Back to P120: Project Accounting Basic Scenarios

Lesson 11: Preventing Direct Purchases to Projects

Part 5: Single-Tier Change Management

This lesson describes how to lock the project budget aer the purchases on the project have been agreed upon with vendors. Once the project budget is locked, users can process additional purchases only by using the change order functionality.

Single-Tier Change Management: Locking Commitments

If internal cost commitment tracking is configured in the system and the change order workflow is configured for a particular project, aer the purchases on the project have been agreed on with vendors and entered into the system, you can lock the commitments for the project. When you decide to prevent users from directly creating new commitments for the project, you select the project on the Projects (PM301000) form and click Lock Commitments on the More menu. Until you unlock the commitments for the project, you can process new purchases for the project only with change orders. If commitments are locked for the project, users cannot perform the following actions:

Creating new purchase orders for the project on the Purchase Orders (PO301000) form
Adding new lines to the existing purchase orders for the project on the Purchase Orders form
Creating new subcontracts for the project on the Subcontracts (SC301000) form
Adding new lines to the existing subcontracts for the project on the Subcontracts form However, users can edit or delete the existing commitments that have been created before the lock by editing or deleting the corresponding purchase order lines or subcontract lines directly. Once you decide to permit users to create new purchase orders and make changes to existing purchase orders for the project on the Purchase Orders form, you unlock the ability to process project commitments directly for the project by clicking Unlock Commitments on the More menu of the Projects form. For more information on commitments, see Committed Costs: General Information. Single-Tier Change Management: To Prevent Direct Changes to Commitments
If you want to manage changes to a project's committed values, you can prevent the creation of purchase orders for the project on the Purchase Orders (PO301000) form and create new commitments by using change orders.

Story

Suppose that the HM's Bakery and Cafe customer has ordered a juicer from the SweetLife Fruits & Jams company, along with the services of installation and training for its employees on operating the juicer. SweetLife has contracted the Squeezo Inc. vendor to perform the installation. The project accountant of SweetLife has created a project with tasks corresponding to the installation and training phases. Acting as the project accountant, you need to purchase the installation service from the vendor. When you purchase the budgeted service, you will lock the commitments for the project to prevent the direct processing of purchase orders for the project.

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
Change Orders, which gives you the ability to manage changes to the project’s budgeted and committed values
Inventory and Order Management feature, which provides the functionality of purchase orders
On the Projects (PM301000) form, the HMBAKERY11 project has been created and the PHASE1 (for installation) and PHASE2 (for training) project tasks have been created for the project. PHASE1 is the default task of the project. The cost budget of the project has not been configured.
On the Non-Stock Items (IN202000) form, the INSTALL non-stock item has been created.
On the Vendors (AP303000) form, the SQUEEZO vendor has been created.

Process Overview

In this activity, you will create a purchase order for the project on the Purchase Orders (PO301000) form. You will then lock the project commitments on the Projects (PM301000) form to prevent the creation of purchase orders for the project on the Purchase Orders form.

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 purchase order, and specify the following settings in the Summary area:

Vendor: SQUEEZO
Description: Purchase for HM's Bakery & Cafe

On the Details tab, click Add Row on the table toolbar, and specify the following settings in the row:

Inventory ID: INSTALL
Order Qty.: 4.00
Project: HMBAKERY11
Project Task: PHASE1 (inserted automatically)
Cost Code: 00-000

On the form toolbar, click Remove Hold. The system assigns the purchase order the Open status. When the Open status is assigned to the purchase order, the system updates the committed values of the project.
On the Projects (PM301000) form, open the HMBAKERY11 project, and review the cost budget on the Cost Budget tab. Notice that the original committed quantity and amount of the budget line with the PHASE1 project task and the INSTALL inventory item are 4 and 320.00, respectively.

Step 2: Locking Commitments for the Project To prevent the direct creation of purchase orders for the project, do the following:

While you are still reviewing the HMBAKERY11 project on the Projects (PM301000) form, on the More menu, click Lock Commitments.
On the Purchase Orders (PO301000) form, create a purchase order, and specify the following settings:

Vendor: SQUEEZO
Description: Purchase for HM's Bakery & Cafe

On the Details tab, click Add Row, and specify the following settings in the row:

Inventory ID: INSTALL
Order Qty.: 2.00
Project: HMBAKERY11 When you select the project, the system shows an error message in the Project column that says you cannot create purchase order commitments for this project because the commitments are locked for the project (see the following screenshot).
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    Figure: The restriction of direct commitment creation for the project

               Until you unlock the commitments for the project, you can process new purchases for the
               project only with change orders.
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Close the form without saving the purchase order, which was created solely for testing purposes. Part 6: Time Tracking | 76