Project Evaluation#
General#
Since service provision and invoicing to the customer diverge in the majority of cases, these values must be determined at certain points in time. The so-called capitalization and deactivation postings are the result of the project evaluation.
This section describes which preparatory measures must be taken in the project in order to be able to initiate the project evaluation. Finally, the different project evaluation methods are presented.
Consumption and sales items run primarily to financial accounting. Thus, in consumption, all items are expensed via an incoming invoice. For resources, a distinction must be made between internal and external resources. The external resources are booked identically to the articles via purchase invoices in the expense. The consumption of internal resources is mainly expensed via payroll. In sales, the outgoing invoices to the customer represent direct success as a revenue item.
In the project, the expenses are recorded via these incoming invoices and via the time bookings of the individual project resources. A direct integration of the payroll entries is not useful; this also does not correspond at all to the actual actual expenses. The sales invoices are also set against the services in the project.
Normally, these two areas do not run congruently. This means that a supplier is in advance with the service; in the rare case, the customer is in advance with the payment.
Now, a project evaluation must be defined from the data resulting in the project from consumption and sales in order to correctly reflect the success of this one project and, in the overall view, the success of the company.
The project can be valuated on the basis of the posted project items. The system forms the project valuation items based on stored specifications in the project valuation books.
Depending on the setup, the activation transfers the values of the services rendered or the down payments received to the financial accounting. The deactivation makes the corresponding offsetting entries as soon as the project is completed.
To post these items to Financial Accounting, Microsoft Dynamics 365 Business Central1 provides two batch processes:
- Post activation: posts the activation to financial accounting.
-
Post deactivation: transfers the deactivation to financial accounting.
This completes the data in financial accounting. In addition to the consumptions and the sales, the over- and underperformance against the booked revenues are also recorded in closing logic.
Project evaluation can be done in different ways: -
Consideration of the actually posted values
- Using cumulative quantities
Several project evaluation books can be stored per project, which are all run through during the evaluation. Thus, one is not limited to one method during the evaluation. Several alternatives can be carried out in parallel. Each alternative forms its own project valuation items. For each alternative you can determine whether these values should be transferred to the financial accounting or not.
Evaluation templates are part of the "advanced project evaluation" module and are explained in more detail in the "advanced project evaluation" section.
Establishment#
In order to be able to carry out the evaluation runs, some basic determinations and setups must be made in advance.
Project Regulation Accounts#
In Financial Accounting, the project settlement accounts must be entered in the "Posting matrix setup" in the fields "Project sales settlement account" and "Project cost settlement account". These will be used when posting a project activation to the FIBU.
These accounts can also be defined depending on the project valuation account used.
If accounts are defined there, they have priority over the accounts directly on the posting matrix.
This will be explained in more detail at a later date.
Project booking group#
The project booking group is stored in the evaluation books.
Via the call "Project booking group Project" you get to the overview of the project booking groups. In the project booking groups, accounts are stored to which the various project costs are booked.
The individual fields are explained in more detail below:
| Field | Description |
|---|---|
| Code | Unique identifier of the project booking group |
| Description | Description of the project booking group |
| Cost n. abgs. Arb. | Consumption: Post debit entries of cost prices in batch processing project activation or post credit entry in batch processing project deactivation. In the case of activation, the account Project cost regul. Account from the posting matrix represents the contra account. When deactivating, the project costs account from the project posting group represents the contra account. |
| Sales n. abgs. Arb. | Sales: Post credit entries of sales prices in case of batch processing activation or post debit entries in case of batch processing deactivation. In the case of activation, the account Project sales regul. Account from the posting matrix is the contra account. In the case of deactivation, the offsetting account is the project revenue account from the project posting group. |
| Cost type | Consumption: Post debit entries of cost prices on this P&L account in batch processing deactivation. |
| Project Revenue Account | Sales: Post credit entries of the sales prices on this P&L account with the batch processing Deactivation. |
| Salescto and. Project costs | Used only for postings to G/L accounts for projects. A credit amount is posted to this account when the project consumption is retrieved in the sales lines. |
| Profit share account | Account for pro rata profit allocation according to the Percentage Of Completion (POC) method under IAS. The account is only required in the case of a progress review. |
| Clearing account | Contra account for the profit share account. The account is needed only in case of progress evaluation. |
Several project booking groups can be created. The project booking group that is stored in the used valuation book is used for the valuation.
Evaluation books#
In order to be able to carry out a project evaluation on the basis of the bookings made, one or more evaluation books must be assigned to the project. The assignment is made on the project map > "Associated" > "Project" > "Project evaluation" > "Evaluation books".
Valuation books contain specifications according to which the valuation is carried out. The most frequently used valuation guidelines are based on the accounting methods HGB, IAS, US-GAAP and IFRS. Depending on the definition of the guidelines, other valuation items are created which are then transferred to financial accounting.
You can find the evaluation books via the call of the same name via the user search.
The fields are explained in more detail below:
| Field | Description |
|---|---|
| Code | Enter a unique name for the valuation book. |
| Description | More details of the evaluation book. |
| Integration Fibu | You can use the Integration Financial Accounting field to specify whether you want to transfer the project valuation items posted for this project valuation ledger to Financial Accounting when the project is activated and deactivated. Place a check mark to activate the integration into financial accounting. |
| Project booking group | Specifies which project posting group this valuation ledger is based on. You use project posting groups to specify which G/L accounts are linked to the batch processes Post project valuation act. and Post project valuation deact. Two accounts in the posting matrix are also involved in posting work in progress when it is activated in Financial Accounting. These are the P&L accounts Project Cost Regulation and Project Sales Regulation. |
| Valuation Template | Evaluation templates are part of the "advanced project evaluation" module and are explained in more detail in the "advanced project evaluation“ section. |
| Rating to | Here you can specify the criteria according to which the evaluation should take place. There are three options to choose from: Project item: The project is valued on the basis of the posted project items. Cumulative Quantity: The project is evaluated at the cumulative quantities defined in the Project Progress window These cumulative quantities refer to the project budget in terms of value. Evaluation template: The valuation is performed on the basis of a valuation template. Valuation rules are defined in a valuation template. This allows you to define valuation rules that go beyond simple project item and cumulative quantity valuation. The valuation template is part of the "extended project valuation" module and is dealt with in separate documents. |
| Activation method | Here you can select on which basis you want to perform the activation. There are 3 options to choose from: None: There is no activation. One-time prices: Capitalization is carried out on the basis of cost prices, which are stored in the geb. project items. UK prices: Capitalization is performed on the basis of the sales prices stored in the given project items. Activation of Here it is possible to specify which items are to be taken into account during an activation. There are 3 options to choose from: Both: Both consumption and sales values are proposed for valuation. Consumption: Only consumptions are proposed for evaluation. Sale: Only sales are proposed for evaluation. |
| Deactivation method | Project activation entries are recorded in the uncompleted work accounts. Deactivation of a project depends on its degree of completion. The deactivation entries neutralize the amounts in the work in progress accounts and transfer the deactivated values to the respective G/L accounts for project sales and costs. In the Deactivation method field, you specify the time when the deactivation should be posted. There are two options to choose from: Percentage for manufacturing: There is already deactivated during the project run. The value depends on the degree of completion On completion: deactivation takes place once after completion of the project. |
You can define project valuation accounts for the valuation book. To do this, call up the "Project valuation accounts" via the ribbon under "Associated" > "Valuation book".
The valuation accounts are defined to a combination business / product posting group. These are used when posting a project capitalization to FIBU. Alternatively the accounts can be defined valuation book neutral on the FIBU posting matrix.
Project Assessment Books#
You can call up and assign the "Project evaluation books" via the respective project map. To do this, select "Associated" > "Project" > "Project evaluation" > "Evaluation books" in the menu ribbon.
In the process, the specifications from the valuation book are transferred to the project valuation book. The parameters that are stored here in the project-specific project valuation books are decisive for the posting of the project valuation.
Subsequent changes in the general valuation book can be transferred to the associated project valuation book sheets by function. Only changes in the project valuation book are relevant for the project valuation. After a change in the general valuation book, the user is asked whether this change should be transferred to the associated project valuation books.
Project progress#
If you have selected the cumulative quantity valuation method in one of the project valuation books, you can determine percentage values for valuation based on the project budget and the actual figures posted.
To do this, you can use the Project Progress window to determine what percentage (in relation to the project budget) of the project has already been completed on a specific date. You can access the Project progress window via the "Associated" > "Project" > "Project evaluation" > "Progress" ribbon. The fields are explained in more detail below:
| Field | Description |
|---|---|
| Date | The date that is specified as the end date when the call is made is stored here. It defines the time at which the evaluation is carried out. The date can also be entered directly for manual creation. |
| Description | Here the remark from the call is taken over. In the case of manual creation, direct input is also possible at any time. |
| Plan profit amount | Is determined from the budgeted DB of the work breakdown structure. The value represents the difference between the sales amount and the cost amount. The calculation goes over all WBS lines of the project and adds up the values. |
| Cost amount | Represents the realized cost amount of the selected date filter. |
| Progress % | Progress is determined as a percentage of the realized cost amount to the budgeted cost amount. It can be overwritten manually. |
| Plan HKD % | Indicates the plan HKD in percent. |
| Profit share | Calculated automatically from the cumulative quantity multiplied by the planned profit amount. Manual adjustment is not possible here. |
| Capitalization amount | This amount results from the valuation amount and the profit share. Manual adjustment is not possible here. |
| Rated | Once the project score is posted based on the cumulative quantity, the system places a check mark here. |
| Product posting group | Here you can select the product posting group that will be used for the posting. |
These values, which are displayed in the Project Progress window, can be tracked via the project statistics. The "Calculate progress" function in the menu ribbon can be used to call up project-related values. The call is made per project.
Project Evaluation Book Sheets#
This section describes the structure of the project valuation posting sheets and the procedure for entering posting transactions. All necessary postings of the project valuation with the respective values can be made via project valuation posting sheets.
Structure of the project evaluation book sheets#
| Field | Description |
|---|---|
| Posting date | In the Posting date field, you must enter the date on which the valuation is to be posted. |
| Document no. | The document no. is preset from the project activation and project deactivation proposals. |
| Project no. | The project to be evaluated is entered in the Project no. field. |
| Item type | The item type indicates whether a project item to be valuated is a consumption or sales item. The field is only relevant for project items, not for valuation by progress. |
| Type | The Type field indicates whether a project item valuation is a resource, an item, a G/L account, or whether it is a progress valuation. |
| No. | Here the corresponding No. to the selected type is entered, the field is filled only for project items. |
| Description | The description is entered by the project activation and deactivation proposals. It can be overwritten at any time. |
| Evaluation type | In the valuation type, you can specify whether the valuation posting is an activation or a deactivation. |
| Rating | The amount to be included in the valuation is stored in the Valuation field. |
| Profit share | In the case of valuation according to progress, the (calculated) profit share stored in the progress table is stored in the Profit share field. |
| Cost amount | The Cost amount field displays the cost amount of the project item. |
| Sales amount | The Sales amount field displays the sales amount of the project item. |
| Evaluation book code | In the field Valuation book code is defined which valuation book should be used for this valuation line. |
| Integration Fibu | The field Integration in Financial Accounting will then be preset from the valuation ledger code. Only lines marked there will be posted to the financial accounting. All others will only be posted as project valuation items. |
| Lfd. No. Project item | Indicates the sequential number of the respective project item. |
Via the menu ribbon > [...] > "Associated" > "Project" the project map of the project of the active line can be opened via the selection "Project map". Via "Project items" all project items of this project are displayed. Via the call Project valuation items all project valuation items posted so far are called up.
Via the Ribbon > [...] > "Associated" > "Row" the "Dimensions" of the active row can be viewed.
In the ribbon > [...] > "Actions" are the two calls to retrieve the "Activation and deactivation suggestions" into the book sheet.
Furthermore, you will find here the possibility of calling a test report. The function Book can also be used in combination as Book and Print. In this case, the evaluation report is printed out immediately. Subsequent printing is no longer possible.
Implementation of the project evaluation#
All postings for consumption and sales are not automatically transferred to financial accounting, but are triggered via batch processing.
When posting, a distinction is made between activation and deactivation. A project is capitalized in order, for example, to match inventory consumption, salaries, etc. with a stock of work in progress or similar. At the end of the period, capitalization must be carried out for ongoing projects for accounting reasons. This is because postings to projects are not initially recorded in full in financial accounting. Only the invoiced amounts of the sales or purchase transaction are located there. To provide you with a complete and correct record, Microsoft Dynamics 365 Business Central1 provides you with batch processing for capitalization and deactivation.
When a project is completed (or partially completed), the work in progress must be derecognized because it has left the company. This process is called deactivation. Project capitalization entries are recorded in the work in progress accounts. Deactivation of a project depends on its degree of completion. The deactivation entries neutralize the amounts in the work in progress accounts and transfer the deactivated values to the respective G/L accounts for project sales and project costs.
The activation and deactivation are called up via the project evaluation book sheets.
A differentiation of the call is necessary. Via the periodic activities the valuations are transferred to the Fibu.
The first part deals with the valuation for project items, the second part with the valuation for cumulative quantities. Project evaluation templates belong to the "advanced project evaluation" module and are explained in more detail in the section of the same name.
Valuation by project item#
Valuation by project item is the common method used in HGB valuation. It is valued at cost and at the end of the project the deactivation is posted.
Capitalization by project item#
In the first step, the project items are to be called up via the project valuation ledger sheet and the project valuation items are to be formed. Subsequently, the transfer and posting in the financial accounting takes place.
Project activation proposal is called in the project evaluation book sheet.
With No. individual projects can be entered. If the entry is missing, the call goes over all projects. In the valuation book code, the valuation book must be entered according to which valuation is to be performed in this proposal. If no entry is made, all valuation books will be taken into account. In the Options bar, the fields Valuation from and Valuation to are used to specify the period for which the posted items are used for valuation. Furthermore, the posting date is required as well as a document number and a posting description.
Note
In voucher no. and booking description the placeholder %1 can be used. This will be automatically replaced by the booking date.
With "OK" the project evaluation proposal is entered into the book sheet.
If the project evaluation book sheet is filled via this call, no manual changes to the data are normally required. If a call is made with incorrect data, the lines can be deleted at any time and the call repeated.
A valuation ledger for capitalizing project consumption items at cost is set up as follows:
| Field | Value |
|---|---|
| Code | HGB-P |
| Description | HGB n. Psten |
| Integration Fibu | Enabled |
| Valuation Template | Disabled |
| Rating to | Project item |
| Activation method | One-time prices |
| Activation of | Consumption |
| Deactivation method | on completion |
The project items of the item type consumption are evaluated, evaluated at cost prices. If required, the financial accounting integration is activated.
As a result, only the project items with the type Consumption are retrieved into the book sheet. The project items with the type sale remained completely unconsidered. The valuation amount is taken from the Cost price field of the respective project item. The sales price has only an informative character here.
The subsequent posting generates project valuation items that can be viewed via the project. There is a reference from the project valuation item to the valuated project item via the Lfd. No. project item.
The capitalization amount was stored in the project item itself.
From the project map, the overview of the current status of the evaluation can be retrieved in a matrix via the call Project evaluation → Evaluation. The posted valuation items appear in the column Activation of the posting period.
A lookup in the Activation field shows the project valuation items.
Incorrect basis for evaluation:
If the evaluation basis was incorrectly selected, a second evaluation can be carried out. However, only the project items that were not yet taken into account in the previous project evaluation will be used. The valuation book must be changed accordingly and reassigned to the project. Cancellation of the posted project valuation is not possible.
Posting project capitalization to financial accounting#
The project valuation items generated via the project valuation ledger sheet, which only affect the project area, can be transferred to financial accounting via batch processing. It is important that the valuation items to be transferred have a check mark in the "Integration Fibu" field, which is controlled via the project valuation ledger.
The values are transferred to financial accounting via the periodic activity. The call is made via Projects -> Project valuation periodic activities → Post activation.
Individual projects can be selected in the Project tab. It is also possible to select other fields of the Project table and specify corresponding filter values.
In the Project Valuation Items tab, filters can be specified on the project valuation items. It makes sense here to specifically delimit only the time period. You should already delimit the items in the first step via the project valuation book sheet.
In the Options tab, the method to be used for posting is specified. For each project valuation item a general ledger item can be created or for all these items only one general ledger item can be created. In addition, the posting date must be specified with which the posting is to be made in the FIBU. The document number and the posting description must also be entered. The Book checkbox can be used to control whether a preview of the activation should be performed first (no checkmark) or whether the booking should actually be performed.
The booking or its preview is triggered by the Print or Preview buttons. A report of the activations will be displayed.
As soon as the project activation has been posted to the financial accounting, it can be seen via the call of the valuation per project that these postings have been made. The column Geb. Activation shows the same value for the month as the column Activation.
After posting the activation, the "Proj.posting date" field is updated in the related project valuation book.
The project valuation items included in the entry have been updated in the Geb. valuation amount field.
The individual posting records were posted in the financial accounting. Since the posting method "per project valuation item" was selected when posting the capitalization, a large number of posting records were posted.
The process is identical for the cumulative quantity valuation. Only the progress must be determined for the period under consideration. The valuation proposal in the project valuation booklet then uses these values. The posting to financial accounting is also carried out identically. However, the underlying account determinations are completely different.
Deactivation by project item#
For deactivation, the stored information is important, when deactivation takes place, whether after percentage of production or on completion. On completion, the status of the project must be Closed. The deactivation is called up in the project evaluation book sheet via the menu ribbon.
The deactivation posting date is specified in the Options area. Furthermore, the document no. and the posting description must be maintained.
In the Project area, a project can be entered specifically or, if no entry is made, all projects will be taken into account.
In the Project valuation book area, a specific valuation book can be specified as a filter. If no entry is made, all valuation books are taken into account.
Via the Project valuation items area, it is possible to filter specifically on certain posted project valuation items. The selection via consumption or sale is possible via the item type. If no entry is made, all items are taken into account accordingly.
Analogous to the capitalization, the project valuation ledger sheet must now still be posted. The Deactivated project items can now also be found in the evaluation matrix under the Deactivation column.
Posting the project deactivation to financial accounting#
The deactivation is now done in the project area. The posting in the financial accounting must still be triggered via the period. Activity command Projects → Project Valuation Periodic Activities → Post Deactivation.
Individual projects can be selected via the Project tab if required.
In the tab Project valuation book you can define from which valuation book should be deactivated.
The Project Valuation Items tab can be used to specify which project valuation items are to be transferred to the Financial Accounting for deactivation.
In the Options tab, you can again specify whether each project valuation item is to be formed individually or as a total G/L item in financial accounting. In addition, a posting date, a document number and the posting description must be entered.
Only if the checkbox Post is selected, the data will actually be entered into the FIBU, otherwise only a control report will be generated.
Analogous to the capitalization, numerous G/L item postings were again deducted in the FIBU during the deactivation.
Rating by progress#
The evaluation by progress is in large parts identical with the evaluation by project items. Only the differing steps are explained in detail here.
This is the determination of progress. This has already been dealt with in detail, so it will only be briefly discussed here.
Furthermore, the posting records are structured completely differently, which was already apparent from the deposit of the accounts in the project posting group.
Calculate project progress#
The calculation of the progress of a project takes place in the project under the item Project evaluation -> Progress. With the function Calculate progress the progress lines result.
Activation according to progress#
For evaluation according to progress, a suitable project evaluation book must be created for the project. The "Valuation at" field is decisive; the cumulative quantity must be entered here.
Analogous to the evaluation by project item shown above, a project evaluation proposal is also now called up in the project evaluation book sheet. Note on the date filtering, now the data from the project progress are relevant.
The further process (posting the project valuation as project valuation item -> posting the project valuation item to FIBU [if the project valuation ledger provides for this accordingly] -> deactivating the project valuation item -> posting the project capitalization to FIBU) is identical to valuation by project item.