Project Management – Fixed Price Project Posting

Project Management - Posting Scenario

There are different scenarios for revenue recognition postings No WIP, Completed percentage and completed contract. In this article, we go through the postings of fixed price project which is based on completed percentage.

Project postings method (revenue recognition) are defined on project groups and that project group selected on project creation.

So below are the configurations on project group:

Ledger:

Post costs (hour, Expense, item): profit and loss

On account invoicing: Balance

Estimate:

Revenue recognition: Completion of percentage

Calculation method: None

Cost template: Based on cost

Matching principle: sales value

project management - posting scenarioLet’s take an example:

Company has the project for ERP implementation from a customer. Company has deal for flat amount 200000 and invoice based on milestone completed.

Project Management - Posting ScenarioForecast work to be done

For above scenario you need to first forecast your all cost in project forecast tab and then by day by day enter your actual cost and then RUN estimate process for knowing percentage of completion.

Project Management - Posting ScenarioEnter actual hours and expense journals and post.

Project Management - Posting ScenarioPosting will be as below.

Project – Cost A/c 16000
To Project – Payroll allocation account 16000
Project – Cost A/c 6000
To Project – Payroll allocation account 6000

Project Management - Posting ScenarioEstimate

Now create Estimate it will show work completed against forecast

Estimate date: 5/31/2018

Percentage completed: 14.97

Total Cost: 22000 (16000+6000)

Margin: 7931.97

Project Management - Posting ScenarioPosting this estimate will not affect anything as accounts till this involved are P&L as setup earlier. So let’s generate invoice.

Post estimate and posting are as below:

WIP – Invoiced On Account 29931.97
TO Accrued Revenue 29931.97
  • For invoicing go for on- account transaction.

Invoice on account transaction

Customer balance 20000
To WIP invoiced – on account 20000
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Darshan Patel

Darshan Patel

I am a Project Lead at Dev Information Technology Ltd. I have 8 years of Functional & Technical experience in Microsoft Dynamics AX (ERP). I have worked on public and private sector projects. My hobbies include traveling and exploring different places.
Darshan Patel

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