Microsoft Dynamics AX (Archived)

Cost on completion basis.

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Posted on by Gaurav Chandak

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Hi All,

In AX 2012 R2, I have the following requirement.

I created a project for which i have posted a PO of Amount USD 10000. I "Generate Committed cost", while calculating estimates i can see the whole PO cost.

But my billing rule is on "Percentage completion"

In Manual calculation field i specified only 10% and i want system to take only the 10% cost not the whole amount i.e. i want system to take only 10% of USD 10000 which is = USD 1000.

Because I am going to generate revenue on the monthly basis and if i post the whole cost together, then for the first month system will not show me the accurate revenue.

Can someone guide me to achieve this scenario in standard.

Thanks in advance,

Kind Regards,

Gaurav Chandak

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David Massey on at

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There are two types of amounts being recognized in the scenario mention. All of the cost will be recognized at the time ov invoicing the purchase order. The project module does not directly suport deferred costing.

At the time of processing the vendor invoice, if the project is setup to track WiP in progress the revenue will be tracked. The billing rule is not generating revenue. It is indicating how much revenue is to be invoice. When the invoicce is created and posted the WIP in revenue is moved to P/L Revenue.

Project "Committed Costs" are tracking of amounts against the project. These values are released when the amounts are invoiced. This values are not tracked at the general ledger level. Budgetary control will track information at a general ledger level, and release the amount in a similar process.

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Sandeep Chaudhury 3,303 on at

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Hi Gaurav,

I believe the question you asked is not very clear.

When you said you posted the PO for USD 10000, did you post the Packing slip ? Until this the Committed cost is fine. When you invoice the PO, then the whole cost of the PO gets accrued and Project expense gets debited with USD 10000. The committed cost is reversed here.

The Manual calculation you mentioned with regards to billing rules only used to calculate the invoice amounts automatically. It does not have anything to with revenue generation/recognition.

Can you please elaborate your requirement again. May be with the following info.

1. Your project type (T&M or FP).

2. What are your revenue recognition requirements.

3. Business process in the project (When costs are posted etc.).

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Gaurav Chandak 955 on at

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Hi Sandeep & David,

Apologizes for coming late on this.

See what exactly I am looking is on Fixed price project in AX 2012 R2.

For a company, they have government agencies as their customer where the Amount for project contract is fixed. So, what happens is Company buys a certain amount of good and deliver it to customer directly at first month of the project. For doing this i create item requirement which is flowing from the project quotation. from Item requirement i create a PO and Invoice the same.

But now problem happens is that i have goods with high value cost say $100,000 which is associated to project and i have to deliver the same at the first month of the project where my only 10% of the project has been completed & revenue has got recognized 10% of $300,000.

But at present when i Invoice the PO the whole amount gets hit to the system, and system shows me loss of $70,000. ( $100000 (PO cost) - $30000 ( 10% of $300,000 through estimates) in my project system for the end of the month.

what i want from system is that system should take only 10% of the cost only as well as the 10% of the fixed price contract value as revenue. Revenue is not a problem, as estimates are taking care of it in FP project. But i am not able to do costing of my goods on my project completion basis that is in project statement i should be able to see the profit of $20000 ( 10% of $100000 (PO cost) - 10% of $300000 ) and the remaining cost should go and sit in the WIP account.

Hope, this clarified the situation better,

Thanks in advance for your help,

Kind regards,

Gaurav Chandak

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Sandeep Chaudhury 3,303 on at

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Hi Gaurav,

The scenario is clear now.

The cost accrual based on percentage completion is not a possibility in AX(At least automatically). All the costs you post, gets accrued immediately in the project.

However, when you have consumed $100000 in a project who's contract amount is $300000, then the percentage of completion should be ideally more than 10%. Do you agree ? Can you please let me know how are you deciding the percentage complete in the project. Is it purely manual ?

In your scenario it looks like you are recognizing less revenue manually and expecting system to recognize less cost automatically. Per my knowledge this is not a feasibility.

If the percentage complete is decided manually, then even though system calculates the revenue amount as 10% of $300000, you could override this amount under the Profit and Loss tab of the estimates form and in fact recognize more revenue to meet the costs and be able to see profits in the project statement.

Let me know if you have any question on these.

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Gaurav Chandak 955 on at

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Hi Sandeep,

Thanks for your reply,

Yes it is just a manual calculation.

So, i can conclude that this scenario is not possible in AX.

May i have your valuable feedback to achieve this scenario in AX 2012 or possible places to look into for customization.

Thanks for your kind cooperation,

Kind Regards,

Gaurav Chandak

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Sandeep Chaudhury 3,303 on at

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Gaurav,

I would recommend not to customize the cost accrual on percentage complete basis, because it will involve modifications to various GL posting logics and will more prone to other issues.

Can you not recognize more revenue to match the cost ? Even though 10% is complete and the Estimate process calculates 10% of contract value as the revenue, you can still override the accrued revenue amount while posting the estimate(As I mentioned in my earlier reply).

Let me know if you need more information on this.

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Gaurav Chandak 955 on at

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Thanks Sandeep,

Yes, I can recognize more revenue, but i would prefer my cost recognition automatically from the system on the basis of % which i have mentioned in Revenue.

Somehow, where i can map that whatever cost is occurring in project, go and sit in WIP and later only when i post revenue, system take the cost from WIP and post automatically the cost in Actual as per % of revenue.

But as you conclude, this will not be possible in standard AX.

If you feel any other possible way to achieve this, please confirm me.

Thanks in advance,

Kind Regards,

Gaurav Chandak

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Community Member on at

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Did anybody get a solution for this?

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Community Member on at

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Hi Gaurav,

Did you find a solution for the above?

Best Regards

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