Control Costs#

Overview#

In essence, project cost control is concerned with the difference between a project's budgeted and actual values. It helps ensure that the revenues you earn and the expenses you incur match estimates as much as possible. Comparing these figures over multiple periods is crucial for timely, effective project management.

The cost control functionality in Microsoft Dynamics 365 Business Central¹ uses project ledger and account entries to show you how close your projects are to being cost-effective. Whereas project ledger entries record revenues and expenses related to day-to-day operations, such as item consumption or hours spent on a project, the work breakdown structure and the budget contain the expected sales and costs and form the basis for creating account entries from a chart of project accounts.

The accounts are linked to both the project ledger and the budget. This means that, like in Finance, you can use the account chart to create budget-to-actual comparisons for multiple cost types and generate a variety of business insights.

For even more insights into project performance, you can set up views to analyze the dimensions stored with project ledger and account entries. You can then set filters on budgeted and actual values, or on their variances, to specify what to include in a view.

Basics#

The chart of project accounts is the most important component of cost control. It covers the key values used for tracking cost performance, that is, the types of revenues and expenses you might encounter, and can be as compact or large (detailed) as you want.

Both the project ledger and the project account entries are created based on this chart. They are later consolidated in a financial report.

Chart of project accounts and account setup#

Not unlike G/L entries in Finance, entries related to projects are linked to accounts with the help of Project Accounts Setup.

All accounts are identified by their general product posting group, project type, work package, and phase code. Any combination of these can be assigned to a sales and a cost account from the account chart. See the following table for more information.

You can use this information, for example, to determine

• resource expenses when managing research projects with internal resources.
• the cost of small items for onsite assembly.
• travel times of external employees for major projects.
• follow-on orders (=phase code) for customer projects.

You must set up the chart of project accounts and fill in the Project Accounts Setup page based on what you want to analyze later.

Multi-use accounts#

You can add an account more than once to Project Accounts Setup. To see if and how often an account is used:

1. Choose the search icon, enter Chart of Project Accounts, and then choose the related link.
2. Select an account. On the ribbon, choose Related > Account > Where-Used List.

The page that opens also shows where to find the account in templates created through the project measurement functionality.

Switch to setup with phase codes#

Previous project365 releases didn’t include phase codes in Project Accounts Setup. You need to switch to a newer version to make use of this feature.

1. Choose the Search icon, enter KUMAVISION Module Setup, and then choose the related link.
2. On the ribbon, choose Actions > Setup > project365 App Setup.
3. Turn on the Use Phase Code in Project Accounts toggle. This opens a dialog. Choose Yes.

Existing entries are now copied to a new setup page and deleted from the old one.

Project ledger entries = actual values#

Each posting that goes toward a project creates a project ledger entry. These entries are the basis for billing, that is, they show project usage and consumption and store the revenues generated from invoices. They are also used to measure project progress.

When you post to a project, an account is assigned to the created project ledger entry based on what you entered in Project Accounts Setup. This gives you access to the latest data on project usage and sales so that you can track revenues and expenses throughout the lifecycle of a project.

Project account entries = budget figures#

Project account entries store the quantities and values from planning. They are created based on the planning level of a WBS line. They originate with budget line entries if you selected the Copy Budget checkbox on available budget lines or with the WBS line itself if planning is set to that level.

You need to run a function to create project account entries:

1. Choose the Search icon, enter Update Project Account Entries, and then choose the related link.
2. Set filters as necessary. If you don’t set filters, account entries are created for all projects.

You can also update entries for a single work breakdown structure. Open a WBS and choose Actions > Functions > Update Project Account Entries on the ribbon.

If you rerun the function, the account entries are deleted and recreated from scratch. This gives you greater flexibility when budgeting a project, as the dimensions, prices, and planning level of a project might be subject to constant change.

See the following table for an explanation of the Project Account Entries page. You can view this page by choosing Related > Project Account Entries on a WBS, for example.

As explained earlier, the product posting group is crucial to identifying the correct project account for cost control. If an account is retrieved based on budget lines, the system uses the group of the resource or item stored there to find the account.

If you plan at the WBS line level, the posting group related to the work package billing type and number is used. Typically, this is the group of a billing resource. Because of how account entries are stored in the system, you need to run the update function each time you change planning data.

If a project has more than one WBS, project account entries are created for all structures, but only the WBS that is currently active is shown in cost control.

We recommend you use the job queue to update account data on a regular basis.

Account entries for revenues#

Typically, cash inflow is recorded later than expenses. In fact, project work is often paid for only in subsequent accounting periods.

However, to monitor projects accurately, the system needs to store expected sales prior to payment. This is what the Sales Project Acc. Entries From field on the project card is for. You can find the field on the Planning tab. It has the following options:

Project Budget#

Choose this option if you want project account entries to be created as described earlier. You can still use the Base Date Sales Project Acc. Entries and Formula Sales Project Acc. Entries fields to change the workflow to some extent.

If you choose Planning Date in the Base Date Sales Project Acc. Entries field, the assumption is that you generate revenue when you record project usage, and a date formula doesn’t apply.

If the field is set to Date Formula, the date on which sales are generated is calculated based on the budget date and a specified formula.

Example
The budget line shows 05/15/21. The system then calculates 06/15/21 as the date that needs to be stored with the sales account entry.

(Advance) Payment Plan#

Payment and advance payment plans work in the same way. The only difference is their data source. For more information, see the Advance Payment feature.

If you choose one of these options in the Sales Project Acc. Entries From field, you can no longer enter a base date or a date formula.

From this point on, the project budget is no longer required. Instead, revenue is created according to the payment plan. The plan is used to store all information needed for billing a project, such as posting dates and prices.

Allocating a sales account to a payment plan works in the same way as allocating a cost account when you create project account entries from a WBS line. The system will use a work package, a billing type, and a billing number (usually of a billing resource) to determine the correct account.

For cost control to capture the entire cash inflow, the final invoice must also be part of the plan. However, this invoice must include only the amount that remains after all amounts from partial invoices have been subtracted from the total price.

When you create the final invoice based on an invoice suggestion, the total price is shown on the invoice in addition to the partial amounts applied as credit memos.

If you want to use a payment plan in-house and remove it from billing, clear the Copy to Suggestion checkbox on the payment plan lines.

Set up financial reports for projects#

You can now use the project ledger and account entries to set up financial reports for analyzing projects based on multiple criteria. The reports have the same purpose and function as those for analyzing G/L accounts and entries in Finance.

Report setup#

You can create more than one financial report, for example, to set up different reporting environments for internal and customer projects. To create a new report:

1. Choose the Search icon, enter Project Financial Reports, and then choose the related link.
2. On the ribbon, choose New, and fill in the fields as described in the following table.

Row definition#

The report itself is set up in a way that you can add accounts to individual lines. You can also specify formulas or enter lines that total amounts or quantities.

1. Choose the Search icon, enter Project Financial Reports, and then choose the related link.
2. Select a report. On the ribbon, choose Edit Row Definition and fill in the fields as described in the following table.

Actions#

To insert an account into a row, choose Actions > Functions > Insert G/L Accounts. The row can then be used immediately.

Column definition#

1. Choose the Search icon, enter Project Financial Reports, and then choose the related link.
2. Select a report. On the ribbon, choose Actions > Functions > Edit Column Definition and fill in the fields as described in the following table.

Financial report card#

You can select Edit Project Financial Report on the ribbon to see the card related to the new report. Report values are shown in the rows and columns according to the filters you set.

The header displays the names of the report and the row and column definitions. You can filter data there as well.

All default values on the page can be changed to meet your requirements. You can also use the lookup on a field to see how it relates to the chart of project accounts. On the page that opens, you can then use another lookup if you want to know where an entry originally comes from.

To switch from a report column (or analysis period) to another, choose Column (or Period) on the ribbon, and then choose Previous Column (or Period) or Next Column (or Period).

To copy the financial report to a new Excel worksheet for further editing, choose Export to Excel.

Analyze dimensions#

As an alternative, you can use the dimensions posted with project ledger entries to monitor projects. Dimension-based analyses include both global dimensions—posted directly to project ledger entries—and additional dimensions linked to a project. For easy filtering, they’re part of the following aggregated entries:

• Project analysis view entries—created from project ledger entries—to represent actual values.
• Project analysis view budget entries—created from project budget entries—to display budget figures.

Dimension sources#

Before you start working with this kind of analysis, it might be helpful to get an overview of the potential sources of a dimension linked to a project, a WBS line, or a budget line, as listed in the following.

Sources of project dimensions#

• With certain fields in Projects Setup filled in, the dimension (for example, a cost object) might have been automatically added to the project, with the code of the dimension matching the number of the project.
• The dimension might have been entered on the template from which the project was created.
• The dimension might be assigned to a project type. You can set up one dimension per type of project in Projects Setup, with the dimension value matching the type.
• The dimension might have been copied when a customer was assigned to the project. Alternatively, it might have been transferred from a contact or a customer template assigned to the project if the project was set to Quote at the time.
• The dimension might have been added when a project manager was entered for the project provided you’ve turned on the relevant feature in Projects Setup.
• The dimension might have been copied from a main project linked to the project.
• The dimension might be from a responsibility center that was entered for the project.
• The dimension might have been copied from a salesperson if the code of that person was added to the project.

Sources of WBS line dimensions#

• The dimension might be among those that are inherited from the project to the WBS lines set up for the project.
• The dimension might be from the work package master if a work package was validated on the WBS line.

Sources of budget line dimensions#

• The dimension might be among those that are inherited from the WBS line to the budget line during creation of the latter.
• The dimension might have been copied from a resource (group), an item, or a G/L account when the No. field was validated on the budget line.

Dimension sources during project postings#

A dimension that is stored with base data (such as a resource or a vendor) might be passed along to all kinds of documents and journals in the system.

• A project dimension is copied to a document or journal line when the project number has been validated on the line.
• A dimension stored with a work package is copied to a WBS or a budget line when either line is selected for posting. What line must be selected depends on the posting level specified for the project.
• Even WBS or budget line dimensions created manually in planning are copied to project ledger entries if certain fields in Projects Setup are filled in.

On the Dimensions FastTab in Projects Setup, you can see the criteria that will be used for project-related dimension transfers. You can also fill in or change fields on the tab to specify, for example, what dimensions the system should set up for project types or for main projects and how it should copy dimensions from project manager resources.

Project analysis views#

Project analysis views offer insights into project data based on analysis view entries and analysis view budget entries.

Analysis view entries can be set up on the project analysis view card. You can use four additional dimensions per card.

To open a list of all cards, choose the Search icon, enter Project Analysis View List, and then choose the related link.

Each line on the page shows if budget values will be created from the card, when the card was last modified, and what dimensions are available.

Choose a card for editing and then fill in the fields as necessary.

General#

Dimensions#

On the Dimensions tab, choose the four additional dimensions you want to analyze on the card.

Actions#

To store selected dimension values, choose Related > Analysis > Filter on the ribbon. This ensures that only certain values are totaled on the card.

You can also choose Update to find all project ledger and account entries that match the filters you set and use them to create project analysis view and budget entries.

If card changes affect existing analysis entries, the entries are deleted. For example, if you edit the Date Compression field or a dimension filter, the project analysis view and budget entries are recreated at the next update. This step is necessary because the criteria for creating entries have changed.

Entries created#

Every time you update a view, the system creates data-rich project analysis view and project analysis view budget entries from the project ledger and project budget entries that include the four dimensions you want to analyze.

The analysis view budget entries contain the values shown in the view, the budget name, and the project account, followed by the four dimensions, the posting date, the quantity, and the amount. In short, they represent the link between key data stored with project account entries and the dimensions of a document.

The same is true for analysis view entries. In this case, dimension data is merged with data from project ledger entries.

In the Quantity and Amount fields, you can use a lookup to see where an entry originates.

Analysis views on financial reports#

You analyze by dimensions in the same way you analyze by project ledger and account entries.

Open a row definition and use the Assist button next to the Name field at the top to look at the name of the assigned analysis view. If you chose a view, the report will be filled in automatically with analysis view entries.

You can use the lookups on individual lines to identify what analysis view entry was used to fill in a certain line. Choosing the lookup first opens a page that shows the project account chart related to the account used in a certain column.

When you then select a Quantity or a Cost Amount field, you can see the project analysis view entry and the dimensions stored for the analysis view.

Difference to standard functionality#

At a cursory glance, the added views might not seem to offer anything new. But you can now set flow filters on the four dimensions described earlier.

You can already store these filters when you set up a row definition. To use them, unhide the four columns that show the relevant dimension values.

The benefit of specifying filters on the report instead of each card individually is that analyses will all have the same design and thus remain comparable over time.

Project analysis by dimensions#

Project analysis by dimensions also uses the analysis view and analysis view budget entries described earlier.

1. Choose the Search icon, enter Project Analysis View List, and then choose the related link. This shows you list of all views that have been specified so far.
2. On the ribbon, choose Analysis by Dimensions to open the setup and filter view. The date, project account, project, budget, and responsibility center filters are included by default.
3. Choose the other four dimensions based on the selected analysis view. Each dimension can be assigned to a row or a column. You don’t need to specify a default value for a dimension (as is required for a financial report). To link the dimension to an account, the system will use the project accounts stored with the analysis view card, and you can set filters on them there.

The other fields shown on the card are described in the following table.

Filters#

Options#

Actions#

To swap line and column views, choose Related > Actions > Reverse Lines and Columns on the ribbon.

To open the analysis by dimensions matrix, choose the Show Matrix action. There, you can choose Export to Excel to copy the analysis data to a new Excel worksheet.

Project analysis views vs. project analysis by dimensions#

Both options create analysis view and analysis view budget entries based on a project analysis view card.

Project analysis uses a view that has fixed lines and columns, created from row and column definitions. For a more targeted assessment of projects, you can set filters on up to four additional dimensions.

However, project analysis by dimensions puts even fewer restrictions on how views can be structured. Both the lines and columns can show default dimensions, such as the project account and period, and additional dimensions set up on the analysis view card.

Moreover, you can swap the lines and columns and don’t need to create a layout for either. The drawback is that you can only see what has been budgeted, posted, or the difference between those numbers. But, as an example, you cannot use this view to compare budget to actuals by including all three values.

Track ongoing projects#

You can use multiple functions to assess an ongoing project at the push of a button.

Statistics#

The statistics available for projects and main projects can provide you with key insights into project progress and performance. They include budgeted and actual figures and the variance between both. To view the statistics:

1. Open a project card.
2. Choose Related > Project > Statistics on the ribbon.

You can now see a project's budgeted and actual values.

Budgeted#

This tab shows you the budgeted values at the level of the WBS and the budget lines, that is, detailed planning.

Achieved#

This tab shows you how far the project has progressed.

The fields of both tabs are described in the following table.

Budget vs. Actual#

Compares project usage to budget figures.

Advance Payments#

For more on this FastTab, see Track WIP and Advance Payment.

Project cockpit#

Both the project list and card contain elements of a project cockpit. In some cases, you need to use the Personalize function to unhide these elements.

Except for the color indicators, the cockpit on the project card shows the same fields as the cockpit on the list.

The list cockpit is split into two areas. The indicators are shown directly on the list in the form of columns. Fact boxes that describe the project can be found to the right.

Indicators#

Two list indicators are available to visualize actual usage and profit in percent.

To turn on these indicators, you need to specify in Projects Setup when you want one of them to go from green to yellow and from yellow to red. This setup will then be used for all projects.

The symbols you want to show can be imported as a JPG file to the Documents tab on the Company Information page.

Fact Boxes#

The fact boxes provide you with a clear, concise overview of various kinds of project-related information. You can also personalize them to meet your needs. All boxes are available on project cards as well.

Budget/Usage Incl. Commitment#

On the first line below the heading, the project budget is given in local currency. Click this value to see the active WBS.

The remaining values are shown in the form of bars so that you can visually compare project budget and usage, that is, actual usage and commitments.

Budget vs. Actual#

Displays the same values as the previous box but shows them as numbers. Except for Stock Commitment and Remaining Budget, which are determined automatically, you can open the source tables of all lines by clicking the relevant figure.

Project Documents#

Broken down by sales, purchase, and project documents, this list shows the number of documents associated with the project. Click a number to view the related documents.

Payment Plan#

Indicates when the payment plan says you need to send the next invoice. This plan isn’t the same as an advance payment plan, which would show in another box (advance payments are handled by a separate app). Besides a projected invoice date, the plan includes the total price expected for the project.

Invoice Overview#

Provides a visual update on billing. The bar on the left shows—in local currency—the budgeted total price according to the WBS.

The bar in the middle displays the total price invoiced so far and the open project ledger entries. It is the most important bar regarding projects that are billed based on time and materials. The bar on the right shows what entries remain according to the payment plan. As you can use plans for both fixed-price and time and materials projects, this bar is relevant in both cases.

Compare budget to actuals for work packages#

To perform a budget-to-actual comparison at the work package level:

1. Select a project on the Projects page.
2. Open the active WBS of the project.
3. On the ribbon, choose Process > Budget vs. Actual.

On the General FastTab, you can now see the fields of the selected WBS. You cannot change them here. The fields required for comparison can be found on the WBS Line Usage FastTab, near the end of each line. They include fields indicating project progress and those showing the quantities and amounts budgeted and consumed for the project.

Regardless of which WBS version you open, that is, which version is used to fill in the budget figures, the actual values are always the same. This means that you can open any version to compare budget to actuals.

As the Budget vs. Actual page is just another kind of WBS view, only fields that aren’t explained in the WBS portion of this documentation are described in the following.

A budget-to-actual comparison offers you an overview of an entire project. It not only shows you all work packages related to a project with their budget and actual figures but also allows you to identify where current results differ from expectations.