Fixed price projects and early registration of costs

Posted on 05. Jan, 2011 by in Exact Globe Next, Exact Synergy

 

When working with fixed price projects, the registration of labor hours will not lead to a sales invoice for these realized hours, because the invoices are generated via project terms. This document explains how customers can register the costs related to these labor hours, independently from the sales revenue process.

Step 1: After you’ve created and activated your fixed price project, go to the project rates and fill in 0.00 for the hour categories you intend to use on this project:

 

Step 2: go to Project>>Reports>>Invoicing term requests and create the project terms:

 

Step 3: start planning the people who will perform activities on this project

Step 4: hour realizations are being registered on the project. Each request will automatically have a “to be invoiced” sales amount of 0.00

Step 5: the project manager approves the hour realizations

Step 6: The project manager is in control when he wants to send the costs of the realizations to his financial Globe administration. He creates a new project term with a zero revenue amount, just to register the costs:

 

Step 7: The project manager approves this zero invoice-term for invoicing:

 

 

As a result, the invoice will appear under Invoices:

 

Step 8: run the PSA background job that generates the invoices and costs in Exact Globe

As a result:

-          The costs are already registered in Exact Globe on the fixed price project:

 

-          The project term request as well as the hour registration request, will get the status Processed:

 

That’s all!  The costs are correctly registered in the financial administration where, optionally, several Work-In-Progress calculations can be done and project profitability reports can be shown.

 

 

More info

- Working with project terms on fixed price projects: chapter 10.2  of the Exact Synergy Enterprise PSA manual

- Setting up the PSA background job : chapter 12  of the Exact Synergy Enterprise PSA manual

- Introduction video on Exact’s PSA solution

Tags: , , ,

5 Responses to “Fixed price projects and early registration of costs”

  1. Barry van der Meij

    05. Jan, 2011

    Great,

    Technically it works, but it is more like a workaround to me, hocuspocus abracadabra.

    I cannot explain this to my project managers, can you?

    Reply to this comment
  2. Ronald Voets

    05. Jan, 2011

    The post explains a solution for a process, using the current product update 244 of Synergy Enterprise. This solution was discussed with a few customers so far and they’re going to implement it in their organization. I’ll ask these users to post their feedback on this blog as well.

    Reply to this comment
  3. Sebastiaan Barlo

    05. Feb, 2011

    What is the reason that I have to add the hours with 0.00 rate to a fixed price project?
    From a user perspective I think the project terms should be enough, shouldn’t it?
    The only reason that I can think of adding the hours to a fixed price project would be to use them as a budget that makes up the total amount of calculated hours for this project.
    But in this case you’ll want to register them with their sales price otherwise you won’t be able to manage your project’s budget.
    Can you please explain?

    Thnx,

    Sebastiaan

    Reply to this comment
  4. Ronald Voets

    05. Feb, 2011

    Hi Sebastiaan, technically you are right and creating new project terms with a zero revenue amount, should be sufficient. The reason why I adviused to also make the hourly sales rate for the fixed price project 0, is that “Each request will automatically have a “to be invoiced” sales amount of 0.00″ and prevent mistakes.
    In product update 246, we are going to split the registration of costs and the invoicing part, so the customer can choose (also for Time&Material projects) at what moment he wants to register the costs in Globe and use it in i.e. Work in Progress.calculations

    Reply to this comment
  5. Ron Vegter

    06. Mar, 2012

    Hi Sebastiaan, some important issues are not covered. Fixed Price projects are invoiced with project terms but this should not register revenue.
    Revenue is generated with WIP.
    When a project is completed the project terms are reversed and the actual revenue should be booked to get proper reporting.
    When the Sales Amount for 0-value is used on the hour items, to prevent “invoicing”, the question is where is the actual revenue registered when the project is completed?
    Your comment about the budget is not correct. A budget should be defined up front and cannot be driven by the number of hours entered. You need the budget to compare with the actuals when a project is completed. When entered hours drve the budget, the concept of a budget is wrong.
    I have not looked at the budget and planning possibilities for PSA but I am curious if there is a good solution because the solution is Globe is not a workable one so far.

    Reply to this comment

Leave a Reply