Generally, a project designates a set of specific objectives that should be accomplished within a fixed time interval and with fixed resources. Using projects helps increase efficiency.
The Project Costing module of FirstBit ERP enables the users to create projects, enter budget estimates, monitor the project progress, compare the budgets to actual revenues and costs, and view the project profits or losses.
This module can be enabled on the Administration > Settings > Project Costing form.
General options available for projects
General options for all projects can be selected on the Administration > Settings > Project Costing form.
You can select the default method of project estimate calculation from the following options:
- Independent Calculation of Costs and Revenues: If you need to set estimates for costs and revenues independently.
- Calculation of Revenues Based on Costs: If you want to calculate revenues as the values based on costs.
Also, you can specify how material costs incurred for projects should be calculated. For this, select for the Calculate Material Costs setting one of the following options:
- On Purchase: To calculate material costs when the items are received to warehouses according to Invoices Received and Employee Business Reports.
- On Usage: To calculate material costs only when the items are issued from warehouses according to Inventory Issues and Invoices.
Select the Enable Project Tasks option to be able to create project tasks and track tasks completing.
For more detailed planning, select the Enable Project Estimates by Period option – then you can create project estimates by month and compare to actual data by month.
The Show Project Information in Document Printable Templates and Show Project Task Information in Document Printable Templates options include projects and project tasks into document templates so that information on projects and tasks will be printed along with other information.
Related master data
Before you create projects, you may need to create the related master data: Project Types and Project Roles.
You can define arbitrary project types by using the Project Costing > Master Data > Project Types form. Project types will be used in reports for analysis of projects of particular types.
Project roles can be added by using the Project Roles form. These roles are used for information purposes only.
Creating a project
For each project, you can create a master record: Project Costing > Master Data > Projects. Notice that using folders, you can organize projects in a hierarchic or flat structure.
For a new project, you can specify the entity, project manager, customer and contract if the project is intended for the customer, not an internal one, project type, and planned dates of start and of completion.
Also, you can specify two project teams that will work for the project: one team from your company's side and the other one - from the customer's side. For each team member, specify the person's role in the project.
For details on creating projects, see Projects.
Adding Project Tasks
If project tasks are enabled, you can add tasks to the project by using the Project Costing > Master Data > Project Tasks form. For a task, you need to specify the project, planned dates of start and finish, and the employees responsible for task execution. Also, you can indicate the order of task execution by specifying a predecessor for a task or you can group multiple tasks by specifying a parent task. For more details, refer to Project Tasks.
You can view all the tasks of the project on the Project Tasks tab of the project master record.
Project statuses
For each project, on its path from the initial idea to planning and then execution, you can indicate a new stage by changing the appropriate status.
Projects can have the following statuses: Proposed, Active, Completed, and Canceled.
A newly created project by default has the Proposed status.
Changes in statuses are unconditional, and you can change them manually for a particular project when it is needed by clicking the Status Change link on the Project form and selecting the new status.
Planning the project budget
While the project is in Proposed status, you can enter the project's planned budget: cost and revenue estimates. Budget is defined by using the Project Costing > Project Costing Documents > Project Estimates form.
First of all, you need to understand which of the two available methods of estimate calculation is good for the project. You can use the default method or change it for another by clicking the Settings button on the toolbar. The Document Settings dialog box appears, and you can select the method you need.
The Document Settings dialog box
Also, in this dialog box you can select the cost and revenue analytics for the project. The meaning of the options is detailed in the subsections below.
Note. If you use the same method and the same cost and revenue analytics in all your projects, you can select them as your personal settings. For this, go to: Quick menu > Personal Settings. Open the Default Values tab and make your selections.
Cost analytics
You can enter cost estimates with different levels of details for different projects. You can use the following levels of details (analytics parameters):
- Cost Element (Employee standing for the associated labor costs; Items, such as materials, stock items, or services, and Fixed Assets standing for related depreciation costs in case you need to use special equipment, devices, vehicles for the project)
- Project Task
- Company
- Business Activity
- Department
You can provide the cost estimates for each applicable combination of these details. You can select these analytical parameters by clicking the Settings button.
Revenue analytics
For revenue estimates, you can use the following levels of details (analytics parameters):
- Item
- Project Task
- Income Item
- Business Activity
- Department
You can provide a revenue estimate for each applicable combination of these details.
You can select these analytical parameters by clicking the Settings button.
The Independent Calculation of Costs and Revenues method
Use this method if you need to set estimates for costs and revenues independently. Selection of the method brings the Revenues and Costs tabs which you can use to enter planned revenues and costs, respectively.
If the Estimates By Period option is selected for the project, you can specify how the costs and revenues are distributed within the defined project duration. For this, you can select the appropriate planning period: Week, Month, Quarter, Half Year, or Year. Then, you can split all the amounts evenly by period or only the selected amounts evenly by period. Also, you can distribute the costs and revenues manually so that the total amount is equal to the sum of period amounts.
The Calculation of Revenues Based on Costs method
Use this method if you want to calculate revenue estimates as the amounts based on planned direct costs and overhead costs. This method brings the Revenues and Costs tab and Overhead tab.
On the Revenues and Costs tab, there are two tables:
- The Revenues table is intended for the revenue estimates (or planned revenue amounts). First, to define the kind of revenue, you need to select analytical parameters. The estimates for each kind of revenue are calculated based on costs and markups.
- The Costs table lists the planned direct costs for each of the revenue kinds.
For each revenue (defined by a specific set of analytical parameters), you can specify direct costs and provide the cost estimates. Then on the Overhead tab, you can list the estimates for various overheads and allocate them to proportionally to costs. Alternatively, later you can allocate overheads to costs but proportionally to the calculated revenue estimates.
To calculate the revenue estimates based on cost estimates, you use markups. You can enter markups in the following ways:
- As percentage applicable to the sum of all costs related to the specific revenue. For this, you enter a markup in each row of the Revenues table. The revenue estimate will be calculated as the total of costs increased according to the specified markup.
- As percentages applicable to particular costs (defined by the specified analytical parameters). For this, you enter a markup in each row of the Costs table. Then, the revenue estimate will be calculated as total of the sum of costs with each cost amount increased according to its own markup percentage.
If the Estimates By Period option is selected for the project, you can specify how the costs and revenues are distributed within the defined project duration. For this, you can select the appropriate planning period: Week, Month, Quarter, Half Year, or Year. Then, you can split all the costs, overheads, revenues evenly by period or only the selected amounts evenly by period. Also, you can distribute the costs. overheads, and revenues manually, so that each total amount is equal to the sum of corresponding period's amounts.
Versions of the project budget
For a project in any status, you can edit the estimates as needed at any time. Once you save the edited estimates, the version increases by 1. If needed, you can set the version number manually.
Previous versions of estimates are available for reviewing if you click the Project Estimates Versions link right under the project title (the project's master record).
Project execution
Once a project is created and executed, any document related to the project can be linked to this project. For accurate tracking of actual costs, you need to correctly specify the analytical parameters.
Note. If you need to specify multiple projects in a document—link different items to different projects—you can move the Project field from the document heading (the Main tab) to the list of items or services (the Inventory and Services tabs) by using the Settings button on the form toolbar.
The actual direct costs are calculated based on the documents that were linked to the project and in accordance with the analytical parameters selected for tracking the project costs.
However, if there are overhead or indirect costs, such as labor costs, depreciation costs, that can be distributed between multiple projects, this can be done by using the Project Costing > Project Costing Documents > Project Cost Allocations form.
To allocate the overhead and indirect costs, you can manually select the costs (documents), specify the amounts to be allocated and choose the projects to which you want to allocate these amounts.
Also, you can define the proportion in which each amount should be distributed between projects or import an Excel spreadsheet with all the allocation data. For details. refer to Project Cost Allocations.
As the project is being executed, you can monitor the project progress by using the Diagrams tab of the Project form. for details, refer to Adding a Project. The Diagrams tab.
Analysis of project costs and revenues
For more effective execution of projects, you need to be able to assess factors that affect project costs and project returns.
You can use the reports in the Project Costing module to analyze each project's actual costs and revenues, compare them to estimated costs and revenues, review the project cash inflows and outflows.
For more information, refer to Project Costing: Reports.