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Project Management Parameters > Estimate > Remaining budget

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Posted on by Apix

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Hi,

Does someone have an idea of the purpose of these setting :

Kind regards,

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Junaid Idrees on at

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Hi PICCIN,

Please refer to the below link to understand these option business purpose.

docs.microsoft.com/.../project-management-and-accounting-parameters-form

Let me know if you need more clarity on "Committed cost after estimate date" & "Actual cost after estimate date" and I'll explain to you with business example.

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Ludwig Reinhard Microsoft Employee on at

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Good morning Piccin,

Do you use fixed price projects and do you make use of the estimate process to calculate the accrued revenue using the estimate process?

If so, what is your 'benchmark'; that is, the forecast model that you use to compare the actual cost against to come up with a POC number that AX calculates and that is crucial for calculating the accrued revenue?

Do you use an original forecast model that contains your your original budget or do you use a remaining forecast model as the benchmark to compare the actual costs against and to calculate the POC?

Only for the latter case you need to worry about those parameters because they determine what is included in the 'benchmark' that is used to calculate the POC.

When using a remaining budget forecast model as the benchmark, you can define what is included in this benchmark because you know that the remaining budget forecast is reduced as you post transactions on your project. In other words, as the project progresses, the 'basis' (remaining budget) is shrinking, which can quickly result in high POC numbers and accrued revenue values. For that reason, you can specify what is included in the calculation.

If I would use the remaining forecast model for the estimate process, I would personally tick the first two parameters but not the last one but that is something you have to decide.

Best regards,

Ludwig

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Apix 307 on at

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Hello Junaid

These setting are missing from this page... If you have business examples I'm looking for it,

Regards,

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Apix 307 on at

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Hi Ludwig,

It's a very interesting answer.

I used two kind of project, investment and fixed price. For the later originally, I planned to use a original forecast to compare the actual cost.

Let’s take an example. We have an item forecast for 1000 € and we post a vendor receipt for 500€, then the estimation process will calculate a 50% POC.

My problem with this method is to handle committed cost. How can I balance between my original forecast and my actual committed cost? Let’s say we schedule an item forecast for 1000€ but the original purchase order increase during the project to 1200€. If I understand what you wrote yesterday, we can use a remaining forecast which will decrease as we post product receipt but we can take to the denominator for POC calculation : actual product receipt + remaining forecast + committed cost?

If I’m right about that, I need to have a better understanding of the first to option. I guess the third “actual cost after estimate date” take to the POC denominator all the cost posted after my estimate date?

Thanks a lot for your reply,

Aymeric

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Ludwig Reinhard Microsoft Employee on at

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Hi Aymeric,

I don't know if I have a straightforward answer for your question about the committed costs.

The thing is that the POC will impact the revenue that will be accrued for your fixed price project.

What you have to answer yourself if whether the committed costs are that much likely that you can consider them in the POC calculation and consequently in the accrued revenue calculation.

If there is a high probability that committed costs will change until the invoice arrives and the costs are posted then it might be better to not consider them.

On the other hand side, does it really matter if you include them or not?

The difference will be a periodic shift of revenues; that is, if you don't consider them in this months then they might be considered in the next months assuming that the invoices arrived and the costs are posted. If you assume that your project runs of a number of periods / probably years, then this is a one time effect that won't really matter assuming that you receive and pay items/expenses in regular intervals.

Hope that helps.

Best regards,

Ludwig

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Apix 307 on at

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Hi Ludwig,

I tried to test committed costs in my estimates :

1/ Setting :

Parameters

Forecast model

Cost template

Project Groups

2/ I created a project and add a O and a R Forecast :

3/ I added an on account transaction :

4/ I created a purchase order related to my forecast activity :

5/ I checked my committed cost, that's ok :

6/ I run the estimates with a remaining budget method on R_Forecast

An i've got nothing. As i select the checkbox "committed cost up to estimate date" and "committed cost after estimate date" I expected to have my 5000€ committed cost in the numerotor of my POC.

Where I'm wrong?

Regards,

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Ludwig Reinhard Microsoft Employee on at

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Hi,

Your screenshots are very small and hardly readable except the one that says 'create estimate'.

I am wondering whether you have some actual costs posted for the period March 2020?

Are your forecast values in the R_Forecast model also recorded with a date in March 2020?

Best regards,

Ludwig

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Apix 307 on at

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Hi,

The first screenshot shows the parameters. But you already know them because I use a standard contoso environment and I let them as they are.

My forecast are posted with a date in March 2020. I did not post my product receipt in order to have no cost but only committed cost on my project.

As I selected these parameters :

I expected the system to take my committed cost as posted cost.

Regards,

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Ludwig Reinhard Microsoft Employee on at

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Hi,

Can you try the following things:

1) Can you post 1 eur as actual costs

2) Can you run the estimate with the committed costs and your remaining budget model

3.) Then delete the committed costs, delete the estimate and run the estimate again.

Best regards,

Ludwig

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Apix 307 on at

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Ludwig,

I created a new project to get rid of my previous tests.

Well, here my Cost Template setting :

Then my forecast and on account transaction. I used hours forecast to be faster than item management.

Then my posted and not posted costs :

I encircled the committed date.

I guess that this date is the date the batch job gather the committed cost and not the date the system will use to apply the committed cost which will be my project date, am I right?

In the end the estimate :

I tried to delete my unposted journal and run again the estimate and I get the same POC.

Another point, I realised the system reduce my R_Forecast when confirming the PO, what I want is to reduce the R_Forecast when posting the product receipt, can I do that? I've seen nothing relevant here :

Regards,

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