Back to P100: Project Implementation and Processing

Lesson 6: Purchasing Materials and Services for Projects

Part 2: Capturing of Costs for Projects

This lesson describes how to configure and use separate warehouse locations for tracking the inventory items that

are sold or purchased for a project.

Purchase of Materials and Services: General Information

In Acumatica ERP, you can purchase materials and services for a particular project so that these purchases will be recorded as commitments to the cost budget of the project. This helps you to track the amount of money and resources spent on the project against the budgeted values and the project profitability. The following sections explain how you process purchases for a project in which separate warehouse locations are configured for each project task.

Learning Objectives

You will learn how to do the following:

Create a purchase order with materials and services for a project
Prepare a purchase receipt for the purchase order
Enter the accounts payable bill for the purchase order
Review the project and GL transactions that are generated during the processing of a purchase

Applicable Scenarios

You process a purchase order for a project if you need to record the receipt of items to a warehouse for the project. As a result of a purchase being processed, the actual values of the project budget are updated with the cost of the purchased items.

Purchase of Materials and Services for a Project

To process a purchase of materials and services for a project with these items being received to a warehouse, you use a purchase order of the Normal type. On the Details tab of the Purchase Orders (PO301000) form, to associate a purchase order line with a project, you specify the project and project task in the line. It is possible to process purchases for multiple projects with a single purchase order. If you purchase some material from a vendor directly to a customer and do not need to receive the material to your warehouse, use a purchase order of the Project Drop Ship type for processing this purchase. For more information, see Purchases to the Project Site: General Information and Purchases to the Project Site with a Receipt: General Information.

The processing of a purchase order line depends on the type of the inventory item specified in this line. When you select an inventory item in a purchase order line, the system assigns the line one of the following types, depending on the selected item:

Goods for IN type: A stock item. For more information on processing purchases of stock items, see Purchases of Stock Items: General Information.
Non-Stock type: A non-stock item that is configured so that the system requires a purchase receipt for it. For more information on purchasing non-stock items with receipts, see Purchases of Non-Stock Items and Services with Receipts: General Information.
Service type: A non-stock item that is configured so that the system does not require a purchase receipt for it. For more information on purchasing services, see Purchases of Services Without Receipts: General Information. When the items of a purchase order have been received to a warehouse, you create a purchase receipt by opening the purchase order and clicking Enter PO Receipt on the form toolbar of the Purchase Orders form. The system automatically adds the purchase order lines of the Goods for IN and Non-Stock types to the created purchase receipt and opens it on the Purchase Receipts (PO302000) form. If the Internal Cost Commitment Tracking check box is selected on the Projects Preferences (PM101000) form, when the purchase receipt is released and the corresponding inventory receipt is released on the Receipts (IN301000) form, the system updates the committed values in the corresponding budget lines of the project on the Cost Budget tab of the Projects (PM301000) form. Aer the items have been received, you create an accounts payable bill for the purchase order selected on the Purchase Orders form by clicking Enter AP Bill on the form toolbar. Then you release the prepared AP bill on the Bills and Adjustments (AP301000) form.
When the bill is released, for the purchase order lines of the Service type, the system updates the actual values in the cost budget lines of the project with the same project budget key on the Cost Budget tab of the Projects form.
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        For the stock items, the system will record the actual values in the cost budget lines of the project
        when the items will be used for the project (that is, when the inventory issue with these items will be
        released).
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Workflow of Purchasing Materials and Services for Projects

The following diagram illustrates the workflow of purchasing materials and services for projects using purchase orders. Purchase of Materials and Services: Inventory Tracking by Warehouse Location

In Acumatica ERP, you can define a project so that specific project tasks are associated with warehouse locations. With this configuration, in the project cost budget, you can track materials and services purchased for the project. Based on the expenses recorded to the cost budget, you can later bill the customer. The ability to track items used for projects by warehouse location helps you to track the amount of money and resources spent on the project and to accurately estimate the project profitability.

Inventory Tracking by a Project-Specific Location To track project items by warehouse location, you select Track by Location in the Inventory Tracking box on the Summary tab of the Projects (PM301000) form for a particular project. You then associate a separate warehouse location with each project task for which you need to receive inventory items on the Warehouses (IN204000) form. With this configuration, the items purchased for the project are tracked at the warehouse location level. For a purchase of project items, you create a purchase order on the Purchase Orders (PO301000) form. When the purchased materials are received to the warehouse location, you create a purchase receipt on the Purchase Receipts (PO302000) form and an accounts payable bill on the Bills and Adjustments (AP301000) form. If the Internal Cost Commitment Tracking check box is selected on the Projects Preferences (PM101000) form, these expenses are recorded to the project budget as project commitments. For more information about commitment tracking in projects, see Tracking Cost Commitments. Once the purchased project stock items are used for the project, you issue the items for the project from the warehouse location. The system updates the actual quantity and actual amount of the cost budget of the project with the quantities and cost of the issued items.

Limitations

The following limitations apply to the Track by Location inventory tracking mode of the project on the Summary tab of the Projects (PM301000) form:

The purchased materials are not reserved for the project and can be sold and shipped for other projects and customers.
If a warehouse location is associated with a particular project and project task, the system cannot issue the items from this location using the X non-project code. To issue the items stored in the project-specific warehouse location with the non-project code, you first need to transfer the items to a warehouse location that is not linked to any project task.
The system does not track the project-specific cost of materials. In projects with inventory tracked by location, the cost of the issued materials is not project-specific and is defined by general cost calculation rules. The cost of the item depends on the item valuation method, and is aﬀected by other factors: the warehouse location from which the item is issued, the account and subaccount, the selected subitem, and the lot or serial number of the item. For more information on how the system calculates item costs, see Item Costs and Valuation Methods: General Information.

Project Inventory Tracking by Warehouse Location: To Purchase Materials and

Services for a Project

This activity will walk you through the process of purchasing materials and services to a project-specific warehouse location with a purchase order.

Story

Suppose that the HM's Bakery and Cafe customer has ordered two juicers, along with four hours of the installation service from the SweetLife Fruits & Jams company. The SweetLife company contracted the Squeezo Inc. vendor to provide the juicers and perform the installation. SweetLife's project manager has created the project. Acting as SweetLife's purchasing manager, you will process the purchase of materials and services for the project. When the vendor delivers the juicers to company's warehouse, you will process a purchase receipt for the juicers. When the vendor provides the installation service, you will process an accounts payable bill from the vendor for the delivered juicers and provided service.

Configuration Overview

In the U100 dataset, the following tasks have been performed to support this activity:

On the Enable/Disable Features (CS100000) form, the following features have been enabled:
Project Accounting, which provides support for the project accounting functionality
Inventory and Order Management, which provides the purchase order functionality
On the Projects (PM301000) form, the HMBAKERY2 project has been created and the INSTALL project task has been created for the project. This task is the default project task.
On the Account Groups (PM201000) form, the SUBCON account group has been created. The 54200 (Project Subcontract Expense) account has been mapped to the SUBCON account group.
On the Warehouses (IN204000) form, the EQUIPHOUSE warehouse has been created, and the HMBAKERY2 location has been created for the INSTALL task of the HMBAKERY2 project.
On the Vendors (AP303000) form, the SQUEEZO vendor has been created.
On the Stock Items (IN202500) form, the JUICER10C stock item has been defined.
On the Non-Stock Items (IN202000) form, the INSTALL non-stock item has been defined. On the General tab, the Require Receipt check box has been cleared. On the GL Accounts tab, 54200 (Project Subcontract Expense) has been selected in the Expense Account box. On the Price/Cost tab, Purchase is selected in the Post Cost to Expenses On box.

Process Overview

On the Purchase Orders (PO301000) form, you will create a purchase order for the project, specifying the project and project task. Then you will create a purchase receipt and release it on the Purchase Receipts (PO302000) form. You will bill the purchase order on the Purchase Orders form and then release the bill on the Bills and Adjustments (AP301000) form. Finally, you will review the project balances on the Projects (PM301000) form.

System Preparation

To prepare to perform the instructions of the activity, in the info area, in the upper-right corner of the top pane of the Acumatica ERP screen, make sure that the business date in your system is set to 1/30/2025. If a diﬀerent date is displayed, click the Business Date menu button, and select 1/30/2025 on the calendar. For simplicity, in this activity, you will create and process all documents in the system on this business date.

Step 1: Creating a Purchase Order for the Project To create a purchase order for the project, do the following:

On the Purchase Orders (PO301000) form, create a new record.
In the Summary area, specify the following settings:

Type: Normal
Vendor: SQUEEZO
Date: 1/30/2025
Project: HMBAKERY2
Description: Purchase for HM's Bakery & Cafe

On the Details tab, add two purchase order lines that have the settings shown in the following table.

    Inventory ID                Order Qty.                   Unit Cost                   Cost Code
    JUICER10C                   2                            1500                        00-000

    INSTALL                     4                            80                          00-000

   The system automatically inserts the INSTALL project task for each line when you select the HMBAKERY2
   project because this task is the default project task of the project. Also, in the line with the JUICER10C stock
   item, the EQUIPHOUSE warehouse is inserted automatically.

In the Summary area, make sure that the Order Total value, which is the sum of the Ext. Cost of two lines (3,000.00 and 320.00), is 3,320.00.
Save the purchase order.
On the form toolbar, click Remove Hold. The system assigns the purchase order the Open status.

Step 2: Receiving the Purchased Materials to a Warehouse To create a purchase receipt for the purchased materials, do the following:

While remaining on the Purchase Orders (PO301000) form with the purchase order selected, on the form toolbar, click Enter PO Receipt. The system creates a purchase receipt with the Balanced status for the JUICER10C item and opens it on the Purchase Receipts (PO302000) form. The service item (INSTALL) does not require a receipt and is not added to the created document.
On the form toolbar, click Release. The system creates and releases an inventory receipt transaction based on the purchase receipt. On release of this transaction, the stock items are received to inventory. The purchase receipt is assigned the Released status.

Step 3: Creating a Bill for the Purchase Order To bill the purchase order, do the following:

On the Purchase Orders (PO301000) form, open the purchase order that you have created earlier in this activity.
On the More menu (under Processing), click Enter AP Bill to create a bill for the purchase order. The system creates an accounts payable bill and opens the bill on the Bills and Adjustments (AP301000) form. Make sure that both purchase order lines have been added to the bill.
On the form toolbar, click Remove Hold to assign the AP bill the Balanced status, and then click Release.
On the Projects (PM301000) form, open the HMBAKERY2 project. On the Cost Budget tab, review the actual values of the cost budget. Notice that the Actual Quantity and Actual Amount of the line with the INSTALL item have been updated and are now 4 and 320.00, respectively (see the following screenshot). The actual values for the line with the stock item (JUICER10C) are not updated yet: the system will record the cost of stock items to the project budget when the items are used for the project and issued from the project-specific warehouse location. Figure: Actual values of the budget updated by the purchase
You have completed the processing of the purchase of materials and services for the project.