Back to P120: Project Accounting Basic Scenarios

Lesson 8: Tracking Committed Costs in the Budget

Part 4: Cost Commitments

This lesson explains how you can prepare and process project commitments if you need to control purchases for

projects by using separate project budget lines.

Committed Costs: General Information

Acumatica ERP supports the tracking of purchase orders for each project as project cost commitments, which gives you the ability to control purchases made for projects. When the commitments are created, the system uses them to populate the cost budget for the corresponding project, project task, inventory item, and account group.

Learning Objectives

In this lesson, you will learn how to do the following:

Set up the tracking of project commitments in the system
Create commitments by creating a purchase order for a project
Review how the commitments aﬀect the project cost budget during the processing of the purchase order

Applicable Scenarios

You set up commitment tracking if you want to distinguish purchases within the cost budget of a project. When you process a purchase order with detail lines related to the project, the system tracks this purchase as a commitment to the project and updates the cost budget of the project with the purchased services and materials. The commitment values are shown in separate columns in the cost budget.

Tracking of Committed Costs for Projects

If the Internal Cost Commitment Tracking check box is selected on the General tab (General Settings section) of the Projects Preferences (PM101000) form, the system tracks project-related purchase orders as commitments to these projects and exposes these commitments on the Commitments (PM306000) form.

          If the Construction feature is enabled on the Enable/Disable Features (CS100000) form, the system
          also tracks subcontracts as commitments to projects. For more information about processing
          subcontracts, see Subcontracts: General Information.

The system creates a commitment for a purchase order line in the amount of the Ext. Cost of the line and updates the committed values of the corresponding budget line of a project on the Cost Budget tab of the Projects (PM301000) form if all of the following conditions are met on the Purchase Orders (PO301000) form:

The type of the purchase order is Normal, Drop-Ship or Project Drop-Ship.
The status of the purchase order is Pending Printing, Pending Email, or Open.
The purchase order line specifies the project and the applicable project task (and, optionally, the cost code). On the Cost Budget tab of the Projects form, for each budget line, the system displays the total values of all the commitments that are associated with the same project, project task, account group, and inventory item. The system tracks the following committed values of the project budget on the Cost Budget tab:
Original committed quantity and amount
Revised committed quantity and amount
Committed open quantity and amount
Committed received quantity
Committed invoiced quantity and amount The initial commitment amount is displayed in the Original Committed Amount column and the Revised Committed Amount column. The Committed Open Amount of a new commitment is equal to the Revised Committed Amount. When you release an accounts payable bill with the purchase order lines of the Service type, the Committed Invoiced Quantity and Committed Invoiced Amount of the corresponding commitments are updated with the Quantity and Ext. Cost values of the bill lines, respectively. The Committed Invoiced Quantity and Committed Invoiced Amount are subtracted from the Committed Open Quantity and Committed Open Amount and added to the Actual Quantity and Actual Amount, respectively. When an inventory receipt that corresponds to the purchase receipt with the purchase order lines of the Goods for IN or Non-Stock type is released, the Committed Received Quantity of the corresponding commitments is updated with the received quantity. On release of the AP bill with these lines, the received quantity and the amount of the Ext. Cost of the related purchase order lines are subtracted from the Committed Open Quantity and Committed Open Amount and added to the Committed Invoiced Quantity, Committed Invoiced Amount, Actual Quantity and Actual Amount, respectively. Aer a purchase order line is assigned the Closed status, the Committed Open Quantity and Committed Open Amount of the corresponding commitment become 0. If a purchase order has been canceled, the incomplete amounts are subtracted from the Committed Open Amount.

Workflow of Commitments

The following diagram illustrates the workflow of processing a commitment and the ways the commitment aﬀects the project budget. Committed Costs: Process Activity

This activity will walk you through the creation of a purchase order for a project and tracking this purchase order as a commitment to the project cost budget.

Story

Suppose that the HM's Bakery and Cafe customer has ordered the installation of three juicers it previously purchased from the SweetLife Fruits & Jams company. Acting as SweetLife's project accountant, you have created a project related to the planned installation work. The installation, which is performed by the vendor of the juicers, has been provided for each juicer. Based on the agreement with the vendor, your company will be billed in two parts—that is, first for the installation of the first two juicers and then for the installation of the third juicer. Acting as the project accountant, you need to capture the first part of the installation cost as a commitment to the project.

Configuration Overview

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

The following features have been enabled on the Enable/Disable Features (CS100000) form:
Project Accounting, which provides support for the project accounting functionality
Inventory and Order Management, which provides the purchase order functionality
On the Account Groups (PM201000) form, the SUBCON account group has been created. The 54200 - Project Subcontract Expense account has been mapped to the account group.
On the Vendors (AP303000) form, the SQUEEZO vendor has been created.
On the Projects (PM301000) form, the HMBAKERY8 project has been created and the INSTALL project task has been created for the project. This task is the default project task.
On the Non-Stock Items (IN202000) form, the INSTALL non-stock item has been created. On the General tab, the Require Receipt check box is cleared for the item. On the Price/Cost tab (Standard Cost section), the Current Cost of the item has been set to 80.00. On the same tab, Purchases is selected in the Post Cost to Expenses On box. On the GL Accounts tab, the 54200 - Project Subcontract Expense account has been specified as the Expense Account.

Process Overview

In this activity, you will create a purchase order on the Purchase Orders (PO301000) form with lines related to the project. You will review how the committed amounts are shown in the project budget on the Projects (PM301000) form. You will then create a partial bill for the purchase order and release the bill on the Bills and Adjustments (AP301000) form. Finally, you will review how the processed commitments aﬀect the project budget on the Projects form.

System Preparation

To prepare to perform the instructions of the activity, do the following:

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.
On the General tab (General Settings section) of the Projects Preferences (PM101000) form, select the Internal Cost Commitment Tracking check box to expose commitments and committed values in the project budget, and save your changes to the project accounting preferences.

Step: Creating Commitments for the Project To process a purchase order for the project that updates the project budget with committed values, do the following:

On the Projects (PM301000) form, open the HMBAKERY8 project, and on the Cost Budget tab, review the cost budget of the project. Because tracking of cost commitments is enabled in the system, the table contains columns for the original committed, revised committed, committed received, committed invoiced, and committed open values. In the only cost budget line of the project, all these values are 0.
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
Date: 1/30/2025

On the Details tab, add three purchase order lines, and specify the settings shown in the following table in the lines you add.
Inventory ID Line Description Order Qty. Project Cost Code INSTALL Installation of the 3 HMBAKERY8 00-000 first juicer
INSTALL Installation of the 4 HMBAKERY8 00-000 second juicer
INSTALL Installation of the 5 HMBAKERY8 00-000 third juicer
```
       The system automatically selects the INSTALL project task when you select the project of the
       line because this task is the default task of the HMBAKERY8 project.
```
Make sure the Ext. Cost of the added lines is 240.00, 320.00, and 400.00, respectively; these represent the costs committed to the project.
In the Summary area, make sure that the Detail Total value, which is the sum of the Ext. Cost values of the three lines, is 960.00, and save the purchase order.
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 creates the commitments for the project.
On the Projects form, open the HMBAKERY8 project, and on the Cost Budget tab, review the updated cost budget line. Notice that the committed quantities and amounts of the cost budget line have been updated and the Original Committed Amount, Revised Committed Amount, and Committed Open Amount columns contain the purchase order total (960.00).
On the table toolbar, click View Commitments to review the commitments that correspond to the cost budget line on the Commitments (PM306000) form. Notice that the system has created a commitment for each purchase order line and that all the commitments correspond to one cost budget line.
Close the form and return to the Projects form with the HMBAKERY8 project. 10.On the Commitments tab, click the link in the Order Nbr. column to open the purchase order that you have created earlier in this activity. 11.On the More menu of the Purchase Orders form, which the system opens, 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. 12.On the Details tab of this form, delete the line with the Quantity of 5.00 to bill the purchase order partially, as your company agreed on with the vendor. When you delete the line, the amount in the Detail Total box in the Summary area becomes 560.00. 13.On the form toolbar, click Remove Hold to assign the bill the Balanced status, and then click Release to release the bill. 14.Return to the Projects form with the HMBAKERY8 project, press Esc to refresh the form, and review the updated cost budget on the Cost Budget tab. Notice that the billed quantity and amount (7.00 and 560.00, respectively) of the purchase order have been subtracted from the committed open quantity and amount, which is now equal to 5.00 and 400.00, respectively. The billed quantity and amount have been added to the committed invoiced quantity and amount, to the actual quantity and amount, and to the received committed quantity, as shown in the following screenshot.
Figure: Committed values of the project cost budget

You have processed the commitment to the project. Part 5: Single-Tier Change Management | 60