Budget and Billing rule Contract value changes and its impacts

Edits in the Billing Rule contract value

Contract value in the Billing rule can only be changed till the time a project transaction is posted to the project. Once the project transaction is posted, the contract value on the billing rule gets non-editable.

Contract value is read-only

Edits in the Cost Budget 

In the example below:

Cost Budget = 10,000
Contract value = 100,000
Hours transaction posted = 4,000

Hence the percent complete is 40%. Therefore when the project invoice proposal was raised, the appropriate revenue amount of 40,000 was suggested by the system to be billed to the customer.

40% percent complete - Invoice value 40,000

However if the cost budget is changed / revised, after the first project invoice is posted, then the % complete calculation takes into account the new cost budget and compares the cost posted against the new budget amount.

Budget revision = 90,000
Hence total cost budget = 100,000
Hours transaction posted = 10,000

When the invoice proposal is created now, the % complete is calculated as follows:

Cost initially posted + Cost posted now = 4000 + 10,000 = 14,000
Total cost budget, after revision = 100,000
Hence the % complete = 14%
There revenue posted from the contract value of 100,000, as per the %complete should be = 14,000
But the revenue already posted on the project = 40,000.
Hence the system will suggest a credit note of 26,000, so that revenue posted on the project is in-line with the % complete.

Please refer the screenshot below:

Credit note created to match the revenue to the %complete

After knowing this i did one more test to confirm this behavior and hence created a new project exactly similar to the one above and did all the steps till the budget revision. However after the budget revision of 100,000 was done, did not post any transaction. Just directly created an invoice proposal, so as to see whether the system will match the revenue with the new %complete. The system did a credit note so as to match the revenue with the new %complete because of the revised budget.

Cost initially posted = 4000
Total cost budget, after revision = 100,000
Hence the % complete = 4%
There revenue posted from the contract value of 100,000, as per the %complete should be = 4,000
But the revenue already posted on the project = 40,000.
Hence the system will suggest a credit note of 36,000, so that revenue posted on the project is in-line with the % complete.

Please refer the screenshot below:

Credit note created to match the revenue to the %complete

Thanks

Sarang

Fee Billing Rule - Strange Behaviour

Fee billing rule also has some strange behavior. Will update this post once i find the right reasons for this behavior. But for now just wanted to note this behavior for future reference.

Fee billing rule can only be defined if there is an existing billing rule in place, which is other than fee or else you get this error message. This is a standard behavior, which is ok and accepted.

Error message when trying to create a Fee billing rule, without having any other billing rule created up-front.

Now that i have created a progress billing rule, i can then create a fee billing rule and can add the progress billing rule into it.

Progress billing rule added to the Fee billing rule, with fee percentage specified

 Now if a new project is created for the same project contract and if a new progress billing rule is created for the new project and if the user wishes to add the newly created billing rule into the already created Fee billing rule, then the system throws this error. This is what i found strange and also could not understand the error message and the logic behind it.

Error message highlighted, which states that Fee line can only reference a Fee line with a lower contact line number

There are two ways in which this can be handled.

First way is to add the project in the already created billing rule.

Adding a project to the already created billing rule

Second is to create a new fee billing rule and then add the new project into it.

New fee billing rule and adding a project to it

Also one last thing is, if the user tries to add a fee billing rule to the 'Selected items' in the fee billing rule, then the system complains and throws this error message. This is a correct behavior.

Error message when trying to add a fee billing rule to a fee billing rule

Thanks
Sarang

Progress Billing Rule - Strange Behaviour

This is just a post for me to remember the strange behavior about the billing rule functionality.

Whenever a progress billing rule is configured, for it to make it automatically calculate the % complete, all the projects till date should be selected in the 'Selected projects' section, with 'Chargeable categories' selected for the project configured in the 'Billing rules' section.

If all the projects till date are not configured then the system does not calculate the % complete automatically and that particular billing rule line is treated as manual progress billing rule line, with user having to define the % complete manually.

Not sure why the system behaves this way, but this is how it behaves as of now. More information to be added, if i get to know the 'WHY' for this behavior.

Please refer to the screenshots below.

Billing rule 76 with project selected in the 'Project' field in the 'Billing rules' section

Billing rules 76 with all the projects till date, selected in the 'Selected projects' in the 'Project' section

Billing rule 75 where all the projects till date, NOT selected in the 'Selected projects' in the 'Project section', hence system treated it as a candidate for 'Manual progress billing rule'

Billing rule 76 where all the projects till date, selected in the 'Selected projects' in the 'Project section', hence system treated it as a candidate for 'Automatic progress billing rule'

Thanks
Sarang

Receipt of a Non-stocked item versus a Stocked item

Receipt postings for the 'STOCKED' type of a project:

DEBIT Cost of purchased materials received          1000
            CREDIT Purchase expenditure, un-invoiced          1000
DEBIT Purchase expenditure, un-invoiced             1000
            CREDIT Purchase, accrual                                     1000

So effectively it is:

DEBIT Cost of purchased materials received          1000
            CREDIT Purchase, accrual                                     1000


Receipt postings for the 'NON-STOCKED' type of a project:

DEBIT Purchase expenditure, un-invoiced             1000
            CREDIT Purchase, accrual                                     1000


Thanks
Sarang

Use Tax and Line Property in WBS, Forecast and actual transaction

I have encountered two separate incidents related to use tax and line property, which are totally not linked to each other. Just wanted to note this down somewhere and hence this article.

Use Tax

I created a vendor record and attached a Sales Tax group to it. Then i created an item and attached an Item sales tax group to it. After that i created a purchase order and clicked on the 'submit' button to submit the record for approval. However i got this error:

One or more accounting distributions is missing a ledger account. Use the Accounting distribution form or the Posting profile to update the ledger account.

After reading this 'generic' message, i knew there was an issue with the accounts setup. So i checked the vendor posting profile, item posting profile and all seemed to be working fine. Then i checked the VAT setup as well. Checked whether the Sales tax codes are properly setup in both the Sales Tax group and Item sales tax group. I also checked the 'Ledger posting group' but all seemed to be ok. I tried and tried but couldnt really understand why this message was coming. Then i decided to navigate to the PO lines > Financials > Distribute amount. There i realized that i could see the ledger account for Line 1, but could not see any ledger account for the tax line. I was not able to figure out why. And this was only happening with one specific vendor and not with other vendors. This gave me a firm understanding that there is something wrong with the Sales Tax group. I checked the Sales tax group minutely this time and i realized that in this Sales Tax group, for the Sales tax codes, the 'Use tax' checkbox is checked. Then i checked the 'Ledger posting group' again and realized that in the ledger posting group there is a provision to define the 'Use tax' accounts, which i completely missed. I configured the 'Use tax' accounts in the 'Ledger posting group' and then submitted the PO successfully for approval.

Use tax (From wikipedia) : It is essentially the same as a sales tax but is applied not where a product or service was sold but where a merchant bought a product or service and then converted it for its own use, without having paid tax when it was initially purchased. 

For e.g.(From technet) : Assume that you order office supplies over the Internet. You receive an invoice for USD 500, which does not include the 6 percent sales tax that is applicable in the state where the goods will be used. When you enter the vendor invoice, enter a USD 500 credit for the vendor account and a USD 30 credit for the use tax payable account, for a total USD 530 debit for the Office supplies expense account.

Line property

I created a project and then imported the WBS into it from a template. The line property in all the lines of the WBS was 'No charge' because i wanted the project transactions to be non-chargeable. I defined all the cost and sales price for all the lines in the WBS and then pushed this WBS into project forecast. The reason to define the sales price for the non-chargeable transactions was i wanted to calculate the contract value from the same. I only had a 'Fee' line in the WBS with chargeable line property and sales price defined. After i pushed these WBS lines into forecast, all the lines were successfully transferred to forecast with respective line properties and cost&sales prices. I then started posting transactions, which obviously were non chargeable as i configured the ledger posting setup and the line property setup for the transactions such that the transactions are not chargeable.
However when i ran the project statement to see budget versus actual, in the revenue section i could only see the sales value of the Fee category from the forecast. I was wondering why is this happening, if i have defined everything correctly. I was expecting to see the total of sales price of all the lines of the forecast in the revenue section, however i was only seeing the sales price for the fee category only. Then i decided to change the line property of all the lines in the forecast to 'Chargeable' and then again ran the project statement. This time, to my surprise' i could see the revenue figure exactly how i wanted it to be .i.e. the total of the sales prices of all the lines in the forecast.

From this incident i concluded that the project statement with budget will always take into account the line property of the lines in the selected forecast model to calculate the revenue figure. However this still did not matter from the actual line property on the project transaction,as they were still 'Non-chargeable' because of the project-line property setup.

However for the fixed price projects, where there is WBS, Budget and Forecast all defined for the project, then in the project statement with budget, always the 'Budget' forecast model should be selected, so as to see the revenue figure. If you select the 'Forecast' forecast model, then the revenue figure will not be see, even if the line property is billable.

Thanks
Sarang

WBS and Project Budget - IMP Point

If the WBS is defined for the project and also for the same the Budget is also defined, then tracking of project can be done from the WBS as well as Budget. However there is a very minute and important catch here, which if not taken into consideration, the WBS and the Project Budget values will not match.

Whenever the WBS is created, it automatically creates the 'Activities'. However if there are sub-activities or sub-tasks, then the 'Header Activity' has NO 'Category' assigned to it, as seen in the screenshot below.

WBS Planning View

If the same WBS is imported to create a Project Budget, then the Budget is created for the 'Categories' in the WBS.

Project Budget Balances

However when the project transactions are created for the project, then the 'Activity' drop down displays the 'Header Activity' as well against which no 'Category' is assigned to it in WBS.

Hours Journal

Hence when the journal is posted, the 'Budget' is not updated but the WBS tracking / progress is updated and hence both seem to be out of sync.

See below the screenshots for 'Project Budget Balances' after the project transaction (Hour Journal) is posted for the SUB activity for whom the category is assigned in WBS.

WBS Tracking View

Project Budget Balances

See below the screenshots for 'Project Budget Balances' after the project transaction (Hour Journal) is posted for the Header activity for whom the category is NOT assigned in WBS.

WBS Tracking View

Project Budget Balances

Hence the only precaution to be taken is to make sure that while posting the project transaction, the selected 'Activity' is NOT the header activity.

Thanks

Sarang

Importance of 'Active in Journals' and 'Stocked Product' control WRT Project Supplier Invoice

Direct Supplier invoice (without a PO) that is to be created for the project can make use of items as well as procurement categories. In that case, items as well as the procurement categories should be linked to a project category. To setup and link a procurement category to a project category, refer the post Procurement Categories and related setup.

Please refer below for the two main configuration items that can frustrate you if you are trying to create a supplier invoice directly without a PO.

Importance of 'Active in Journals'

Very often it is required to create a supplier invoice for the project and in that case the item that is to be used in the supplier invoice should be linked to the project category. You think that the steps to that are very simple, which actually are, but with a small catch. You think you will create a project category and you will create a released product and then link it, which is correct as well. While linking the same, you need to navigate the 'Manage Project' fast tab of the Item record and select the project category from the drop down. However when you look for the desired project category, recently created, for the item, you cannot see it and then you get baffled as to why other item categories are being seen and why not the one which was recently created. You know that you have missed some setup, but there seems to be no clue. I faced the same situation and was frustrated to the core about it, until finally i found out that issue, which after fixed, the project category started appearing in the drop down and i could link the item to the project category. The frustrating toggle switch (as called in AX7 aka Dynamics 365) is called the 'Active in journals' in the 'Project Categories' window, which when turned to 'Yes', the category started showing in the drop down in the 'Manage Project' fast tab of the Item record.

Importance of  'Stocked Product' checkbox

After the released product is linked with the project category, as mentioned above, the task is still not over, as that item should be visible in the 'Item number' drop down of the supplier invoice. The items that are visible in that drop down are the ones for which are of type 'Non stocked'. Hence for all the items, for which supplier invoice needs to be created, without the PO, make sure that in the 'Item model group' of the item, the 'Stocked' checkbox (as seen in the screenshot below) should be unchecked or else the item will not be visible in the 'Item number' drop down of the supplier invoice.

Thanks
Sarang