit item costs.

Debit when invoice updating.
WIP cost items
Balance
Debit item costs.


5-3

Set up the following sales accounts to run a time and material project that uses
WIP.
Sales Account
Ledger
Purpose
Customer summary account
Balance
Debit on-accounts.
Upon invoice updating debit the invoice amount.
Invoiced revenue
P&L
Upon invoice updating credit the sales value of all costs.
WIP - Invoiced - On account
Balance
Credit on-accounts.
Upon invoice updating debit on-account.
Ledger Principles
Create a project group that uses the following ledger settings to run a time and
material project with WIP.
Open Project management and accounting > Setup > Posting > Project
groups.
FIGURE 5.2 PROJECT GROUPS FORM
The time and material project with WIP follows a simple flow. When you post
costs in the journals, the system automatically posts amounts to the balance
accounts that are set up.
The on-account transactions (which on a time and material project is considered
prepayment revenue) post on a balance account upon on-account invoicing. The
system does not post revenue posted in a journal to the ledger until the project is
invoiced.
5-4


When the invoice project is invoice updated, all costs and on-accounts are offset
and the sales value of the costs together with the fixed fee post to the customer
summary account. The on-accounts are credited from the customer summary
account because they are offset on the actual invoice.
Use the Post costs periodic form to locate project costs not posted to the ledger
and to move these costs to the balance or profit and loss accounts.
NOTE: Decide whether to specify No ledger in the Post hourly costs which
causes the system not to post hour costs to the ledger, but only record them for
time tracking.
Example: Time and Material Project with WIP

The following example shows a time and material project with WIP. The actual
posting on the ledger accounts is displayed.
The example is based on the following transactions, and uses the United States
dollar (USD):
Transaction type
Cost Price
Sales Price
Hour consumption
900 USD - (A)
4,000 USD
Expenses
800 USD - (B)
1,600 USD
Item consumption
1,000 USD - (C)
1,200 USD
Fee
500 USD
This table shows the results of transactions before invoicing:

Account
Debit
WIP cost (hours)
900 USD - (A)
WIP cost (expense)
800 USD - (B)
WIP cost item
1,000 USD - (C)
Cost (Item)
1,000 USD - (C)
Credit
Payroll allocation
900 USD - (A)
Expense Offset
800 USD - (B)
Inventory issue
1,000 USD - (C)
Cost - Item
1,000 USD - (C)

5-5

Hour Consumption
You can post hours on a time and material project from the hour journal or the
timesheet.
FIGURE 5.3 VOUCHER TRANSACTIONS HOUR CONSUMPTION
The postings appear as follows:

Type of cost
P&L / Balance
Transaction
Payroll allocation (603100)
P&L
Credit
WIP cost (160100)
Balance
Debit
Expense Consumption
Use the same method to post expenses in a time and material project as in other
project types. Each expense will have an offset account to use for the project
costs.
FIGURE 5.4 VOUCHER TRANSACTION EXPENSE CONSUMPTION
5-6


Type of cost
P&L / Balance
Transaction
Travel expense (601500)
P&L
Credit
WIP expense costs (160300)
Balance
Debit
Item Consumption
You can record item consumption through the project item journal or vendor
invoices.
FIGURE 5.5 VOUCHER TRANSACTIONS ITEM CONSUMPTION

Type of cost
P&L / Balance
Transaction
Balance
Credit
Project cost (540210)
P&L
Debit
Project cost item (504500)
P&L
Credit
Balance
Debit
Fees
You can record and post the fixed fees amount through the fee journal. Because
there are no costs associated with fees, there are no voucher transactions
reflecting the revenue until invoicing.

5-7

Invoicing
Costs move from balance accounts to profit and loss accounts when they are
invoiced. Additionally, fees post to profit and loss accounts when they are
invoiced.
To create the invoice, follow these steps.
2. Select the project.
Invoice proposals.
4. In the Invoice proposals form click New > Invoice proposal. All
transaction types should be selected.
FIGURE 5.6 CREATE INVOICE PROPOSALS DIALOG
5. Click OK to create the invoice proposal.
5-8


In this example, the invoice proposal sums the total sales price of each
transaction to produce a total amount due of 5,300 USD.
FIGURE 5.7 INVOICE PROPOSAL
The voucher for the invoice shows all the transactions that occur during the
invoice posting.
FIGURE 5.8 VOUCHER TRANSACTIONS INVOICE
The cost amounts in the WIP accounts reverse and post to the profit and loss
accounts. At the same time, the sales amounts post to the profit and loss
accounts.

5-9

Account
P&L / Balance
Transaction
Balance
Credit
WIP cost hours (160100)
Balance
Credit
WIP cost expense (160300)
Balance
Credit
Project cost - item (540500)
P&L
Debit
Project cost hours (540100)
P&L
Debit
Project cost expense (540310)
P&L
Debit
Invoiced revenue hours (411100)
P&L
Credit
Invoiced revenue fee (411400)
P&L
Credit
Invoiced revenue item (411200)
P&L
Credit
Invoiced revenue expense (411300)
P&L
Credit
Accounts receivable (130100)
Balance
Debit
NOTE: Use the Post costs form for transactions that are not going to be invoiced
but must be moved to the P&L accounts.
5-10

Lab 5.1 - Run a Time and Material Project with WIP.

In this lab, you will run a sample time and material project with WIP.
Scenario
The Contoso Company has just signed a contract with a customer 2004 - Valley
Hotel for work to be performed on a time and material basis. The new project
will use the existing project contract (100104).
Because invoices are to be generated on a bi-monthly basis, the project controller
decides that for this project, costs will be posted to WIP to account for the costs
in periods where the invoices are not generated.
Create the project and charge 40 install hours and a 1,000 USD flight expense to
the project. For this project, expenses get reimbursed at cost. Create an invoice
for these charges.
Challenge Yourself
Create the new project. Enter the transactions and create an invoice.
Need a Little Help?

When you create the project use the TM2 project group.
Step by Step
To create the new project, follow these steps.
2. On the Action Pane, on the Project tab, in the New group, click
Project.
3. Select the TM2 for Project group. Select 100104 as the Project
contract ID. Assign a Project ID and Project name. Click OK to
create the project.
4. On the Action Pane, on the Project tab, in the Maintain group, click
Project stage > In process .
5. On the Action Pane, on the Project tab, in the Journals group, click
Hour.
6. Click New to create a new journal.
7. Select Install for Category. Enter "40" for Hours.
8. Enter "11/17/2011" as the Project date.
9. Click Post to post the journal.
Expense.

5-11

12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
5-12
Select PrjJrn for Name.

Click Lines.
Enter "11/17/2011" as the Project date.
Enter "1000" for Sales price.
Select Flights for Category.
Click Post > Post to post the journal.
Click Close.
Click Close.
On the Action Pane, on the Manage tab, in the Bill group, click
Invoice proposals.
Click New > Invoice proposals. Ensure that all the necessary
transaction types are included in the proposal and then click OK to
create the new invoice.
Click Close to close the Infolog.
Click Post to post the invoice proposal.
Click OK.
Click OK.

gfPost Costs Form

Unlike internal projects, costs on time and material projects will automatically be
posted from WIP on balance accounts to profit and loss accounts when invoiced.
However, you can also manually transfer costs by using the Post costs form,
described in the chapter regarding internal projects with WIP.
NOTE: You can set up your project so that costs that are not charged to the
customer are manually posted costs to profit and loss accounts. One exception to
this will be costs that are posted with a zero sales price. Even though they do not
impact the invoice, they are reversed during invoice posting.

5-13
Lab 5.2 - Using Post Costs

In this lab, you will move costs posted to WIP.
Scenario
The project controller for project 10005 needs to move transactions posted to
WIP back into profit and loss accounts. Do this using the Post costs form.
Challenge Yourself!
Use the Post costs form to move costs.
Need a Little Help?

Select Profit and loss in the Post costs to field.
Step by Step
To move the costs, follow these steps.
2. Double-click project 10005.
3. On the Action Pane, on the Manage tab, in the Process group, click
Post costs.
4. Click Select.
5. Select Profit and loss for Post costs to.
6. Check Time and material checkbox in the Include project types.
7. Check Hour, Expense, and Item checkboxes on the Include
transaction types group.
8. Click OK.
9. Review the transactions and then click Post to post the transactions
to the profit and loss accounts.
10. Enter "12/25/2011" for Posting date.
11. Click OK.
5-14

Time and Material Project with Accruals

This type of project accrues the costs in profit and loss during the project time
span and the sales value of the costs in profit and loss accounts.
This financial accounting principle is also known as WIP at sales value on time
and material projects because the project revenue is temporarily accrued to match
cost and revenue, and the accrued revenue is reversed when an invoice is posted.
Working with a Time and Material Project with Accruals

You can use this project group setting to recognize revenue in a time and material
project as costs and fees are posted. This makes it much easier to track the sales
value of the costs that are eventually invoiced to the customer. It is especially
helpful to use this project type if costs occur in one period and invoicing occurs
in the following period.
Incurred costs can be covered in the period they are booked by accruing the
revenue which helps smooth the financial results.

5-15

The following diagram shows the main events when you work with a time and
material project with accruals.
The main events are as follows:
Posting costs and fixed fees.
Post transactions to profit and loss accounts.
Accruing the sales value.
Updating the invoice.
Posting or reversing revenue.
NOTE: This project type does not dictate how customer advances (on-account
transactions) are handled. Decide to enter on-account transactions in balance or
profit and loss accounts.
5-16


Set up the following ledger cost accounts to run a time and material project with
accruals:
Cost Account
Ledger
Purpose
Cost
P&L
Debit all costs
Payroll allocation
P&L
Credit hour costs
NOTE: You do not have to set up any WIP posting accounts on the Cost price
tab because all costs post to profit and loss accounts.
Set up the following ledger sales accounts to run a time and material project with
accruals:
Sales Account
Ledger
Purpose
Invoiced revenue
P&L
Upon invoicing credit the sales value of all

costs.
WIP - Sales value
Balance
Debit fees and the sales value of costs.

Accrued revenue Sales value
P&L
Credit fees and the sales value of costs.

Debit when invoice updating.
WIP Invoiced On-account
Balance
Credit on-accounts.
Debit on-accounts when offsetting on the
invoice update.
Customer summary
account
Balance
Debit on-accounts.
Upon invoice updating debit the invoice value (sales value of all
costs and fees minus on-account
transactions).

5-17

Ledger Principles
Create a project group that uses the following settings to run a time and material
project with accruals.
groups.
FIGURE 5.10 PROJECT GROUPS FORM
The Accrue revenue options are selected. Select to only accrue revenue on the
preferred types of transactions by selecting the appropriate options.
In a time and material project with accruals, when the financial statements are
run, revenue shows for these transactions even if they are not yet invoiced. In a
simple time and material project, revenue is not visible until an invoice is
generated.
Accruable Line Property

The Project Management and Accounting Essentials course discussed line
properties to control whether a project transaction can be invoiced and specify a
markup on the sales price.
Additionally, you can use a line property to control whether a transaction should
be included on any accrual calculations for time and material projects.
5-18


To open this window, open Project management and accounting > Setup >
Line properties > Line properties.
FIGURE 5.11 LINE PROPERTIES FORM
When you select the Accrue revenue check box, any revenue generated by the
transaction is accrued immediately. If you do not select this check box, the
revenue will not be accrued until it is invoiced.
Processing a Time and Material Project with Accruals

The process flow for time and material project with accruals follows:
When costs are posted in the journals, the system automatically posts
amounts to the profit and loss accounts that are set up.
The on-account transactions post on a balance account upon onaccount invoicing. The posted fees and the sales value of the posted
costs accrue temporarily in a profit and loss account.
When the invoice project is invoice updated, all accrued revenues,

WIP sales values and on-accounts are offset and the sales value of
the costs together with the fixed fees post to the invoice revenue
account. The invoice amount which is the total of fees and cost sales
value minus on-account invoices is posted to the customer summary
account.
NOTE: No ledger can be specified in the Post hourly costs. This causes the
system not to post hour costs to the ledger, and only records them for time
tracking. Use the Post costs form to move these hourly costs to the profit and
loss accounts.

5-19
Example: Time and Material Project with Accruals

The following example shows a time and material project with accruals. The
actual posting on the ledger accounts is displayed. The example is based on the
following transactions:
Transaction type
Cost price
Sales price
Hour consumption
2,000 USD - (A)
4,000 USD - (B)
Expense
800 USD - (C)
1,600 USD - (D)
Item consumption
1,000 USD - (E)
2,000 USD - (F)
Fee
1,500 USD - (H)
On-account (pre-payment)
5,000 USD - (G)
The following table displays the results of the preceding transactions before the
final invoice.
Account
Debit
Cost - hours
2,000 USD- (A)
Cost - expense
800 USD - (C)
Item Consumption
1,000 USD - (E)
Payroll allocation
2,000 USD - (A)
Expense offset
800 USD - (C)
Inventory issue
1,000 USD - (E)
WIP sales value
9,100 USD - (B, D,

F, H)
Accrued revenue sales

value
9,100 USD - (B, D, F,

H)
WIP invoiced on-account
5,000 USD - (G)
Customer Balance
5-20
Credit
5,000 USD - (G)


Hour Consumption
You can post hours on a time and material project from the hour journal or
timesheet. These are the voucher transactions from the hour transaction in this
example:

Type of cost
P&L/ Balance
Transaction
Payroll allocation (603100)
P&L
Credit
Project cost - hours (540100)
P&L
Debit
Accrued revenue (420200)
Balance
Credit
WIP sales value (161300)
Balance
Debit

5-21

Expense Consumption
Use the same method to post costs in a time and material project as in other
project types. Each expense will have an offset account to use for the project
costs. These are the voucher transactions from the expense transaction in this
example:
FIGURE 5.13 VOUCHER TRANSACTIONS EXPENSE CONSUMPTION
5-22
Type of cost
P&L / Balance
Transaction
Travel expense (601500)
P&L
Credit
Project cost - travel (540360)
P&L
Debit
Balance
Credit
Balance
Debit


Item Consumption
These are the voucher transactions from the item transaction in this example:
FIGURE 5.14 VOUCHER TRANSACTIONS ITEM CONSUMPTION

Type of cost
P&L / Balance
Transaction
Balance
Credit
Project cost - item (540200)
P&L
Debit
Balance
Credit
Balance
Debit
Fees
You can record and post project fees through the fee journal. These are the
voucher transactions from the fees in this example:
FIGURE 5.15 VOUCHER TRANSACTIONS FEE
Because there is no cost for the fee, the sales amount is posted as an Accrued
revenue credit (420200) and a WIP - Sales value debit (161300).

5-23

Customer Advance
When you enter the on-account transaction for the time and material project, you
can select Prepayment journal voucher to indicate a customer advance. This
amount will be included when you create an on-account invoice proposal.
FIGURE 5.16 VOUCHER TRANSACTIONS ON-ACCOUNT
After the on-account invoice is created and posted, the voucher shows a credit to
the customer balance (130100) and a debit to the WIP Project - invoiced onaccount (162100).
Invoicing
To include the customer prepayment on the invoice, you must enter an onaccount transaction with a transaction origin of Deduction. This amount will be
included when you create a final invoice proposal.
FIGURE 5.17 ON-ACCOUNT TRANSACTIONS FORM
Now, the original on-account transaction for 5,000 USD has been invoiced and
the deduction amount is ready to be invoiced.
5-24


To create the final invoice, follow these steps.
2. Select the project.
Invoice proposals.
4. In the Invoice proposals form click New > Invoice proposal. All
transaction types should be selected.
FIGURE 5.18 CREATE INVOICE PROPOSALS FORM
5. Click OK to create the invoice proposal.

5-25

In this example, the invoice proposal sums the total sales price of each
transaction and includes the on-account deduction, to produce a total amount due
of 4,100 USD for this invoice.
FIGURE 5.19 INVOICE PROPOSAL
The voucher for the invoice shows all the transactions that occur during the
invoice posting.
FIGURE 5.20 VOUCHER TRANSACTIONS INVOICE
The sales values in the WIP accounts reverse and the sales prices post to the
profit and loss accounts.
5-26


Type of cost
P&L / Balance
Transaction
P&L
Debit
Invoiced revenue hours (411100)
P&L
Credit
Invoiced revenue fee (411400)
P&L
Credit
Invoiced revenue item (411200)
P&L
Credit
WIP invoiced on-account (162100)
Balance
Debit
Balance
Credit
Balance
Credit
Accounts receivable (130100)
Balance
Debit
NOTE: Because the revenue is accrued as transactions are posted, there is no

change in revenue because of invoice generation. The invoice posting just moved
accrued revenue into invoiced revenue.

5-27
Lab 5.3 - Run a Time and Material Project with Accruals

In this lab, you will create and run a time and material project with accruals.
Scenario
The Contoso Company has just signed a contract with a customer 2003 Rainbow Hotel for work to be performed on a time and material basis. The new
project will use the existing project contract (100103).
Because invoices are to be generated on a bi-monthly basis, the project controller
decides that for this project, revenue accruals will be created to the account for
the costs in periods where the invoices are not generated. The client also agreed
to pay a 1,000 USD prepayment for the project to be deducted from work that is
performed at a later date.
Create the project and charge 40 install hours to the project. Also create the
invoice for the prepayment.
Challenge Yourself!
Create the new project with the proper project group. Create the prepayment
invoice and charge 40 install hours to the project.
Need a Little Help?

When you create the on-accounts, also create a deduction transaction.
Step by Step
To create the new project with the proper project group, follow these steps.
Project.
3. Select the TM3 for Project group. Select 100103 as the Project
contract.
4. Enter "Lab 4.3 T&M" a Project ID and "Lab 4.3 T&M Project"
Project name. Click OK to create the project.
Project stage > In process.
6. Click OK.
7. On the Action Pane, on the Manage tab, in the Bill group, click Onaccount transactions.
8. Click New.
9. Enter "1000" for Sales price.
10. Click New.
5-28


11. Enter "500" for Sales price.
12. Click Close.
13. On the Action Pane, on the Manage tab, in the Bill group, click
Invoice proposals.
14. Click New. Then click On-account invoice proposals.
15. Click OK.
17. Click Post to post the invoice proposal.
18. Click OK.
19. Click OK.
20. Open Project management and accounting > Journals > Hour.
22. Enter "40" for Hours. Select Install for Category. Select "Lab 4.3
T&M" for Project ID.
24. Click OK.
27. Single-click project "Lab 4.3 T&M".
28. On the Action Pane, on the Manage tab, in the Bill group, click
Invoice Proposals.
29. Click New. Then click Invoice proposals.
30. Make sure Hour and On-account is selected. Click OK.
32. Click Post to post the invoice proposal.
33. Click OK.
34. Click OK.

5-29
Reversing Accrued Revenue

Situations might occur where revenue that is already accrued but not yet invoiced
must be reversed. The Accrue revenue option must be enabled on the Line
property form to accrue or reverse the sales value for transactions charged to the
project.
Procedure: Reverse Accrued Revenue

If there is no invoicing, follow these steps to use Accrue revenue to reverse the
accrued revenue and settle the ledger accounts.
To complete this procedure, open Project management and accounting >
Periodic > Time and material > Accrue revenue.
1. Use the Select button on the menu bar to select the transactions to
accrue or reverse, from this form. To reverse, select Reverse
revenue from the Posting field drop-down box. The system reverses
the selected revenue transactions for the appropriate periods and
posting dates by selecting this option.
2. Click Select to pinpoint the specific project to reverse.
3. Click the drop-down menu in the Criteria column to display a listing
of project groups and projects.
4. Select the appropriate criteria and then click OK, to populate on the
Accrue revenue form fields.
Procedure: Accrue Revenue

The following is an example of a transaction that has posted and is not yet
accrued. To run the Accrue Revenue script to accrue this revenue, follow these
steps.
1. Open Project, click Projects, click the Functions button, and then
click Accrue revenue.
2. Click the Select button to pull in transactions, similar to posting
costs. The script finds transactions to post as accrued revenue using
the following parameters:
o Revenue selection: Select between Accrue revenue or Reverse
revenue. This indicates if revenue should be accrued or if the
previously accrued revenue should be reversed.
o Include transaction types: This indicates what costs should be
included; hours, expenses, fees and items.
o Project date: This indicates the time interval the system should
locate costs.
o Ledger date: This provides the posting date for the transactions.
5-30


Accrue Revenue Form
You can use the Accrue revenue form to manually post the sales value on
selected transaction types (hour, costs, items or revenues). To do this, follow
these steps.
1. Open Project management and accounting > Periodic > Time
and material > Accrue revenue.
2. Click Select and select Accrue revenue for Posting.
3. Click OK to execute a search.
FIGURE 5.21 SELECT TRANSACTIONS TO ACCRUE REVENUE
If after you start with a simple time and material project, and then determine for
future accounting purposes you want to post a sales value for the project that is
currently running, use the periodic form. By doing this, if there are transactions
posted to the project without accruing any revenue, and they are not expected to
be invoiced in the same period they are incurred, you can use this form to accrue
the revenue.

5-31

Use the function "Reverse revenue" in the script to reverse accruals. When you
do this, all accruals must be reversed, not only hourly accruals. Because a fixed
fee transaction cannot be invoiced, the value should not be accrued. If this is the
case, reverse the accrual again to only reflect the costs; follow these steps.
1. Delete the cost lines in the top grid that should not to be included or
click the Select button again to modify the transactions before
updating the ledger accounts.
2. You might want to print a list of the transactions to transfer to other
accounts, and verify that the information is correct before posting.
3. Click the Post button to specify the posting date. After confirming
the date dialog box, the revenue is accrued for the selected
transactions.
4. Review the transaction, the "Accrued revenue" option is now
selected.
5-32

Lab 5.4 - Using the Accrue Revenue Form

In this lab, you will reverse accrued revenue for a project.
Scenario
The project controller for project 10006 needs to reverse the accrued revenue for
the project.
Challenge Yourself!
Use the Accrue revenue form to reverse accrued revenue on the project.
Need a Little Help?

Ensure all the transaction types are selected on the Select transactions to accrue
dialog.
Step by Step
To reverse accrued revenue on the project by using the Accrue revenue form,
follow these steps.
2. Select project 10006.
3. On the Control tab, in the Monitor group, click Project statements.
4. In the Project statements form, click Calculate.
5. Select the Profit and loss tab to view the amount of accrued revenue
on the project.
6. Click Close.
7. On the Action Pane, on the Manage tab, in the Process group click
Accrue revenue and then click Time and material.
8. Click Select.
9. Select Reverse revenue for Posting.
10. Ensure all transaction types are checked.
11. Enter "12/25/2011" for Posting date.
12. Click OK.
13. Review the transactions and then click Post to post the transactions
to the profit and loss accounts.
14. Click OK.
16. Click Close.
17. On the Control tab, in the Monitor group, click Project statements.
18. In the Project statements form, click Calculate.
19. Select the Profit and loss tab to view the impact of the reversal.

5-33
Summary
This chapter discussed how to process advanced time and material projects.
There are two types of advanced time and material projects:
Time and material projects with accruals.
Time and material projects with WIP.
Time and material projects with accruals will accrue revenue as costs and fees
post, and before an invoice is generated. Time and material projects with WIP
post costs into balance accounts and then move the costs to profit and loss
accounts as the invoice is posted. Both project types are typically used when
costs are posted in one period and invoiced in another.
5-34

Test Your Knowledge

1. Give an example of when you would work with a time and material project
with accruals.
2. What is the purpose of the cost account for time and material projects with
accruals?
( ) Debit all costs
( ) Debit only expenses
( ) Credit all costs
( ) Credit only expenses
3. Why can no ledger be specified in the Post hourly costs?

5-35

4. What steps are involved in creating a new invoice proposal? (Select all that
apply)
( ) Open Project management and accounting > Common > Projects >
Project contracts.
( ) On the Action Pane, on the Maintain tab, in the Bill group, click
Invoice journals.
( ) Select a contract.
( ) On the Action Pane, on the Maintain tab, in the Bill group, click New
invoice proposal.
5-36


chapter
1.
2.
3.

5-37
Solutions
Test Your Knowledge
1. Give an example of when you would work with a time and material project
with accruals.
MODEL ANSWER:
A building contractor producing modular homes has to accrue project costs.
The construction process can take several months and the contractor must
track the standard production costs for each home produced. These costs and
additional costs for upgrades or optional features such as special lighting or
whirlpool tubs each have a known cost and an increase in expected sales
value. However, these individual costs do not directly connect to the
expected sales revenue in the period they occur. The time and material
project with accruals temporarily accrues the sales value of the posted costs
in a profit and loss account. This is offset when the project is invoice
updated.
2. What is the purpose of the cost account for time and material projects with
accruals?
() Debit all costs
( ) Debit only expenses
( ) Credit all costs
( ) Credit only expenses
3. Why can no ledger be specified in the Post hourly costs?
MODEL ANSWER:
Because this causes the system not to post hour costs to the ledger, and only
records them for time tracking.
4. What steps are involved in creating a new invoice proposal? (Select all that
apply)
() Open Project management and accounting > Common > Projects >
Project contracts.
( ) On the Action Pane, on the Maintain tab, in the Bill group, click
Invoice journals.
() Select a contract.
() On the Action Pane, on the Maintain tab, in the Bill group, click New
invoice proposal.
5-38

CHAPTER 6: ADVANCED FIXED-PRICE PROJECTS

Objectives
The objectives are:
Review concepts of fixed-priced projects.
Describe the completed contract method.
Describe the completed percentage principle.
Describe how advanced fixed-price projects are run using the

estimate system.
Set up estimate period types.
Set up cost templates.
Set up estimate projects.
Use the estimate process.
Introduction
This chapter describes the handling of advanced fixed-price projects. Its main
focus is on how to deal with work in process (WIP), and how to use the estimate
system for revenue accruals on these projects.

6-1
Concepts
The process for fixed-price projects in Microsoft Dynamics AX is more
complex than internal or time and material projects because the matching of costs
and revenue is not done directly, because it is on time and material (T&M)
projects. Unless it is a simple fixed-price project, it requires that the matching of
costs and revenues occurs throughout the life of the project.
The Project Management and Accounting Essentials course discussed simple
fixed-price projects. This type of fixed-price project requires no periodic
matching of costs and revenue because the time span is short. Additionally,
everything posts to the profit and loss account, and the costs and revenues are
matched at the end of the project. You can use this project type when the invoice
and the costs occur in the same period to match the costs to the revenue when the
invoice is generated. An example is a service call that is charged with a fixed
amount.
Advanced fixed-price projects can have a much longer time span, include many
individuals and incur different types of costs that require assessment and
matching principles.
There are two methods of assessment principles used to match costs to revenues
in fixed price projects:
The first method, considered the conservative principle, is the

completed contract method.
The second method, considered the more optimistic approach, is the

completed percentage method.
Both methods are introduced in this training material and covered in depth in the
following chapters.
Completed Contract Assessment Principle

When you use the completed contract method there are two principles:
Sales value principle: Costs and revenue are matched at the end of
the project with a sales value.
Production and profit principle: Costs and revenue are matched

with a sales value that is split into realized costs and a calculated
profit.
The following criteria applies to both methods for completed contract projects:
6-2
Costs reflect as WIP in the balance sheet during the project, because
the matching of costs and the revenue recognition does not occur
until the end of the project.

When you use the completed contract principle, revenue and costs do
not post to the profit and loss account until the project is completed.
Costs and payments received from customers accumulate as WIP in
the balance sheet during the project. Revenue and costs are not
recognized until the contract activity is completed.
The fixed-price project that uses the completed contract principle

requires the estimate function, because the checking of costs to
revenue must be done periodically.
The estimate system handles the automatic transfer of ledger updates

in profit and loss and balance accounts.

The following diagram displays the main events when you work with this kind of
project:
The main events are posting costs and on-accounts, posting WIP, and
eliminating.

6-3

Posting Costs
You can post the different types of project costs through their respective journals.
This include hours, items, and expenses. Revenue posts through on-account
invoice transactions.
Once the costs post to their respective journals, the system automatically posts
the costs on profit and loss accounts. To control this use the project groups.
Posting WIP
If costs are posted to profit and loss accounts, posted costs move to balance
accounts when the estimating function is run. The cost will reside there until the
Estimate project is eliminated.
Eliminating
When the project is completed and the estimate project is eliminated, all costs
and on-accounts move from the balance accounts to the profit and loss accounts.
For a completed contract with production plus (+) profit project, the only
difference is when the project is eliminated revenue postings are created related
to cost (production) and for the profit on the project.
Completed Percentage Principle

The characteristics of the fixed-price project that uses the completed percentage
principle include the following:
6-4
It resembles the completed contract principle. It uses the sales value

approach and the production and profit approach.
It adds revenue and costs to the profit and loss accounts as the work
progresses. The revenue recognized is determined by the stage of
completion of the contract activity every time that estimates post.
It also requires using the estimate function. The reason for this is that
the checking of costs to revenue must be done periodically. This
must also be done with the completed contract principle. The
estimate system handles the automatic transfer of ledger updates in
profit and loss and balance accounts.


The following project accounting cycle shows the main events when you work
with this kind of project:
The main events are posting costs and on accounts, accruing the sales value and
eliminating and reversing the sales value.
Posting Costs
You can post the different types of project costs through their respective journals.
This include hours, items, and expenses. Revenue posts through on-account
invoice transactions.
Once the costs are posted to their respective journals, the system automatically
posts the costs on profit and loss accounts. To control this use the project groups.
The following form shows how to set up a completed percentage and Sales value.

6-5

groups.
FIGURE 6.3 PROJECT GROUP POSTING COSTS
Accruing Sales Value

Costs are at first posted to profit and loss accounts and then they are moved to
balance accounts as the estimates are posted.
The accrued revenue (sales value) is calculated based on the completion
percentage. When you use the sales value matching principle, the account
affected is the accrued revenue sales value account.
When you use the production plus (+) profit matching principle, the accounts
affected are the accrued revenue profit and accrued revenue production
accounts.
Eliminating
Eliminating occurs when you complete the project and the estimate project is
eliminated.
The Estimate Process

The estimate process for the assessment principles for fixed-price projects is
simple. However, it can be difficult to determine what type of estimate method to
apply when you review the estimates.
Estimates are maintained on individual Estimate projects or on batches of
Estimate projects. The method that you select for Estimate projects that will be
processed in batches that use the periodic jobs is based on the period type.
6-6


The following figure shows the general estimate process with the main processes
displayed in the middle of the diagram:
FIGURE 6.4 GENERAL ESTIMATE PROCESS
The process consists of five main functions that are supported by two minor
functions. They include creating, editing, calculating, posting, and eliminating.
To run the estimate process, you must first create and attach an estimate project
to the project. Once it is attached, you can use the estimate project to select:
The cost template: This controls how the estimate is calculated
The period code: This determines how frequently to run the

estimates to use

6-7
Period Types
When you use the estimate system with a fixed-price project, a period type must
be set up. The system uses this code as a reference for the control periods used in
calculating estimates on the estimate project.
The period code defines the time interval between estimate calculations. Estimate
calculations are always attached to a certain period.
NOTE: In addition to controlling estimate calculations, periods are also defined
for time reporting for workers. This chapter focuses on project estimates.
Timesheets are covered in the Project Management and Accounting Essentials
course.
To access period types, open Organization administration > Common >
Calendars > Period types.
FIGURE 6.5 PERIOD TYPES FORM
When you create a Period type, specify the Period frequency. You can select
anything from one period for each year to an unlimited number of periods.
6-8


Click Generate periods after you select the frequency. Use this option to
generate periods for a new period type or to create a new period interval for an
existing period type. If a period already exists for the selected period code, the
system suggests a starting date in continuation of the existing period. The periods
created always start at the beginning of the period type.
FIGURE 6.6 GENERATE PERIODS
Enter a number for the number of period frequency units to create in the Length
of period field.
Click Periods after the periods are created to view the changes. Split or delete
periods from this window, or view the period's status.
After the periods have been generated, you will attach the period type to the
estimate project the fixed-price projects are tied to.
NOTE: After a project period code is assigned to an estimate project and the
first estimates are posted, the period code and frequency cannot be changed.

6-9
Cost Templates
Cost templates determine how work in process (WIP) is presented in a fixedprice estimate and how the percentage of completion is calculated.
A cost template defines the following:
Whether to base the calculation of the degree of completion on the

posted amount or quantity.
Whether the calculated degree of completion can be changed

manually.
The categories (overall categorized in cost groups) included in

calculating the degree of completion.
How to use cost templates:
6-10
The degree of completion is calculated as the proportion between

realized consumption of hours, items, and expenses and their
projected (estimated) values.
Use cost templates only for handling fixed-price project estimates.

They determine whether the completion percentage is open for
change before posting the WIP values.
When calculating the percentage of completion on a fixed-price

project, determine which categories form the basis of the calculation.


The following figure displays the overall setup procedure for cost templates.
FIGURE 6.7 OVERALL SET UP PROCEDURE
To setup the cost templates, open Project management and accounting >
Setup > Categories > Cost template.
FIGURE 6.8 COST TEMPLATE FORM

6-11

NOTE: The system automatically creates three cost groupings. When you create
a new Cost template enter a name for these groupings for them to appear under
cost lines hour, expense and item.
The following table shows the descriptions for the Completion based on options
on the Cost Template form.
Completion
based on
Description
Amount
Select this option for the system to use the estimated

currency amount when calculating a percentage of
completion.
Unit
Select this option for the system to use the unit entered
as an estimate when calculating the percentage of
completion.
Automatic
Select this option for the system to calculate the

percentage of completion automatically on a project.
The automatically calculated value cannot be changed.
Manual
Select this option for the system to calculate the

percentage of completion automatically on a project.
The automatically calculated value can be edited.
Cost templates can be set up in various ways. The setup depends on which costs
the company wants to include in the calculated degree of completion.
Procedure: Attach Categories to Cost Groups

Once a new cost template is created and the three default cost groups are named,
follow these steps.
1. Click Cost lines to define more variables in the cost template.
Determine whether to include a cost group in the degree of
completion calculation and which categories belong in each cost
group.
2. Select the categories to be included in the cost template.
6-12


The Transaction type is related to the category set up and drives what is
available on the Categories tab. When the cost template is first set up, there are
three lines. These lines include, by default, all the categories related to the
Transaction type on the line.
FIGURE 6.9 ESTIMATE TEMPLATE FORM
All the categories listed on the following screen are for the transaction type
Hours, displayed on the hours estimate line. All categories must be linked to cost
groups so that it is not possible to not include them.
A category often refers to just one cost group. For two or more cost groups that
have the same transaction type on one cost template, divide the categories
between the cost groups using these steps.
1. Create a new cost group.
2. Highlight the new cost group and view the Categories tab. All the
Hours categories are listed on the right-side and they can be attached
to the new cost group.
3. Highlight the category to add and then click the left arrow button to
attach the category to the cost group.
The category is now related to the new cost group and is automatically removed
from the previous cost group. This guarantees a category does not appear in two
cost groups.

6-13

Excluding Categories
To exclude certain categories in the degree of completion calculation, create a
new cost group and clear Percentage of completion.
FIGURE 6.10 PRECENTAGE OF COMPLETION ESTIMATE TEMPLATE
The percentage of completion is now calculated using this Cost template. Any
hours posted to the attached categories are excluded from the calculation.
You can use cost groups to control which types of transactions to include in the
completed percentage calculation. Some companies can, for example, only want
to include hours in the calculation and not expenses, whereas other companies
might also want to include other costs.
Control Parameters
After you set up a cost template together with selected cost groups and
categories, the next task is to specify the correct parameters.
Amount or Unit
When you use a cost template the system automatically tries to base the
completion estimate on the sales value (amount) of the entered transactions or the
quantity (units) of the entered transactions.
The default setting is Amount.
6-14


Typically, you would base the expense and item costs on an amount type, and
have the hourly consumption calculated by each of the units. Because cost
templates cannot be mixed, you will need to create two separate cost templates;
one that compares on an amounts base, and another one that compares on a units
base.
You can only apply one cost template when the estimates are run for a fixedprice project. Therefore, it is important to be careful when you consider what the
comparison base will be. If progress will be tracked against the hour only, select
a cost template that uses units as a comparison base.
Allow Editing of the Calculation Result

On the cost template, determine how to handle the maintenance of the calculation
of the percentage of completion. The system calculates the percentage of
completion based on the actual costs amounts against the forecasted costs
amounts.
To keep the automatically calculated percentage of completion, select
Automatic.
To include more aspects into the percentage of completion calculation, select
Manual so that the system can automatically calculate the percentage of
completion and change it manually. The default setting is Automatic.
NOTE: The manual setting is useful to take more than the actual recorded costs
into account when calculating the percentage of completion. Include the progress
of the tasks in the calculation to receive a more accurate indication of the
percentage.

6-15
Lab 6.1 - Create a Cost Template

In this lab, you will create a cost template for a fixed-price project.
Scenario
The project manager must create a new cost template to track estimates on a
fixed-price project. The percent complete calculation must be based on the Install
and Design hours charged to the project. Create a cost template called Install that
only bases the percent complete on the amount of hours charged from those two
categories.
Challenge Yourself!
Create a new cost template.
Need a Little Help?

Ensure that no other categories are included in the cost line that is based on the
percent complete.
Step by Step
To create a new cost template, follow these steps.
1. Open Project management and accounting > Setup >
Categories > Cost template.
2. Click New.
3. Name the Cost template ID "Install".
4. Enter "Hour" for Hour cost line ID.
5. Enter "Expense" for Expense cost line ID.
6. Enter "Item" for Item cost line ID.
7. Click Cost lines.
8. Click New.
9. Enter "Design" for Cost line ID and Name.
10. Click the Categories tab.
11. Select Design in the Remaining categories table and then click
the > button.
12. Select Sales in the Remaining categories table and then click the >
button.
13. Click New.
6-16


14. Enter "Install" for Cost line ID and Name.
15. Click the Categories tab.
16. Select Installation in the Remaining categories table and then click
the > button.
17. On the General tab in Cost group, uncheck the Percentage of
completion check box.
18. In the Percentage of completion group, select Remaining budget
for Cost to complete method.
19. Click Close.

6-17
Estimate Projects
Although the name estimate project implies this is a project, it is not. Expenses
and revenue cannot be entered through journals and invoice updates cannot be
run on an estimate project. It is instead, a data collection and calculation unit for
fixed-price projects.
The purpose of the estimate project is to group project control parameters for one
or more fixed-price projects and ease the periodical estimate control process by
providing a single point of access.
The following figure is an example of the setup of two estimate projects, each
using different control parameters and having different types of fixed-price
projects attached to them.
FIGURE 6.11 EXAMPLE ESTIMATE PROJECTS
6-18


The most common way to create an estimate project is during creation of a fixedprice project. You can specify the cost template and period code in the Create
project dialog.
FIGURE 6.12 CREATE PROJECT DIALOG
Alternatively, to set up or edit estimate projects, open Project management and

accounting > Common > Projects > Estimate projects.
FIGURE 6.13 ESTIMATE PROJECT LIST

6-19

Procedure: Setup an Estimate Project
To create an estimate project for an existing fixed-price project, follow these
steps.
Projects > Estimate projects.
2. On the Action Pane, in the New group, click Estimate project.
3. In the Estimate project ID field, select an existing fixed-price
project.
4. Optional: In the Description field, modify the description of the
estimate project.
5. In the Cost template field, select a cost template.
6. In the Period code field, select a period code.
7. Click Close.
If an estimate project is not created when a fixed-price project is created, the
system performs a search to try to locate fixed-price projects that do not belong
to an estimate project when a new estimate project is created.
Creating Estimates
You can run the estimate process from the estimate project or one of the related
projects.
The progress of the project must be monitored during its life span. To do this in
Microsoft Dynamics AX, use the estimate. Apply a period code specifying the
length of every project estimate period when you start an estimate project linked
to a fixed-price project.
As the project is being monitored during the estimate periods, the estimates
might need a revision. To start the revision process, create the estimate periods as
the progress is revised. To do this:
2. Select a project.
3. Then on the Action Pane, on the Manage tab, in the Process group,
click Estimates.
4. In the Estimate form, click New.
6-20


The following table describes the options for information entered into the Create
Estimate form.
Option
Purpose
Period code
This value reflects the period code applied to the estimate

project and is blocked from change.
NOTE: The period code can only be changed on the
estimate project, before the first estimate is posted.
Estimate date
This is the end date of the period applied, if the date is

selected from the list.
The system examines the previously posted estimate and
then defaults in the last date of the period code. If no
estimate has been posted it examines today's date and
defaults in the last day of the previous period.
Continuous
This option specifies whether to skip continuous estimates

periods. Every estimate period must be updated by
selecting the option. If this is not checked an estimate can
be run at any time as long as it falls in the period that is
attached to the control type.
Cost to
complete
method
This method determines how the remaining cost for the

project to be completed is determined. The cost to
complete methods are discussed later in the section about
how to edit estimates. The default setting of the cost to
complete method is set cost to complete to zero.
Completion
method
Determine how the completion percentage is determined.

Manual: Percentage is entered manually.
Forecast
model
Automatic: Percentage is generated automatically

based on the total estimate.
From Cost template: Percentage is based on

parameters that are defined in the cost template.
Refers to a forecast model to copy forecasts to and

compare with. This relates to the forecast set up on each
project. To run the estimate and have it detect any
forecasted amounts, select the same forecast models. A
forecast model is only required when the cost to complete
method is set to "Total Budget - Actuals" and "Remaining
Budget" and depending on certain factors such as the "As
previous method" and "From cost template."

6-21

Option
Purpose
From model
Refers to the forecast model that holds forecast

transactions that should be copied from.
NOTE: This field is only of interest if you are working
with the following estimate methods:
Remaining budget
Print
estimate list
Show info
log
Total budget actuals
As previous method
From cost template
This is a status report that displays the calculated

percentage of completion, total costs, total contract
amount and the margin. Determine whether to include
warnings to be generated automatically by Microsoft
Dynamics AX when:
The percentage of completion is under zero or
exceeds 100.
There is a negative remaining estimate amount.
There is an estimate without a contract amount.
There is an estimate without a cost amount.
Use it as a reminder when the Create estimates job is

executed. The info log displays the Estimate project
processed, the version number and the estimate period.
Some additional characteristics for the Create Estimate form include the
following:
If the Create Estimate form is opened from the Periodic Create

Estimate form, shown previously, Select is present to let the user
select the correct Estimate project.
If the create estimate is completed directly from the estimate project

or directly from the project, Select is not presented because an
estimate is being created for the WIP currently being viewed.
A list of projects is presented to select from by positioning the

pointer in the criteria field and selecting the down arrow. After the
different parameters are selected in the query, an estimate period is
generated by the system.
The status of the estimate period is created and a version number is

applied. A percentage of completion is calculated based on a
comparison of actual costs and forecasted costs.
NOTE: The version number is one as a default when creating a new estimate. If
eliminating an existing posted period, the version number is two.
6-22


Troubleshoot Estimates
When you use the create process and periodically update and post estimates,
sometimes the percentage of completion will always be zero or the percentage of
completion will always be 100.
When you apply the estimate date use the list to select an estimate period.
Because the period code linked to the estimate project can have dates ranging
from one year to another, a typical pitfall is to select the incorrect period. In the
sample data, the period code month dates range until October 2013.
When, for example, mistakenly the first March period is selected, March 2011,
this can create estimates in the incorrect year. When you compare forecast
transactions with an estimate period where there are no cost postings, the
percentage of completion is zero. This occurs because there is nothing completed
to compare to the forecast.
Another reason why the percentage of completion always returns as zero is that
the setup of the cost template allows for a manual adjustment of the percentage of
completion. Three fields on the General tab in the Estimate overview reflect the
percentage of completion:
Completion method
Manual calculation
Automatic calculation
If the completion method is set to manual, the manual calculation method must
be entered. If the completion method is automatic the automatic calculation field
is filled in automatically.
It is possible for the percentage of completion to suddenly be 100 percent,
although the project is not completed. The reason for this calculation could be
that when you select the Forecast model, a model is selected without any forecast
transactions attached.
The system compares the actual costs in the estimate period with a forecast of
zero, and returns a result of 100 percent complete as all forecast expectations are
met.

6-23

Editing Estimates
This stage of the estimate process is determined by the selection of the cost to
complete method that is made when you created the estimate period.
There are three main approaches you can use to determine how to edit estimates:
Total costs Actual
Total budget Actual
Remaining budget
Total Costs - Actuals Approach

If you are editing based on the total costs approach, the total costs must be
entered in the Cost estimate form on the Cost lines. The Total quantity or Total
amount columns in the Cost estimate form must be entered manually and then
actual costs are subtracted from the totals to get the cost to complete.
Typically, tracking the progress of costs, for example, hotel expenses and meals,
is not based on how many hotel stays and meals are recorded in each period, it is
based on a comparison against the total amount forecasted.
This approach does not require forecast transactions, and the Total columns can
be manually edited. If a value is typed in one of the totals columns, the system
automatically compares this value against the actual transactions posted within
that period and decreases the value in the remaining column.
Total Budget - Actuals Approach

The total budget approach is designed to use a forecast model to compare actual
costs against in determining the cost to complete. This method uses a total budget
model with forecasted transactions.
If needed, the budget model can be adjusted as the project is in progress to get a
more accurate view of the project progress. If adjusting the forecast, the basic
idea is to:
Copy forecast transactions into another forecast model.
Compare with actual transactions.
Maintain, decrease, or increase the estimates for the next period.
The system does not automatically decrease the forecasted estimates. The
recommendation is to maintain an original forecast model on the fixed-price
project to establish a baseline for later comparison when the project is completed.
NOTE: Use at least two different forecast models when you apply this approach.
Have one model contain the original forecast and the second be the copy from
and to model.
6-24


Remaining Budget Approach
The remaining budget approach uses a remaining budget model to get the cost to
complete. When you use this method, the actual costs and the forecasted amounts
in the remaining budget model are added together to get a total cost.
When you use this approach, a remaining budget model must be set up to deduct
transactions based on actual transactions logged into the system. To do this,
ensure that the Automatic reduction check boxes are checked on the Project tab
of the Forecast models form.
Typically, a remaining budget is copied from an original budget and as
transactions are entered, the transactions on the remaining budget are lowered. If
as the project progresses, you determine the remaining budget must be adjusted,
you can charge forecast transactions to the remaining budget.
Cost to Complete Methods

In addition to the three main cost to complete methods, there are three other
methods that use a combination of the three main methods.
The purpose of the cost to complete methods is to provide a tool to evaluate
estimates and force consistency. The following methods are available:
Method
Description
Procedure
Total costs
actual
Total amounts are

entered on the Cost
estimate form and
are updated
manually.
The cost template
applied on the
estimate project
determines which
column is open for
editing.
1. Select Total in the create query.

2. In the Cost estimate form,
adjust the value in the Total
quantity or Total amount
columns.
3. Use, for example, the Actuals
to decide on the value to adjust.
4. Calculate the estimates.
5. Post the WIP or accruals.
6. In the next period, repeat the
pattern.

6-25
6-26
Method
Description
Procedure
Remaining
budget
This method requires

a remaining budget
that will get
decreased as
transactions are
registered to a
project.
Any adjustments to
the remaining budget
must be made by
adding new
forecasted
transactions.
1. Select the Forecast model.

2. Click OK.
3. In the Cost Estimate form,
click Forecast to view the copied
estimates. Click Actual to view
actual posted transaction within
the current estimate period.
Set cost to
complete to
zero
This method is
typically used before
eliminating the
estimate project.
It equalizes the total
estimates with the
actual transactions
posted and clears the
remaining estimates
column.
The result is always a
percentage of
completion of 100.
1. Select Set cost to complete to

zero in the create query.
view the equalization.
4. Post the WIP or accruals to
eliminate the Estimate project.


Method
Description
Procedure
As previous
estimate
Use this method to

apply the same
estimate method
approach as in the
previous period.
1. Select Previous estimate in the

create query. Apply the forecast
model that estimates should be
copied from.
2. Only the transaction types
where the Total amount actuals
option is selected can be used to
edit the estimates in the cost
estimate.
3. Adjust the forecasted estimates
by comparing against actuals
then either maintain, decrease, or
increase the copied estimates on
the individual estimate lines.
4. On the transaction types in the
cost estimate where the total
method is applied, adjust the
values in the respective totals
columns.
5. Calculate the estimates. Post
the WIP or accruals. In the next
period, repeat the pattern.
Total budget
actual
This method requires

a forecast model to
compare forecasted
transactions against
actual costs to
determine a cost to
complete.
1. Select the Forecast model.

2. If you want to copy an existing
Forecast model to a new model for
this estimate, enter a model to
copy to.
3. Click OK.
click Forecast to view the copied
estimates. Click Actual to view
the actual posted transaction
within the current estimate period.

6-27

Method
Description
Procedure
From cost
template
Use this method to

apply the cost to
complete methods
indicated on the cost
template cost lines.
This method can be
used for all four of
the other forecasting
methods for each
individual cost line.
1. Select Previous estimate in the

create query. Apply the Forecast
model that estimates should be
copied from.
2. Only the transaction types
where the forecasting option is
selected can be used to edit the
forecasts in the cost estimate.
3. Adjust the forecasting estimates
by comparing against actuals
then either maintain, decrease, or
increase the copied estimates on
the individual estimate lines.
4. On the transaction types in the
cost estimate where the total
method is applied, adjust the
values in the respective totals
columns.
5. Calculate the estimates. Post
the WIP or accruals. In the next
period, repeat the pattern.
Compare Actual to Estimates

Not all estimate methods automatically deduct the actual posted transactions
value from the total forecasted value. Therefore, this value must be calculated
and compared. View the quantity and cost amount of the posted transactions by
clicking Actual in the cost estimate.
Compare these actuals to either the forecasts or the total estimates.
If you are working with forecasts, it can be difficult to actually display all forms
on the screen. Resize the forms so that they are open when you do the
comparison.
Checking and Updating

Ensure that posted transactions not included in the current estimates being
revised are caught by checking the estimates before updating them. The function
corresponds to Update in the calculate process described in the next section.
Use the update function to reflect the adjustments performed on the estimates.
The remaining columns are updated in the estimate lines reflecting the new
values.
6-28


Totals Overview
Use the Total tab in the estimate form to retrieve a quick overview of the
currently posted and estimated transactions.
The display of the total estimated costs can result from Forecasted costs on the
project or Manually entered costs in the Totals column in the Estimate lines
form.
If you manually enter the forecasted costs, the Total costs actuals method is
applied when you create the estimate periods.
Calculating the Estimates

This part of the estimate process involves comparing estimates and actual values
and editing future estimates. Many factors can influence the calculated
percentage of completion.
To ensure that the changes that you make in the editing process
updates the percentage of completion, click Calculate to recalculate.
The option to recalculate is also important to ensure transactions

posted after you create the estimate period are included in the
calculation (this could be late incoming timesheets).
These new transactions are included and the percentage of

completion is also updated by selecting Update in the Calculate
query.
If it is required, reevaluate the estimates and actual values caused by

new transactions and calculate the percentage of completion again.
There are two other values influenced when you run the calculation:
Hours Qty. and Value added hour rate.
Deleting the Estimates

You can delete the created estimate until the WIP or accruals for the estimate
post.
NOTE: To ensure that already copied estimates do not influence the forecast
model, select Delete forecast. If this is not done, there can be a bigger estimate
value to compare.
Posting WIP or Accruals

Once the estimates are evaluated and they are maintained, decreased, or
increased, post the WIP when you work with the completed contract assessment
principle, and post the accruals when you work with the completed percentage
assessment principle. The estimate period status will change from Created to
Posted.

6-29

Reversing WIP or Accruals
Use the reverse option to credit already posted WIP, or accruals. Then create
estimates for that period.
NOTE: To reverse a period in between other periods, reverse all the necessary
estimate periods and repost them. Do not skip periods, as all subsequent periods
depend on the estimates from the previous period.
Eliminating the Estimate Project and Finishing the Project

The final step in the estimate process is to eliminate the estimate project and end
the fixed-price project when the percentage of completion reaches 100 percent.
When the elimination is run:
The WIP values clear from the balance accounts and post to the
profit and loss accounts if a fixed-price project with completed
contract is run.
If a fixed-price project with completed percentage is run the accruals

are removed from the profit and loss accounts.
To effectively block the project(s) attached to the estimate project from

additional consumption entries, select Set project stage to finished. The
estimate period changes the status to Eliminated.
NOTE: The percentage can extend beyond 100 percent in special cases. If this is
the case, reduce the percentage of completion by using the Set cost to complete to
zero method to reach 100 percent.
Reversing Elimination
Open Project management and accounting > Periodic > Estimates > Reverse
elimination. On the Action Pane, on the Process tab, in the Maintain group,
click Estimate. At the top of the Estimate - Estimate project form, click
Reverse elimination.
Use this form to reverse all eliminations with a specified estimate date and with
an estimate status of Eliminated. The transaction status is changed after you
select the appropriate fields and then click OK.
This also automatically changes the project status to In process if the project
stage is set to finished. The estimate status of the project period changes back to
posted.
6-30

Lab 6.2 - Create and Post an Estimate

In this lab, you will create and post an estimate for a fixed-price project.
Scenario
The project manager for project 10006 needs to run the estimate for the project.
He or she is using the remaining budget method to generate the cost to complete.
Create and post the current estimate for this project.
Challenge Yourself!
Create and post the estimate for the project.
Need a Little Help?

Make sure that you select the Remaining budget as the forecast model.
Step by Step
To create and post the estimate for the project, follow these steps.
Projects > Estimate projects.
2. Double-click estimate project 20002.
3. On the Action Pane, on the Estimate project tab, in the Related
information group, click Estimates.
4. Click New.
5. Change the Cost to complete method to Remaining budget.
6. Select Remaining as the Forecast model.
7. Click OK.
8. On the Totals tab, review the actual and forecasted costs.
9. Click Post.
10. Click OK.
11. Click Close.

6-31
Summary
This chapter introduced the financial accounting principles used with advanced
fixed-price projects in Microsoft Dynamics AX. The chapter also showed how to
set up estimate period types, cost templates, and estimate projects.
6-32

Test Your Knowledge

1. To exclude certain categories in the degree of completion calculation create a
new cost group and clear which of the following?
( ) Transaction type
( ) All categories
( ) Percentage of completion
( ) Amount
2. The main events for a project accounting cycle for a fixed-price project by
using completed percentage principle are as follows: (Select all that apply)
( ) Posting costs and on-accounts
( ) Accruing sales value
( ) Eliminating and reversing sales value
( ) Eliminating and reversing cost value
3. The project periods in Microsoft Dynamics AX serve which purposes?
(Select all that apply)
( ) Control transaction dates for all projects
( ) Control time reporting for workers
( ) Time logging for fixed-price estimation procedures
( ) To set up period types
4. When you set up ledger accounts the invoiced revenue account has the
following characteristics? (Select all that apply)
( ) Profit and Loss
( ) Time and Material
( ) Debited when invoicing turnover
( ) Credited when invoicing turnover

6-33

chapter
1.
2.
3.
6-34

Solutions
Test Your Knowledge
1. To exclude certain categories in the degree of completion calculation create a
new cost group and clear which of the following?
( ) Transaction type
( ) All categories
() Percentage of completion
( ) Amount
2. The main events for a project accounting cycle for a fixed-price project by
using completed percentage principle are as follows: (Select all that apply)
() Posting costs and on-accounts
() Accruing sales value
() Eliminating and reversing sales value
( ) Eliminating and reversing cost value
3. The project periods in Microsoft Dynamics AX serve which purposes?
(Select all that apply)
( ) Control transaction dates for all projects
() Control time reporting for workers
() Time logging for fixed-price estimation procedures
( ) To set up period types
4. When you set up ledger accounts the invoiced revenue account has the
following characteristics? (Select all that apply)
() Profit and Loss
() Time and Material
( ) Debited when invoicing turnover
() Credited when invoicing turnover

6-35
6-36

CHAPTER 7: FIXED-PRICE PROJECT WITH

COMPLETED CONTRACT
Objectives
The objectives are:
Describe the completed contract method for advanced fixed-price

projects.
Introduction
This chapter describes the accounting principles involved with running the
advanced fixed-price project with the completed contract method of revenue
recognition. Unlike the completed percentage method (discussed in the next
chapter) where revenue is accrued in profit and loss accounts throughout the
project, the completed contract method does not recognize revenue until the end
of the project.
After the project is completed and work in progress (WIP) is eliminated, all costs
move to profit and loss accounts. Revenue posted to balance accounts is moved
to the accrued revenue accounts.

7-1
Fixed-Price Project with Completed Contract Example

The following example shows a project running with these settings. The example
is based on the following transactions, and the currency it uses is the United
States dollar (USD):
Transaction type
Amount
Hour consumption (Cost price)
2,000 USD (A)
Expenses (Cost price)
800 USD (B)
Item consumption (Cost price)
1,000 USD (C)
On-account Invoice November
2,500 USD (D)
On-account Invoice December
2,500 USD (E)
NOTE: Because of the complexity of running a project over a long duration, this
example is simplified to only display payments in two periods, and costs are only
recorded in the first period.
Ledger Accounts
Set up the following ledger cost accounts for a fixed-price project by using the
7-2
Account (Cost)
Ledger
Purpose
Cost
Profit and loss
Debit all hours, expenses

and items.
Payroll allocation
Profit and loss or

balance
Credit hour costs.
WIP Cost value
Balance
Debit hour and expenses.
Cost Item
Profit and loss
Credit item costs.
WIP Cost value

Item
Balance
Debit item costs.
Inventory issue
Balance
Credit item costs.
Expense offset
Balance
Credit expense costs.


Set up the following ledger sales accounts for a fixed-price project by using the
Account (Sales)
Ledger
Purpose
Customer summary
account
Balance
Debit on-account invoices.
Invoiced on-accounts
Profit and loss or

balance
Credit on-account
invoices.
Debit when eliminating.
Accrued revenue sales

value
Profit and loss
Debit on-accounts.
Credit when eliminating.
WIP invoiced Onaccount
Balance
Credit on-account
invoices.
WIP sales value
Balance

Credit when elimination.
Ledger Principles
Create a project group that has the following settings to run a fixed-price project
by using the completed contract method.
FIGURE 7.1 PROJECT GROUP SETUP

7-3

Notice the values for Post cost, Revenue recognition accounting rule and
Matching principle.
In this example, costs are posted to balance accounts. If costs are first posted to
profit and loss accounts (not recommended), they are moved to balance accounts
as WIP during the estimate process. This occurs because matching against posted
revenue is finished when the contract is completed.
This project is set up to use the sales value matching principle, where revenue is
posted as a single amount at the end of the project. In contrast, the production
plus (+) profit principle splits posted revenue into realized costs and a calculated
profit. The production plus (+) profit principle is covered in the next chapter.
For this example, on-account invoices are posted to a balance account. If onaccount invoices are posted to a profit and loss account, the values accrue when
WIP is posted, and later when the offset is eliminated. This occurs because the
revenue is already represented in the profit and loss account on the invoiced onaccounts profit and loss account.
Posting of Costs and On-account Invoice in November

For this example, on-account invoices and project costs are posted to balance
accounts.
FIGURE 7.2 VOUCHER TRANSACTION FOR ON-ACCOUNT
The postings for these transactions are as follows:
7-4
Account
Debit
WIP costs hours
2,000 USD (A)
WIP costs expense
800 USD (B)
WIP costs item
1,000 USD (C)
Credit
Payroll allocation
2,000 USD (A)
Ledger cost account
800 USD (B)


Account
Debit
Inventory issue
Customer balance
Credit
1,000 USD (C)
2,500 USD (D)
WIP - invoiced onaccount
2,500 - (D)
Posting of WIP through Estimates in November

Posting the estimate for the on-account transaction for 2,500 USD does not create
a voucher because the costs and on-account transactions are already posted to a
balance account and it does not have to be moved by the estimate.
FIGURE 7.3 ESTIMATE FORM

7-5

Posting of On-Account Invoices in December
The final on-account transaction is invoiced.
FIGURE 7.4 ON-ACCOUNT FORM
The following values are updated in the ledger when the final on-account invoice
is posted.
Accounts
Debit

Customer balance
7-6
Credit
2,500 USD (D)
2,500 USD (D)


Posting of WIP through Estimates in December
Again, there are no vouchers because the on-account already posted to a balance
account.
FIGURE 7.5 ESTIMATES FORM
Eliminating Estimates
In addition to moving the costs from WIP back to profit and loss accounts, there
is a transaction moving the WIP sales value (162100) to revenue (420200).
The figures in bold represent the values updated in the ledger when the current
task is performed.
Accounts
Debit
Accrued revenue Sales value
Credit
5,000 USD (D+E)
5,000 USD (D+E)
2,500 USD (D)

2,500 USD (E)
WIP Cost value Hours
2,000 USD (A)
2,000 USD (A)
WIP Cost value Expenses
800 USD (B)
800 USD (B)
Cost (Hours)
2,000 USD (A)
2,000 USD (A)
Cost (Expenses)
800 USD (B)
800 USD (B)
Cost (Items)
1,000 USD (C)

7-7

Accounts
Debit
Credit
WIP Cost value Items
1,000 USD (C)
1,000 USD (C)
Cost items
1,000 USD (C)
1,000 USD (C)
Example Summary
In this example, on-accounts post to balance accounts and on-account
transactions at first post to balance accounts.
7-8

Lab 7.1 - Run a Fixed-Price Project with Completed Contract

In this lab, you will create and run a fixed-price project with the completed
contract method.
Scenario
The Contoso Company has just signed a contract for work on a fixed price basis
with customer 2004 Valley Hotel to be done on project contract 100104. The
project has a value of 30,000 USD, work is set to begin in November 2008 and
complete in December 2008. The project is to be paid in two equal installments
over the two months in which it is completed.
The project controller does not want to recognize revenue until the end of the
project. When the revenue is recognized, it will be split into two accounts, one
for costs, and one for profit. Costs will be posted to WIP. Additionally, onaccount invoices will be posted to a balance account. All WIP must be eliminated
at the end of the project.
The project will be estimated on a monthly basis, using the standard Contoso cost
template.
A new project group should be created to handle the accounting needs of this
project.
The following transactions need to be registered to the project:
Month
Category
Quantity
Cost Price
November
Install
60
45.00 USD
November
Design
20
45.00 USD
November
Flights
800.00 USD
December
Install
60
45.00 USD
December
Flights
800.00 USD
In addition to these transactions, the project will need to purchase 20 of item

1701 for the project. Process this purchase through a purchase order and vendor
invoice.
Challenge Yourself
1.
2.
3.
4.
5.
6.
Create the new project group.

Create the new project.
Create the on-accounts transactions.
Post the invoice for November.
Create and post the hour transactions for November.
Create and post the expense transactions for November.

7-9

7.
8.
9.
10.
11.
12.
Create and invoice the project purchase order.

Create and post the estimate for November.
Create and post the invoice for December.
Create and post the transactions for December.
Create and post the estimate for December.
Eliminate the project estimates.
Need a Little Help?

When you create the project group, use the production plus (+) profit matching
principle.
Step by Step
To create the project group, follow these steps.
1. Open Project management and accounting > Setup > Posting >
Project groups.
2. Click New. On the General tab, select Fixed-price as the Project
type.
3. Click the Estimate tab.
4. In the Fixed-price group, select Completed contract as the
Revenue recognition accounting rule and Production + profit as
the Matching principle.
5. In the Set up categories for estimate group, select Prod Est for
Production and Profit Est for Profit.
6. Click the Ledger tab and set Post costs - hour, Post costs - expense,
Post costs - item, and On-account invoicing to Profit and loss.
7. Enter "NewFP" as Project group.
8. Click Close.
Project.
11. Select Fixed-price for the Project type.
12. Enter "NewFP" as the Project ID and "NewFP Project" for the
Project name.
13. Select NewFP as the Project group. Select 100103 as the Project
contract ID. Check New estimate project.
14. Select Contoso as the Cost template and EmplBiWeek as the
Period code.
15. Click OK to create the project.
17. Click OK.
7-10


19. Click New.
20. Enter "11/15/2011" for Project date and "10,000" for Sales price.
21. Click New.
22. Enter "12/15/2011" for Project date and "10,000" for Sales price.
23. Click Functions > Invoice proposals.
24. Click New > On-account Invoice proposals.
25. Enter an Invoice date of "11/30/2011". Click OK to create the new
invoice.
26. Click Close.
27. Click Post.
28. Click OK.
29. Click OK.
30. Click Close.
31. Click Close.
Hour.
33. Click New.
34. Enter "11/16/2011" as the Project date. Select Design for Category.
Enter "20" for Hours.
35. Click the Post button to post the journal.
36. Click OK.
38. Click Close.
39. Click Close.
Expense.
41. Click New.
42. Select PrjJrn for Name.
43. Click Lines.
44. Enter "11/17/2011" for Project date. Select Flights for Category.
Enter "800" for Cost price.
45. Click Add.
47. Click the Post > Post to post the journal.
49. Click Close.
50. Click Close.
51. On the Action Pane, on the Manage tab, in the New group, click
Item-task > Purchase order.
52. Select a Vendor 1001.

7-11

53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.
76.
77.
78.
79.
80.
81.
82.
83.
84.
85.
86.
7-12
Click Yes.
Click OK.
Select Item number 1701.
Enter Quantity of 100.
On the Action Pane, on the Purchase tab, in the Generate group,
click Confirm.
On the Action Pane, on the Invoice tab, in the Generate group, click
Invoice.
Select Ordered quantity for Default quantity for lines.
Enter "10" for Number.
On the Action Pane, on the Vendor invoice tab, in the Actions
group, click Post > Post.
Click Close.
On the Action Pane, on the Manage tab, in the Process group, click
Estimates.
Click New.
Select 11/27/2011 the Estimate date. Click OK to create the
estimate.
Click Calculate.
Click OK.
Click Post to post the estimate.
Click OK.
Click Close.
Click New.
Enter "11/14/2011" for Project date. Enter "10,000" for Sales
price.
Click New.
Enter "12/14/2011" for Project date. Enter "10,000" for Sales price.
Click Functions > Invoice proposals.
Click New > On-account invoice proposals.
Enter an Invoice date of "12/15/2011". Click OK to create the new
invoice.
Click Close.
Click Post.
Click OK.
Click OK.
Click Close.
Click Close.
On the Action Pane, on the Project tab, in the Journals group, click
Hour.
Click New.


87. Enter "12/18/2011" for the Project date. Select Design for
Category. Enter "60" for Hours.
89. Click OK.
90. Click Close.
91. Click Close.
92. Click Close.
Expense.
94. Click New.
95. Select PrjJrn for Name.
96. Click Lines.
98. Click Post > Post.
99. Click Close.
100.
Click Close.
101.
Click Close.
102.
On the Action Pane, on the Manage tab, in the Process group,
click Estimates.
103.
Click New.
104.
Select 12/25/2011 the Estimate date. Select Set cost to
complete to zero as the Cost to complete method. Click OK to
create the estimate.
105.
Click Post to post the estimate.
106.
Click OK.

7-13
Summary
This chapter covered fixed-price projects that use the completed contract method.
This method collects costs and revenue in WIP accounts during the project and
then moves them to profit and loss accounts at the end of the projects.
The chapter also discussed principles for matching revenue to costs. The sales
value matching principle will recognize revenue in a single amount based on the
invoiced amount, while the production plus (+) profit method will split the
revenue into two sections, one for costs and one for profit.
7-14

Test Your Knowledge

1. Describe the periodic progress used to monitor a fixed-price project with the
completed contract and sales value.
2. Which of the following is not a part of the setup for ledger accounts for a
fixed-price project with the completed contract using the sales value?
( ) Cost, Profit and loss, Debit all hours, expenses and items
( ) Inventory issue, Balance, Credit item costs
( ) Cost-item, Profit and loss, Debit item costs
( ) Expense offset, Balance, Credit expense costs
completed contract and production plus (+) profit.

7-15

chapter
1.
2.
3.
7-16

Solutions
Test Your Knowledge
completed contract and sales value.
MODEL ANSWER:
When you post the journals, costs post to profit and loss accounts or balance
accounts. On-accounts post to either a profit and loss account or a balance
account.
After each estimate period, if the costs are initially posted to the profit and
loss accounts, they are moved to a WIP (balance) account during the estimate
project.
At the end of the project, when the WIP is eliminated, all costs are moved
back to profit and loss accounts, and the on-accounts are recorded as revenue
on the project.
2. Which of the following is not a part of the setup for ledger accounts for a
fixed-price project with the completed contract using the sales value?
( ) Cost, Profit and loss, Debit all hours, expenses and items
( ) Inventory issue, Balance, Credit item costs
() Cost-item, Profit and loss, Debit item costs
( ) Expense offset, Balance, Credit expense costs
completed contract and production plus (+) profit.
MODEL ANSWER:
When you post the journals, costs post to either profit and loss or balance
accounts. On-accounts either post to a profit and loss account or a balance
account.
After each estimate period, when WIP is posted, the costs are moved from
the profit and loss accounts to a WIP (balance) account, if it is necessary.
At the end of the project, when the WIP is eliminated, all costs move back to
profit and loss accounts, and the on-accounts are recorded as revenue on the
project.

7-17
7-18

CHAPTER 8: FIXED-PRICE PROJECT WITH

COMPLETED PERCENTAGE
Objectives
The objectives are:
Describe the completed percentage and sales value method for fixedprice projects.
Track the financial effects of a fixed-price project with the completed

percentage and sales value method.
Describe the completed percentage and production plus (+) profit

method for fixed-price projects.
Track the financial effects of an advanced fixed-price project

example using the completed percentage and production plus (+)
profit method.
Introduction
This chapter describes the accounting principles involved with running advanced
fixed-price projects with the completed percentage method of revenue
recognition.
Unlike a completed contract fixed-price project where costs and revenues are
matched when the project is completed, the completed percentage project
matches revenue and costs during the project that is based on the percentage of
project completion.
The completed percentage assessment method is typically used to run projects
with terms lasting longer than a single accounting period.

8-1

Processing Flow
A fixed-price project with completed percentage includes the following process
flow.
During the project, costs are recorded into either work in progress (WIP) balance
accounts or profit and loss accounts. If costs are posted initially to balance
accounts, the costs are moved to profit and loss accounts during the estimate
process.
You must decide between balance accounts or profit and loss accounts for onaccount (milestone) invoicing.
On-account transactions post to profit and loss accounts and are

subtracted from any revenue to be recognized by the estimation
process. Only the revenue adjustments are accrued when WIP is
posted, and later when the offset is eliminated.
On-account transactions post to balance accounts and are not

considered when revenue is recognized during the estimation
process. The accrued revenue and WIP values are calculated and
posted with the project estimates. When the estimate project is
eliminated all WIP transactions are offset and the revenue remains
on the accrued revenue sales value account.
In both setup types, the balance accounts clear when the estimates are eliminated.
If on-account invoices are set up to post to balance accounts, revenue does not
post to a project until the estimate function is run. This means a project profit and
loss statement that is run before any estimates are posted shows a negative profit
because there are costs without revenue.
This project type has two different methods for how it matches costs and
revenue; sales value and production plus (+) profit.
This chapter will show a description, setup and an accounting example for each
method.
Ledger Accounts
Set up the following ledger cost accounts for a fixed-price project with the
8-2
Account (Cost)
Ledger
Purpose
Cost
Profit and loss
Debit all costs.
Payroll allocation
Profit and loss or balance
Credit hour costs.
Inventory issue
Balance
Credit item costs.
Expense offsets
Balance
Credit expense costs.
Cost items
Profit and loss
Debit item costs.


Set up the following ledger sales accounts for a fixed-price project with the
Account (Sales)
Ledger
Purpose
Customer summary
account
Balance
Invoiced onaccount
Profit and loss or

balance
Credit on-account invoices.

WIP invoiced - Onaccount
Balance
Credit on-account invoices.

Debit calculated sales value
when reaching completion
percentage of 100.
Fixed-Price Project with Completed Percentage and Sales

Value
In addition to the accounts described in the introduction, you can use the
following accounts that have the completed percentage and sales value method.
Account (Sales)
Ledger
Purpose
Accrued revenue
sales value
Profit and loss
Credit the calculated sales

values that are based on the
completion percentage.
Debit the calculated sales
value when reaching the
completion percentage of
100 (only when the onaccount posted to profit and
loss).
WIP sales value
Balance
Debit the calculated sales

values that are based on the
completion percentage.
Credit the calculated sales
value when reaching the
completion percentage of
100 and the on-account
invoices are posted to profit
and loss.
Credit during elimination
when the on-account
invoices are posted to the
balance account.

8-3

Ledger Principles
Create a project group that has the following settings to run a project using the
completed percentage and sales value method.
FIGURE 8.1 PROJECT GROUP PROPERTIES
Decide between a balance account and a profit and loss account for on-account
invoice posting.
Fixed-Price Project with Completed Percentage and Sales

Value Example
The following example shows a project running with these settings. In this
example, project costs post to profit and loss accounts while on-account
transactions post to a balance account.
The example is based on the following estimates and transactions, and the
currency it uses is the United States dollar (USD).
8-4
Transaction type
Amount
Contract value total
5,000 USD
Estimated costs total
4,500 USD
Estimated profit
500 USD
Hours consumption May
2,000 USD (A)


Transaction type
Amount
Expenses May
800 USD (B)
Item consumption May
845 USD (C)
On-account May
2,500 USD (D)
Hour consumption June
400 USD (F)
On-account June
2,500 USD (E)
Actual cost total
4,045 USD (A + B + C + F)
Actual profit
955 USD
Hours, Expense, and Item Consumption

For this project, all costs post immediately to profit and loss accounts. The
following figure shows an hour transaction posted to the project:
FIGURE 8.2 VOUCHER TRANSACTION HOUR CONSUMPTION
The expense and item transactions have similar vouchers.

8-5

First Milestone Payment
The first 2,500 USD, milestone is invoiced through an on-account invoice. For
this example, the on-account transaction posts to a balance account (WIP
invoiced on-account).
FIGURE 8.3 ON-ACCOUNT VOUCHER
This table shows the results of transactions through the end of May:
Account
Debit
Cost (hours)
2,000 USD (A)
Cost (expense)
800 USD (B)
Cost (item)
845 USD (C)
Credit
Payroll allocation
2,000 USD (A)
Expense offset
800 USD (B)
Inventory issue
845 USD (C)
Invoiced on-account
2,500 USD (D)
Customer balance
2,500 USD (D)
Posting WIP through Estimates in June

To use the estimate function, you must create an estimate project when you
create the project or use an existing estimate project. The estimate project
controls how WIP is calculated and its frequency.
The estimate can be run from the estimate project or directly from the main
project.
8-6


Because the completed percentage assessment method is being applied, select
which cost to complete method to use when you run the estimate. Refer to the
chapter on Advanced Fixed-price Projects for more information about the
differences between the cost to complete methods and how to create and run
estimates.
The following example uses the Total cost Actual method. This means the
actuals are compared to the total costs entered in the Cost estimate form.
FIGURE 8.4 CREATE ESTIMATE FORM

8-7

After you create the estimate, you can edit the cost to complete for each cost
template line.
FIGURE 8.5 COST ESTIMATES FORM
For this example, the expected costs on the project are 4,500 USD, and they are
allocated into 2,500 USD for hours, 1,155 USD for expenses and 845 USD for
items.
After the adjustments are made to the Cost estimate form, return to the estimate
form and recalculate the estimate based on the updated total cost estimate, by
clicking Calculate. After the estimate is recalculated, the totals are reflected on
the Totals tab. On the General tab, view the estimated completion percentage.
8-8


If the cost template is set up so that a percentage can be manually entered, you
can enter a specific percentage complete in the Manual calculation field.
In this example, the system calculated a percentage of 85.05 percent based on

what is used of the estimated costs (3,645 USD consumed of the 4,500 USD
estimated).
The amount of revenue recognized in June will be 4,090.91 USD. This is
calculated based on 85.05 percent of the total contract value of 5,000 USD. If the
on-account transactions have been set to post to profit and loss accounts, the
recognized revenue would subtract the already posted on-account revenue.

8-9

Use the Accrued revenue sales value on the Profit and loss tab to change
only this amount, and not the completion percentage.
FIGURE 8.7 ESTIMATE FORM PROFIT AND LOSS TAB
The values are posted to the accrued revenue sales value account (credit) and the
WIP sales value account (debit) when the estimate is posted.
FIGURE 8.8 VOUCHER TRANSACTIONS FORM
8-10


Account
Debit
Accrued revenue sales value

WIP sales value
Credit
4,091 USD
4,091 USD
Completing the Project

The project completed at a lower cost than expected with an additional 400 hours
in June, and without any additional expenses. Additionally, the second milestone
payment for 2,500 USD has been invoiced. Similar to the first payment, the
amount posted to a balance account and is offset with a customer balance.
FIGURE 8.9 VOUCHER TRANSACTIONS FORM
The following figures represent the account balances through the end of June.
Account
Debit
Cost (hours)
2,450 USD (A + F)
Cost (expense)
800 USD (B)
Cost (item)
845 USD (C)
Credit
Payroll allocation
2,450 USD (A + F)
Expense offset
800 USD (B)
Inventory issue
845 USD (C)
4,091 USD
WIP sales value
4,091 USD

Customer balance
5,000 USD (D + E)
5,000 USD (D + E)
At this point, the posted costs on the project have exceeded the recognized
revenue so the project statement will show a negative gross margin.

8-11

Posting WIP through Estimate Control in July
When the estimate is created, the Set cost to complete to zero method is used
because no additional work remains, and so the estimate reflects only the actual
amounts charged to the project.
FIGURE 8.10 COST ESTIMATE FORM
The Cost to complete is set to zero, and the automatic completion percentage is
set to 100 percent. On the Profit and loss tab, the accrued revenue is 909.09
USD, with the rest of the total contract value of 5,000 USD.
The following figures represent the values that are updated in the ledger when
you perform the current task.
8-12


Account
Debit

WIP sales value
Credit
909 USD
909 USD
Eliminating the Estimate

After the project is completed and the percentage of completion is set to 100
percent, eliminate the estimates to clear the WIP accounts. You can do this by
selecting the final estimate and clicking the Eliminate button from the Estimate
form.
The Eliminate estimate form reflects the period of the last estimate and lets you
set the Project stage to Finished.
FIGURE 8.13 ELIMINATE ESTIMATE

8-13

When the estimate project is eliminated, the WIP on-account balance account
postings and the WIP sales value transactions are reversed.
FIGURE 8.14 VOUCHER TRANSACTIONS
There is no effect on the profit and loss accounts because both the costs and the
total revenue for the project is already accrued to the profit and loss account.
Account
Debit
WIP sales value
5,000 USD
Credit
5,000 USD
Example Summary
This project showed an example of a fixed-price project by using the completed
percentage and sales value method. In this example, costs posted to profit and
loss accounts while on-account invoices posted to a balance account (WIP).
Revenue is accrued during the estimate process. When the project is completed
and the estimates are eliminated, the WIP accounts are cleared.
Fixed-Price Project with Completed Percentage and

Production Plus (+) Profit
For the production plus (+) profit matching principle, in each estimate period
when WIP posts, the sales value is split into a production value. This value
reflects the actual costs and a profit value that is calculated based on the revenue
and the percentage of completion. These values are accrued to separate ledger
accounts in profit and loss accounts.
Ledger Accounts
In addition to the accounts described in the introduction, you can use the
following accounts that have the completed percentage and production plus (+)
profit method.
8-14


Account
(Sales)
Ledger
Purpose
Accrued
revenue
Production
Profit and loss
Credit revenue for the actual costs.

Debit the revenue for the actual costs
when reaching the completion percentage
of 100 (only when the on-account posted
to profit and loss).
Accrued
revenue
Profit
Profit and loss
Credit revenue for the calculated profit

based on the completion percentage.
Debit revenue for the profit when
reaching the completion percentage of
100 (only when the on-account posted to
profit and loss).
WIP
production
Balance
Debit revenue for actual costs.

Credit revenue for costs when reaching
the completion percentage of 100 and the
on-account invoices are posted to profit
and loss.
Credit during elimination when the onaccount invoices are posted to the
balance.
WIP profit
Balance
Debit revenue for the calculated profit

based on the completion percentage.
Credit revenue for the profit when
reaching the completion percentage of
100 and the on-account invoices are
posted to profit and loss.
Credit during the elimination when the
on-account invoices are posted to the
balance.

8-15

Ledger Principles
Create a project group that uses the following settings to run a fixed-price project
with the completed percentage and production plus (+) profit method.
FIGURE 8.15 LEDGER SETUP
Fixed-Price Project with Completed Percentage and

Production Plus (+) Profit Example
The following example shows a project that is run with these settings. In this
example, both project costs and on-account invoices post to balance accounts.
The example is based on the following estimates and transactions, and the
currency it uses is the United States dollar (USD).
8-16
Transaction type
Amount
Contract value total
5,000 USD
Estimated costs total
4,500 USD
Estimated profit
500 USD
Hours consumption May
2,000 USD (A)
Expenses May
960 USD (B)
Item consumption May
845 USD (C)


Transaction type
Amount
On-account May
2,500 USD (D)
On-account June
2,500 USD (E)
Actual cost total
4,045 USD (A + B + C + D)
NOTE: Because of the complexity of running a project over a long duration, the
example is simplified to only display payments in two periods, and costs are only
recorded in the first period.
Hours, Expense, and Item Consumption

For this project, all costs post immediately to balance (WIP) accounts. This is an
example of the hour transaction.
The expense and item transactions have similar vouchers.
First Milestone Payment

The first 2,500 USD, milestone is invoiced through an on-account invoice. For
FIGURE 8.17 VOUCHER TRANSACTIONS ON-ACCOUNT

8-17

Account
Debit

Customer balance
Credit
2,500 USD (D)
2,500 USD (D)
Because the on-account transactions post to a balance account, no revenue is

recognized on the project by this invoice.
Posting of WIP through Estimates in June

The estimate process follows the same process that is described in the previous
example. In this example, the percentage complete is calculated at 80.51 percent
based on the actual and estimated costs.
For this estimate, the posting is different:
Because the costs are initially posted to balance accounts, the costs
are moved to profit and loss accounts.
The WIP and accrued revenue is split into two parts, one for
production that reflects the actual costs posted to the project, and one
for profit that reflects the estimated profit for the project.
On-account invoices are posted to WIP and accrued.
For this example, the accrued revenue production is 3,810 USD (reflecting the
actual costs) while the accrued revenue profit is 403 USD representing 80.51
percent of the estimated profit value of 500 USD.
8-18


The following figure shows the values updated in the ledger when you perform
the current task.
Account
Debit
Credit
WIP Hours
2,000 USD (A)
WIP Items
850 USD (B)
WIP Expense
960 USD (C)
Cost Hours offset
2,000 USD (A)
Cost Items Offset
850 USD (B)
Cost Expense Offset
960 USD (C)
Accrued Revenue
Production
WIP Production
3,810 USD (A + B + C)
3,810 USD (A + B + C)
Accrued Revenue
Profit
WIP Profit
403 USD
403 USD

8-19

Completing the Project
The final 2,500 USD, milestone is invoiced through an on-account invoice. For
The following table represent the values updated in the ledger when you perform
the current task.
Account
Debit

Customer balance
Credit
2,500 USD (E)
2,500 USD (E)
Posting of WIP through Estimates in July

The project completed in June without any additional costs. When you create the
estimate, select the Cost to complete method to Set cost to complete to zero to
reflect only the actual amounts charged to the project.
8-20


On the General tab of the resulting estimate, the percentage of completion is set
to 100 percent.
The profit of 1,190 USD is now calculated using the total contract amount of
5,000 USD minus the actual costs of 3,810 USD.

8-21

This results in the final 787 USD of revenue being recognized:
Account
Debit
Accrued Revenue Profit

WIP Profit
Credit
787 USD
787 USD
Eliminating the WIP Project

After the project is complete, eliminate the estimates to clear the WIP accounts
by clicking the Eliminate button (this button is only available when all the onaccounts are invoiced and the percentage of completion is 100) on the Estimate
form.
When the estimate project is eliminated, the WIP on-account account postings
and the WIP production and profit postings are reversed.
There is no effect on the profit and loss accounts because both the costs and the
total revenue for the project have already been accrued to the profit and loss
account.
Account
Debit
WIP Production
3,810 USD
WIP Profit
1,190 USD
8-22
Credit
5,000 USD


For the results, view the project profit and loss on the Project statement form.
FIGURE 8.24 PROJECT STATEMENTS FORM
This project showed an example of a fixed-price project using the completed

percentage and production plus (+) profit method. In this example, both costs
and on-account invoices posted to balance accounts (WIP). Revenue is accrued
and costs are posted during the estimate process. When the project is completed
and the estimates are eliminated, the WIP accounts are cleared.

8-23
Lab 8.1 - Create and Run a Fixed-Price Project Using

Completed Percentage
In this lab, you will create and run a fixed-price project using the completed
percentage method.
Scenario
The Contoso Company has just signed a contract for work on a fixed-price basis
with customer 2003 Rainbow Hotel to be done on project contract 100103. The
project has a value of 10,000 USD. It should be paid in two equal installments
over the two months in which the project is completed. Work is set to begin in
November 2008 and complete in December 2008.
The project controller wants to track the accrued revenue by using the percentage
complete calculations and recognizing the sales value.
The project will be estimated on a monthly basis, using the Contoso cost
template. The estimated costs and quantities are as follows:
Cost Line
Estimated Quantity
Estimated Costs
Install Hours
100
5,000 USD
Travel Expenses
3,000 USD
The following transactions need to be registered to the project:

Month
Category
Quantity
Cost Price
November
Design
50
45.00 USD
November
Flights
800.00 USD
December
Design
50
45.00 USD
December
Flights
800.00 USD
Challenge Yourself
1. Create the new project.
2. Create the on-account transactions and post the on-account invoice
for November.
3. Create and post the project transactions for November.
4. Create and post the estimate for November.
5. Create the project invoice for December.
6. Create and post the transactions for December.
7. Create and post the estimate for December.
8-24


Need a Little Help?
When you run the estimates, select Total cost Actuals for the cost to complete
method. Enter the estimated amounts on the cost lines form.
Step by Step
Project.
3. Select Fixed-price as the Project type.
4. Select FP3 as the Project Group. Enter "NewFP CP Project" for
Project name and "New FP CP" Project ID. Select 100103 as the
Project contract ID.
5. Select New estimate project.
6. Select Estimate for Cost template.
7. Select EmplBiWeek for Period code.
8. Click OK.
10. Click OK.
12. Click New.
13. Select 11/30/2011 for Project date. Enter a Sales price of 5,000
USD.
14. Click New.
15. Select 12/30/2011 for Project date. Enter a Sales price of 5,000
USD.
16. Click Functions > Invoice proposals.
17. Click New > On-account invoice proposals.
18. Enter an Invoice date of 12/31/2011. Click OK to create the new
invoice.
19. Click Close.
20. Click Post.
21. Click OK.
22. Click OK.
23. Click Close.
24. Click Close.
Hour.
26. Click New.
27. Select Design for Category. Enter "50" for Hours.

8-25

28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
8-26

Click Post to post the journal.
Click OK.
Click Close.
Click Close.
Click Close.
Expense.
Click New.
Click Lines.
Enter "11/18/2011" for Project date.
Enter a Cost price of 800 USD.
Click Close to close the Infolog.
Click Close to close the Journal voucher form.
Click Close to close the Expense form.
Estimates.
Click New.
Enter "11/27/2011" for Estimate date. Select Total cost actual as
the Cost to complete method. Click OK to create the estimate.
Click Calculate then OK to run the recalculation of the percent
complete.
Click the Post button to post the estimate.
Click OK.
Click Close.
Click Functions > Invoice proposals.
Click New > On-account invoice proposal.
Enter "12/31/2011" for Invoice date. Click OK to create the new
invoice.
Click Close.
Click Post to post the on-account invoice proposal.
Click OK.
Click OK.
Click Close.
Click Close.
Hour.


63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.
76.
77.
78.
79.
80.
81.
82.
83.
84.
85.
86.
87.
Click New.
Select Design for Category. Enter "50" for Hours.
Click Post to post the journal.
Click OK.
Click Close.
Click Close.
Click Close.
Expense.
Click New.
Click Lines.
Enter "12/18/2011" for Project date.
Enter a Cost price of 800 USD.
Click Close to close the infolog.
Click Close to close the Journal voucher.
Click Close to close the Expense form.
Estimates.
Click New.
Select the Estimate date to be "12/25/2011". Select Set cost to
complete to zero as the Cost to complete method. Click OK to
create the estimate.
Click Calculate then OK to run the recalculation of the percent
complete.
Click the Post button to post the estimate.
Click OK.

8-27
Summary
This chapter discussed fixed-price projects that use the completed percentage
method. The method uses two different principles to match costs to revenue. The
sales value method takes a percentage of the total project value to figure how to
accrue revenue. The production plus (+) profit method recognizes revenue in two
parts: the actual costs and a portion of the estimated profit based on the
percentage complete.
8-28

Test Your Knowledge

1. Describe two methods to post fixed-price projects using the completed
percentage sales value.
2. Which of the following is incorrect in setting up the ledger accounts for a

fixed-price project with the completed percentage using the sales value?
( ) Cost account, Profit and Loss ledger, Debit all costs
( ) Inventory issue account, Balance ledger, Credit item costs
( ) Ledger account offset, Profit and loss ledger, Credit expense costs
( ) Cost items account, Profit and loss ledger, Debit item costs
3. Describe the two methods to run a fixed-price project that uses the completed
percentage production plus (+) profit.

8-29

chapter
1.
2.
3.
8-30

Solutions
Test Your Knowledge
1. Describe two methods to post fixed-price projects using the completed
percentage sales value.
MODEL ANSWER:
On-accounts post to profit and loss accounts, and costs post to profit and loss
accounts. On-account transactions post to profit and loss accounts and are
subtracted from any revenue that is recognized by the estimate process.
On-accounts post to balance accounts, and costs post to profit and loss
accounts. On-account transactions at first post to balance accounts and are
not considered when revenue is posted.
2. Which of the following is incorrect in setting up the ledger accounts for a
fixed-price project with the completed percentage using the sales value?
( ) Cost account, Profit and Loss ledger, Debit all costs
( ) Inventory issue account, Balance ledger, Credit item costs
() Ledger account offset, Profit and loss ledger, Credit expense costs
( ) Cost items account, Profit and loss ledger, Debit item costs
3. Describe the two methods to run a fixed-price project that uses the completed
percentage production plus (+) profit.
MODEL ANSWER:
On-accounts post to profit and loss accounts, and costs post to profit and loss
or balance accounts. On-account transactions post to profit and loss accounts
at first, but are moved to WIP accounts during the estimate process.
On-accounts post to balance accounts, and costs post to profit and loss
accounts or balance accounts. On-account transactions initially post to
balance accounts and are not considered when revenue is posted.
In both set up types, when the estimate project is eliminated, the WIP
accounts are cleared.

8-31
8-32


Project Advanced - Ax2012 PDF

Uploaded by

Copyright:

Available Formats

Project Advanced - Ax2012 PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Project Advanced - Ax2012 PDF

Uploaded by

Copyright:

Available Formats

COURSE: 80317

Microsoft Official Training Materials for Microsoft Dynamics

Last Revision: August 2011

Microsoft Official Training Materials for Microsoft Dynamics

Welcome ............................................................................................................ 0-1

Chapter 1: Project Validation

Objectives ........................................................................................................... 1-1

Chapter 2: Project Forecasting

Objectives ........................................................................................................... 2-1

Chapter 3: Advanced Project Invoicing

Objectives ........................................................................................................... 3-1

Microsoft Official Training Materials for Microsoft Dynamics

Project Advanced in Microsoft Dynamics AX 2012

Chapter 4: Advanced Internal Projects

Objectives ........................................................................................................... 4-1

Chapter 5: Advanced Time and Material Projects

Objectives ........................................................................................................... 5-1

Chapter 6: Advanced Fixed-Price Projects

Objectives ........................................................................................................... 6-1

Microsoft Official Training Materials for Microsoft Dynamics

Objectives ........................................................................................................... 7-1

Chapter 8: Fixed-Price Project with Completed Percentage

Objectives ........................................................................................................... 8-1

Microsoft Official Training Materials for Microsoft Dynamics

Project Advanced in Microsoft Dynamics AX 2012

Microsoft Official Training Materials for Microsoft Dynamics

Microsoft Dynamics Courseware

Microsoft Official Training Materials for Microsoft Dynamics

Project Advanced in Microsoft Dynamics AX 2012

Microsoft Dynamics Courseware Contents

Need a Little Help?

Quick Interaction: Lessons Learned

Microsoft Official Training Materials for Microsoft Dynamics

Microsoft Official Training Materials for Microsoft Dynamics

Project Advanced in Microsoft Dynamics AX 2012

Microsoft Official Training Materials for Microsoft Dynamics

Chapter 1: Project Validation

CHAPTER 1: PROJECT VALIDATION

Explain project validation.

Set up project validation parameters.

Enable validation for workers.

Set up validation groups.

Set up project validation category assignments.

Microsoft Official Training Materials for Microsoft Dynamics

Project Advanced in Microsoft Dynamics AX 2012

Worker/project groups to determine one or more projects and a

Project/category groups to determine one or more projects and a

Category/worker groups to combine a set of one or more workers

Microsoft Official Training Materials for Microsoft Dynamics

Chapter 1: Project Validation

FIGURE 1.1 VALIDATION DIAGRAM

Project validation is controlled by setting up:

Parameters in the Project parameters form.

Assignments for individual workers and projects.

Assignments for employees, categories, and projects.

Project Validation Parameters

Microsoft Official Training Materials for Microsoft Dynamics

Project Advanced in Microsoft Dynamics AX 2012

FIGURE 1.2 PROJECT PARAMETERS FORM VALIDATION