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Dynamics 365 Community / Forums / Finance | Project Operations, Human Resources, ... / How to manage rented m...
Finance | Project Operations, Human Resources, ...
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How to manage rented manpower for Projects

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Posted on by Prabhath-AX 105

Hi,

I have a customer who is into Construction and they are using AX. 

Project Budget is defined for each Project Category. I have a project category called "Steel Reinforcement"  of Type Hour. 

I have defined budget during my budget. Now, against this budget, I may use my own manpower or some of the work I have to hire from a manpower supplier.

For hiring a rented, I use the procurement process. Here, I need to have a purchase agreement with the supplier.

Based on this agreement, vendor will supply manpower and my work will continue. Please note, if I use own manpower, I do a timesheet/hour journal.

Against this purchase agreement, I will issue monthly PO based on the actual time spent. I will use the monthly bill received from the vendor.

My challenges are the following:

1. In my purchase agreement, I can only have a project category of Type "Item". Hence, the budget is type Hour category and actual I cannot use the same category. How this can be managed using Purchase Agreement. I can only do this directly in PO (Without using PA). Then my rate contract with the supplier will have an impact

2. When I am renting 10 Forklift operators @ $20 per hour, how will I define this in my line item. I should have a quantity as 10? I can't put $20 in Unit price. Then, I will have only $200 as Amount. Whereas the total amount should also multiply with the actual hours in the month. Let us say 100 hours spent by all 10 workers. Hence, when I release the PO from PA, it should be 10 (Qty) * 20 (Unit Rate * 100 (Hours) =  $20,000. Where can I define the hours and quantity in the same line?

  • Prabhath-AX Profile Picture
    Prabhath-AX 105 on at
    RE: How to manage rented manpower for Projects

    Hello Dr. Ludwig,

    I think, the best way would be create rented Purchase Agreement and Purchase Orders without giving a project number and categories. As you rightly pointed out, this should be Debiting a clearing account while the Credit is to the vendor.  Before that, I will create the rented employees as Contractor in worker master so that, I can post the timesheets. I will use the same clearing account for Credit such that, this will get reversed when the Vendor PO invoice is posted. If at all there is a difference, can be adjusted (+/-) using an expense journal.

  • Prabhath-AX Profile Picture
    Prabhath-AX 105 on at
    RE: How to manage rented manpower for Projects

    Thank you Dr. Ludwig for the timely help..... Much appreciated....

  • Verified answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: How to manage rented manpower for Projects

    Hello Anthony,

    There is possibly another workaround that comes to my mind.

    This goes as follows:

    1. Create and post purchase orders for the external workers that you use. The important thing here is that you post this against a transfer account, something like:

    DR: Transfer account

    CR: Accounts Payable

    Amount: $5000

    2. Let the external workers post their time directly on the projects they work for.

    This generates a posting like:

    DR: Project costs

    CR: Labor allocation account

    Amount: $4000

    3. Compare the transactions that are made on the Transfer account (step 1) and the labor allocation account (step 2) for your external workers. Any remaining balance needs to be clarified and posted manually on the project for example as an expense.

    The advantage of doing that would be that you have an additional control of the hours the external people work on projects and how many hours you get actually charged ;-)

    Maybe you want to test this workaround to see if this is feasible to implement in your environment.

    Best regards,

    Ludwig

  • Prabhath-AX Profile Picture
    Prabhath-AX 105 on at
    RE: How to manage rented manpower for Projects

    Dear Dr. Ludwig,

    Thanks for your quick reply...

    For No.1.

    During budget, customer may have a ballpark estimate of 80:20 ratio (80 being own resources and 20 being rented). However, the way, customer has structured the budget codes (Project categories) as follows:

    Ready Mix Concrete

    Steel Reinforcement

    Earthworks

    Road & Pavement

    Fire Fighting Network

    They might use own workers or rented workers based on my situation. Even if they know, it is not possible to create two budget codes for each of the above categories. I have only listed few there 50 codes for manpower. They will have to maintain 100 codes now. I don't think, customer will agree to it..

    For No.2

    Thanks for your suggestion. Let the customer enter 80/85 hours (For all operators). I will go by that.. :-)

  • Verified answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: How to manage rented manpower for Projects

    Hello Prabhath-AX,

    For No 1:

    Do you know beforehand how many resources will be used internally (own) and how many will be purchased (rented) externally? If you want to have an actual - budget comparison you would need to have an idea about that because, as you said, PO's only work with the item category type and you would have to establish a plan/budget for internal and purchased resources.

    For No 2:

    When you post the PO invoice then you should get the quantity of hours worked by the rented workers and can adjust the quantity. As an example, you can for example enter 10 operators * 8 hrs/day = 80 hours at a price of $20 when you create the PO. Those hours are based on your budget/plan. Once the invoice arrives you might get charged 85 hours and can adjust those hours when posting the invoice to get the correct costs on the project.

    Best regards,

    Ludwig

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