Describe project cost tracking
Contoso is a company that produces e-bikes. Last year they signed a contract with a government agency for a nationwide e-bike rental program. They delivered the e-bikes and the citizens loved them, the program was a national success. With so many Contoso e-bikes used in all major cities, it was just a matter of time before some started needing repairs. Contoso now needs a solution to track the labor costs for technicians performing the repairs. The technicians sometimes travel outside of their home city to repair the bikes, incurring expenses. Some of the e-bikes need to be contracted out for repair and materials, and Contoso needs to track those costs as well.
Once a project is started, various hours, item consumption, and fees begin to accumulate. This results in costs being applied to the project that can be initiated from various transactions.
In this section, we explore the project cost tracking transactions that are available to apply to projects.
The most common costs come from resource hours and expenses. We explore those capabilities first.
Project time entry
As part of their daily work, project resources are often on-site or traveling. The Project time entry mobile workspace lets users enter their billable or nonbillable time against a project on the mobile device of their choice. Therefore, project resources can record time entries anytime and anywhere. They can also view time entries that have already been recorded.
Specifically, in the Project time entry mobile workspace, users can perform these tasks:
For any selected date, enter the number of hours that you spent on a specific task.
Search by project name or customer to find the project to enter time for.
Specify the category and activity for the time that you spent.
Record the time as billable or nonbillable for the project.
Optionally enter any external or internal comments.
Expense management
In Expense management, you can store information about payment methods, travel requisitions, expense reports, policies, and more.
Many of the decisions that you make when you plan your configuration for Expense management are based on your organization’s hierarchy and financial structure, so you must refer to the planning documents for those areas.
Per diems
You must define the employee per diems that your organization provides. Because per diems are typically used to cover expenses such as meals, lodging, and other incidental expenses, you can create rules for the per diem allowances that your organization offers. Per diem rates can be based on the time of year, the travel location, or both. When you define a per diem rule, you can specify that a percentage of the per diem rate will be withheld if a worker receives complimentary meals or services. You can also define per diem rate tiers to set the minimum and maximum number of hours that the per diem rate can be applied to a worker’s travel.
Considerations:
Default per diem rules for the first and last days:
- Is there a reduction in the amount that is offered for meals for the first day and last day? If there's a reduction, what is the percentage of the reduction?
Default per diem rules:
- Is there a percentage reduction in the per diem allowance for each meal if, for example, the meal is complimentary? If there's a reduction, what is the reduction percentage for each meal?
Per diem rules that are based on location:
- Do per diem rates vary according to location? What locations are included?
Material pricing methods
Project Operations supports the following pricing methods for sales price lists:
Price per unit – By default, the sales price of the material is set to the amount that is specified in the Currency amount field.
At cost – By default, the sales price of the material is set to the transaction cost of the material.
Markup percentage – The sales price of the material is calculated as a markup percentage over the transaction cost of the material.
Payment methods
When you allow employees to incur expenses on behalf of your business, you must define the payment methods that employees are allowed to use. For example, you might allow employees to use cash or a corporate credit card. You might also allow employees to use personal credit cards, and then reimburse the employees. You must make the following decisions for each payment method that you allow.
Intercompany expenses
Project Operations comes with the ability to schedule and manage resources across legal entities. This feature allows legal entities and employees to incur expenses on behalf of another legal entity and collect payment from the legal entity of employment within your organization.
For example, an employee in Contoso Canada completes an e-bike service project for Contoso United States, and the project incurs travel related expenses. When intercompany expenses are enabled, the employee can then file an expense report that posts the expense to the legal entity Contoso US, and the expense must then be paid by Contoso Canada.
Enabling intercompany expenses allows organizations that have multiple legal entities to incur expenses across subsidiaries.
Explore project cost on a time and materials project
The following video provides more information about project cost for time and materials projects: