Enter project features

The Project Accounting Settings Features tab contains settings for budgeting, overhead absorption, and committed costs and accruals The process of matching expenditure or income to the accounting period in which it was incurred rather than paid; for instance, a rent cheque or utility charges..

You can choose to record budget information for your projects and to track this against the value of transactions logged. You select which levels of the project structure you want to record budgets against, and whether you want to record budgets for cost and/or revenue items.

Once you have set up your budgets, you can enter revised budgets for jobs that are subject to change, and to track changes from the original budget values. Any budget analysis produced will automatically use the revised budget rather than the original.

You can apply additional costs to your projects to account for your overheads or Uplift costs.

You can post committed costs (known as overhead absorption) to projects, to give you a better idea of profit, once costs are fully recorded.

Budgeting:

If you choose to record and track project budgeting:

  • Your budget figures will are displayed on the Cost Analysis Enquiry and / or Revenue Analysis Enquiry screens.
  • Budgets entered on lower level of the project structure are 'rolled up' to the higher level. For example, if a project contains two groups and budgets of £2,000 and £3,000 has been entered respectively, the budget for the whole project is displayed as £5,000.

Committed costs:

If you choose to track project committed costs and accruals:

  • A new screen is available from the menu for recording project accruals, Create and Reverse Project Accruals.

    • This allows you to enter costs that you know you have incurred in this accounting period but have not yet been recorded, such as a purchase invoice that has not been received or a timesheet that has not yet been entered. The accrual can then be reversed when the costs are recorded, in order to avoid double counting them.

To enter settings

Open: Project Accounting > Utilities > System Setup > Project Accounting Settings | Features.

Select from the following settings:

Select this to enter budgets for your projects. Budget analysis can help you improve business profitability and identify overspending. All businesses use some level of budgeting. You can set up project budgets that are simple or as detailed as you require.

  • Click Settings.

  1. Choose whether to use budgets with your projects:

    Record and track project budgeting

    Select this if you want to enter budgets for your projects.

    To choose the type and the level of your budgets, click Settings

    This setting can be changed at any time.

    If this options is cleared, previously entered budget figures are hidden, not removed. Budget figures cannot be amended or new budgets entered.

    The budget figures will be available if you select the option again.

  2. Select Settings and choose the type of budgets you want to use:

    Record and track cost budgets.

    Select this to allow cost budgets to be recorded and analysed.

    Record and track revenue budgets.

    Select this to allow revenue budgets to be recorded and analysed.

    These settings can be changed at any time.

    If these options are cleared, previously entered budget figures are hidden, not removed. Budget figures cannot be amended or new budgets entered. The budget figures are still displayed on the Cost Analysis and Revenue Analysis Enquiry screens.

  3. Choose the level of budgeting required:

    Project only budgets

    Select this to set budgets at a project level only.

    Once selected, you cannot set budgets for a group or project item.

    Project and group budgets

    Select this to set budgets at a project or group level.

    Once selected, you cannot set budgets for a project item.

    Project, group and project item budgets

    Select this to set budgets at a project, group or project item level.

    Note: If you have already set budgets for groups or project items, you may not be able to change this setting.

    These settings cannot be changed once budget figures have been entered for any project.

Select this to apply additional overhead costs to you projects when direct costs are entered and see these costs reflected in your profitability reports, affecting the Gross profit of your projects.

Note: You can choose whether to include the uplift costs or not when reporting profitability.

Do not select this if you want to see overheads reported separately to the direct costs, and not to affect Gross Profit. You can then create project items types that are designated as an Overhead Project Item type. This is set on the Default tab for each Project Item type (Utilities > System Setup > Project Structure Settings > ProjectItem Type). The costs posted to these items are reported separately in the profitability reports, affecting Net profit but not Gross profit.

If Overhead absorption is selected If overhead absorption is not selected
  • Revenue of £2,000 is posted to the project.
  • Direct costs with 10% uplift (£120) are posted to the project.
  • Revenue of £2,000 is posted to the project.
  • Direct costs of £1200 are posted to the project.
  • Extra cost of £120 are posted to the project using a project item for overheads.

The profit report including the uplift costs:

Revenue 2000
Direct Costs 1320
Gross Profit 680
Overheads 0
Net profit 680

The profit report:

Revenue 2000
Direct Costs 1200
Gross Profit 800
Overheads 120
Net profit 680
  1. Click Settings.
  2. Enter Overhead uplift rates for each project item type:
    3. Modifier

    If the project item type has no uplift rate, leave this as Not applicable.

    If the project item type has an uplift rate, select whether the cost will be modified by a Percentage or a specific Amount.

    Note: You cannot change this from Not applicable unless a valid nominal code has been selected for the item.
    Value Enter the uplift percentage or amount for the project item type.
  3. Select Set project specific overhead uplift rates if you want to be able to override the defaults you have set here on individual project items.

  4. Select Post overhead absorption journals to the nominal ledger if you want to create nominal ledger postings for overhead absorption.

    Once selected, enter the nominal account reference (Code, CC and, or Dep ) for each project item type. The accounts that you select must be posting accounts.

    Note: If you do not select this option, the uplift costs applied to your projects are not posted to the Nominal Ledger. This will make it difficult to reconcile your projects to the Nominal Ledger.

You have project items of the type Plumbing. When timesheets for your plumbers are entered, these will post costs to your Plumbing project items. You also want to record additional employment costs for your plumbers, for sickness and holiday pay, of 20%. To do this, you apply a Percentage uplift of 20% to the Plumbing project item type.

You also have a project item type called Subcontract. When Purchase invoices are submitted by the subcontractors working on your projects, costs are posted to these project items. As there are no additional employment costs associated with subcontractors, you do not want to add overhead costs to your Subcontract project items. To do this, you choose Not Applicable for the Subcontract project item type.

Overhead uplift rates: Code, CC, Dep, Modifier, Value

Any of these settings can be changed at any time.

As these are default values, any changes made will only affect new project items subsequently added to the project.

As long as you have Set project specific overhead uplift rates selected, you can make changes to existing individual project items.

Post overhead absorption journals to the nominal ledger

Changing this setting will affect subsequent postings to the Nominal Ledger.

Set project specific overhead uplift rates Changing this setting will affect whether you can change the Uplift % on individual project items.

You can change this setting at any time. If you clear it, subsequent overhead costs will not be posted to your projects. Any overhead costs that have already been posted are not affected.

Including committed costs in your projects gives you a better ides of the profit you can expect once your costs have been fully recorded.

Select Record and Track Committed Costs if you want to record committed costs for your projects.

  • Click Settings.

Default balance sheet nominal code for accrued cost posting

Select the default nominal account to which accrued costs will be posted. This will be displayed as the default nominal account when entering a project accrual.

This can be changed at any time.

The updated nominal account will be used by default for subsequent accrual postings made. Any accrual that is awaiting reversal will use the nominal code on the original posting when it is reversed.

This setting can only be changed if all costs have been fully realised and all accruals reversed. You cannot change this setting if there are projects that have committed costs or accruals posted.

See also

Steps in this task

Set up integration for projects

Set up terminology for projects

Time and materials pricing rules

Select nominal accounts for postings

Project Miscellaneous tab

Other tasks

Record project accruals

Overview

Understanding project budgeting

Overhead absorption

Understanding committed costs for projects

Reference

How to allocate purchase orders to projects