Item and cost consumption on projects

Have you ever wondered when the consumption of items would have effect on your MS Dynamics AX/D365 for Operations Project? Have you ever wondered when to use which type of item consumption on your projects? If the moment of consumption – or let’s say the moment your project is charged – really matters when it comes to evaluation and project assessment you should have a look at this blog post. The results are finally a mix of documentation I found on the TechNet and the experience I made during the last years.

Important to be kept in mind, that time and material projects as well as fixed price projects are always considered to be without WIP posting setup. I’ll bring up another post in regards to cost consumption on WIP projects.

 

Item Journal

Item journals allow us to create direct consumption from the inventory. One example I tend to mention is: This is what you use when one of your service technicians is in a hurry and needs to pick up some spare parts from the stock which he knows he will consume immediately at the next customer and no delivery note is required.

Item journals are relevant for

  • Internal projects
  • Fixed price
  • Time and material

Cost consumption

  • happens at the time of posting the item journal.
  • no partial delivery. All costs will be postet at once.

 

Item Requirement

Item requirements are commonly used to plan the consumption of items. Actually you are allowed to plan partly deliveries and whatever you put into the item requirement will force the master planning to have your items available in time. This is finally what you would use if you plan a project where you need to install a new VoIP system at a customer site. Item requirements create a sales order in the background (which is of type item requirement). The sales order is open as long as the project is and will be extended once you start to add further items the requirement list.

By the way: Standard doesn’t support direct delivery from item requirement.

Item requirements are relevant for

  • Fixed price
  • Time and material

Cost consumption

  • Posting of costs on delivery

 

Sales Order

From the item tasks you are able to create new sales orders (of type sales order) which are directly linked to the project. Delivery may be performed from the sales order itself. Invoicing is not allowed from the sales order but is to be performed from the project. One example to use it: Your project covers delivery and installation of a new server rack. The customer asks to send an additional spare battery pack for the UPS system and you’d like to have it directly delivered from the local distributor.

Nice to mention that sales orders are not available as soon as you have more than one funding source on the connected project contract.

 

Sales Orders are relevant for

  • Time and material

Cost consumption

  • On post of project invoice

 

Purchase Order

No matter if you manually create a purchase order and link it to the project or you create one from the item tasks the handling of costs may vary depending on the project setup you are running on. Purchase orders which have been created based on an item requirement (manually or by master planning) will create stock which will be consumed by as per description above – so they are separate from purchase orders which you issue to order additional services or items/tools which you need for a project. Example: For an internal regorganization project we need to order several flip charts and a beamer.

Purchase orders are relevant for

  • Internal projects
  • Fixed price
  • Time and material

Cost consumption

  • If project parameters are set to “Purchase order creates an item requirement” an item requirement will be created once you issue a purchase order which is linked to the project. Posting of costs as per description above.
  • In general costs will be posted to the project once the vendor invoice is being posted.
  • As an option the costs may be consumed on the project with item arrival.

 

 

Production Order

Production orders which are manually created and linked to a project or are created from item tasks off the project may – similar to purchase orders create postings in different moments dependend on the setup. Production orders which are issued based upon item requirement/sales order or by master planning will behave as per above topics. Therefore the scope is reduced to directly created production orders.

 

Production orders are relevant for

  • Internal projects
  • Fixed price
  • Time and material

Cost consumption

Depending on the setup you have two options

  • Consumption at time of production posting on basis of materials and time.
  • Consumption at time of finished production on basis of the finished item.
Posted in Dynamics 365 for Operations, Dynamics AX 2012 R3, PMA - Consumption, PMA - Consumption, PMA - Reporting, Project Management and Accounting, Project Management and Accounting Tagged with: , , , ,

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