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Need your thought on the below example
Note- this is done through the estimation of the project
Thanks,
nsarswat
Hi nsarswat,
My company has an ISV for projects that can do earned value calculations and alike.
Probably have a look at my company's website to find out more.
Best regards,
Ludwig
Hi nsarswat,
Great to hear.
If your question has been answered then please be so kind and verify the answers.
Many thanks and best regards,
Ludwig
Hello Mr, Reinhard,
Thanks for your answers, it really help. i am also looking to play with adjustment functionality on the project. trying the post all cost to one dummy project and then move this cost to actual project and move it from balance sheet to P&L during the estimation process. i think that could be possible workaround , also in this case we don,t have to twist the system and accounting . it would be more work at end of month to move the cost to right project ,but this could be possible way to do it.
thanks for your help
Br/
nsarswat
Hi nsarswat,
There are ISV solutions available in the market that make use of different forecast models to calculate the earned value. They don't rely on the estimate process but only use these models somehow for their calculations.
Another thing that I have seen is that companies twist the accounting setup and post the fixed on-account milestones as revenues. The estimates that usually post the accrued revenue are then posted on balance sheet (dummy) accounts and don't affect the profit at all. They often post the costs in full and have the milestone revenue against it to make a cost-revenue comparison. This is, however, a completely different approach from what the standard was originally designed for and you have to see if this works out for you.
You can also play around with the POC calculation and the setup of your accounts to achieve other solutions. They are, however, only a kind of workaround.
A final option that comes to my mind is the project cube, which allows a graphical analysis of the current earned value. The disadvantage with this option is that there is no history and that you can check the earned value only as of the time the report is processed.
Overall, the option that you are looking for is not available and you can think about workarounds or purchasing 3rd party addons.
Best regards,
Ludwig
yes this is what i get from the system. my setup of fixed price project is to post cost to balance sheet account and when i run estimation it moves cost to P&L.
but from customer side, they need more time to setup the project, planning then exceution that means in first two months the amount of cost and POC will be more of then same or could be negative ans suddenly in 3 Month the profit increases as there is less cost or no cost.
That is the reason they want to shift the cost to another period through out the project cycle.
Do you have some other suggestion how to deal with this scenario?
Thanks for your help
Br/
nsarswat
Hello nsarswat,
A partial posting of the costs is not supported. All costs that are accumulated until the time the estimate is run will be shifted to P&L.
Why is it that you want to shift only part of the costs and based on what principle (POC * costs in the period or something alike)?
Best regards,
Ludwig
Thanks Mr. Reinhard,
I totally understand what you want to say , the POC% completion i have put as 50% that why the accured revenue comes to $5000.
But as the estimation post the cost from balance to P&L .
my requirement is to post partially cost from balance sheet to P&L for the estimation.
The scenario is that the cost in month M1 is huge beacuse of prepartion of project, but in another phases it goes down if i post all the cost in one month M1 to P&L then the statement doesn't have right values.
Hope you got what is the requirement.
Thanks,
nsarswat
Hi nsarswat,
The estimate usually shifts your costs from the balance sheet to the expense account.
So, I would expect to see $2000 costs posted with the estimate.
The revenue that is accrued depends then on the POC % that is calculated. You did not provide this detail. What AX usually does is multiplying the POC with the contract value. The resulting amount is then recorded as accrued revenue.
Can you share the POC and the total forecast amount that you used when creating the estimate?
Also can you explain more about no 3 because I cannot understand fully.
Many thanks,
Ludwig
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