Project Percentage of Completion Revenue Recognition
If you are using the Project Level feature, you can now use the project's percentage of completion (POC) to recognize revenue. Previously, percentage of completion could only be used at the job level to recognize revenue.
A project's POC is determined by the Project Total Cost divided by the Project Forecast Cost, where these values are calculated as the sum of the total and forecast costs for all jobs assigned to the project. All jobs, including those that are inactive, are included in the project POC calculation. You cannot have any jobs excluded from POC when POC is recognized at the project level.
The project's percentage of completion will be applied as the POC for each job that is assigned to the project. This is the POC that will be used to calculate the contract earned amount for each job, as well as the entire project.
Example
Project A has three jobs:
| Job | Job Expected Contract | Job Total Cost | Job Forecast Cost |
|---|---|---|---|
2776 | 2,000,000 | 1,500,000 | 1,500,000 |
2777 | 5,000,000 | 2,600,000 | 3,000,000 |
2778 | 3,000,000 | 1,500,000 | 2,500,000 |
The job amounts are added to determine the project amounts:
| Project | ProjectExpected Contract | ProjectTotal Cost | ProjectForecast Cost |
|---|---|---|---|
Project A | 10,000,000 | 5,600,000 | 7,000,000 |
Project POC (Project Total Cost / Project Forecast Cost) = 80% (5,600,000 / 7,000,000)
Project Contract Earned (Project POC x Project Expected Contract) = 8,000,000 (80% x 10,000,000)
Job Contract Earned (Project POC x Job Expected Contract) =
2776 | 1,600,000 (80% x 2,000,000) |
2777 | 4,000,000 (80% x 5,000,000) |
2778 | 2,400,000 (80% x 3,000,000) |
Requirements
To use Project Level POC, in addition to having the Project Level feature registered, you must have the following options selected in the Posting Options window (Microsoft Dynamics GP > Tools > Setup > Job Cost > Job Cost Setup > Posting Options):
- Cost Code Debit Posting Accounts set to Division posting
- Percentage-of-Completion marked as the Revenue Recognition Method
- POC Calculation Method set to Posted Costs
If you meet these requirements, you can use the project-level POC method for recognizing revenue.
When upgrading, the POC Method for existing jobs and projects defaults to Job Level.
- You can change the POC method on a project only if the project type is Project Standard Billing and no invoices have been created for the project.
- You can change the contract type on a job that has been invoiced and included in a POC journal entry only if the billing type for the job and the project is Standard.
Setting up a Project to Use Project-Level POC
Complete the following steps to use percentage of completion at the project level. You cannot change the POC method for any project that has invoices saved or posted.
- Select Cards > Job Cost > Project to open the Project Maintenance window.
- Select a Project Number.
- In the POC Method field, select Project Level.
- Select Save.
POC Method Indicators
On Job Windows
When project-level POC is being used, the POC Method field will appear on multiple job and project windows to indicate that POC is being recognized at the Project Level.
This read-only field appears on the Job Maintenance, Job Status, and Job Billed Position windows for jobs that are using project-level POC.
When POC is recognized at the job level, this field will be hidden from the job windows.
On Project Windows
When project-level POC is being used, the POC Method field appears on the Project Maintenance, Project Status, and Project Billed Position windows for projects that are using project-level POC.
This field is read-only on the Project Status and Project Billed Position windows.
On Reports
When project-level POC is being used, the Job Report indicates the POC Method as Project Level.
All project and job reports display contract and billing amounts based on the project POC when the POC method is set to Project Level.
Project POC Breakdown
The new Project POC Breakdown window allows you to view a breakdown of expected contract, contract earned, billing, and over/(under) billing amounts when you are using project-level POC. You can open this window from either the Billed Position window or the Project Billed Position window.
From the Billed Position Window
Opening the Project POC Breakdown window from a job's Billed Position window allows you to view POC, contract, and billing amounts for the job.
- Select Cards > Job Cost > Job.
- On the Job Maintenance window, select a job and use the expansion button to open the Job Status window.
- Use the Billed Position button to open the Billed Position window.
- Use the Project POC Breakdown button to open the Project POC Breakdown window. This button is hidden if the job is not using project-level POC.
This window displays information only for the current job, using the Project % Completion as the POC.
From the Project Billed Position Window
Opening the Project POC Breakdown window from the Project Billed Position window allows you to view contract and billing amounts for the project by job.
- Select Cards > Job Cost > Project.
- On the Project Maintenance window, select a project and use the expansion button to open the Project Status window.
- Use the Project Billed Position indicator to open the Project Billed Position window.
- Zoom on the Project Contract Earned field to open the Project POC Breakdown window.