(By: Shahzad Ali, CEO – Forte Business Solutions)
Project Types in Project Management Module and Accounting in Microsoft Dynamics 365:
Due to the presence of powerful modules in Microsoft Dynamics 365, the efficiency of the project module and its accounting is sometimes overlooked. And this powerful, flexible module of Microsoft Dynamics 365 is less used in the shadows of other modules.
However, due to the strong integration between this module and other modules, it is essential to enable high performance and capability for any company with a variety of external and internal projects. The following is a quick and comprehensive description of the six types of projects available in Microsoft Dynamics 365. This information gives you a better understanding of what you can expect from this module and is valuable if you want it to be considered as part of the implementation.
Project Time and Material
This project model is the most common type in which the hours of work, commissions, items, goods and costs that are incurred over the life of the project are invoiced to the customer. For example, the project of building a new building can be mentioned. Hourly transactions will be made based on the working hours of the workers. In addition, some processes may include commodities and running costs in which, the customer is identified as the agent. Items such as raw materials are required to manufacture such items and, ultimately, these costs are recorded in the customer’s name. Other costs of this process can be the cost of shipping. After the project has been invoiced for previously listed transactions, its revenue can be recorded at various stages, and after the costs mentioned previously and the project invoices are completed, the amount of revenue is determined.
Fixed Price Project
This type of project differs from the project type: time and materials, because instead of invoicing for each transaction and sending it to the client, the invoices are adjusted based on a scheduled invoice specified in the project contract. This billing planning can be adjusted based on one of two methods of completing the contract or a percentage of the contract. For example, consider a project contract set at $100,000. Revenue can be supplemented by the contract method where once the project completes the client pays $100,000 and the completed percentage method; e.g. 25% of the project is completed, the client pays $25,000. These types of projects use WIP to track costs, so at the end of the project the margin can also be calculated.
Domestic projects are quite different because they are used as company-specific projects. For example, a company might define a project as upgrading its IT infrastructure. This type of project allows you to reserve and manage your company resources for this project. Also, you will be able to track any project related expenses. The following are three sub-categories of this type of project.
These types of internal projects only track the transactions that are realized for the enterprise, such as cost. Hourly transactions can also be considered as a cost but it requires adjustments.
Internal time projects only track work hours provided by employees or company resources. The intended use of this type of project is for workers to record their work hours at different times or during work breaks.
In investment projects, all types of cost transactions are recordable. These transactions are sent to profit and loss accounts and then transferred to the working account. In the end, of course, they are converted into balance sheets so that they can be invested as assets.
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I hope this information provides a good insight into what is happening in all kinds of projects in the project management and accounting module.
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