Back to V300: Project Accounting for Construction

Lesson 2: Capturing Project Costs

Part 1: Project Commitments

This lesson explains how you can use project transactions for tracking budget costs and revenue, with updates to the general ledger or directly without updates to the general ledger.

Account Groups: General Information

An account group is an entity in Acumatica ERP that you map to a subset of general ledger accounts and then specify in project-related documents. Because they are mapped to general ledger accounts, account groups facilitate transfer of the project-related financial information between the general ledger transactions and project transactions.

Learning Objectives

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

Prepare the system for the creation of account groups
Create an account group and map accounts to this group
Review the chart of accounts and find the account group associated with a particular GL account

Applicable Scenarios

You may need to create an account group in the following cases:

When you are initially configuring project accounting functionality
When you are going to track a particular type of expenses or another type of project balances separately

Types of Account Groups

You create account groups on the Account Groups (PM201000) form. An account group can belong to one of the following types: Asset, Liability, Expense, Income, or Oﬀ-Balance. An account group may include any number of general ledger accounts of particular types:

An account group of the Asset or Liability type may include asset or liability accounts. Transactions posted to these account groups are displayed on the Project Budget (PM309000) form and on the Balances tab of the Projects (PM301000) form, but are not displayed on the Revenue Budget and Cost Budget tabs of the Projects form.
An account group of the Income or Expense type may include accounts of any type (income, expense, asset, or liability). Transactions posted to these account groups are displayed on the Project Budget form, on the Balances tab of the Projects form, and on the Revenue Budget and Cost Budget tabs of the Projects form.
Account groups of the Oﬀ-Balance type are not mapped to any general ledger accounts. You can use account groups of the Oﬀ-Balance type to collect and track project statistical and other information that is unrelated to finance. The transactions posted to account groups of this type will not update the general ledger. For example, you might define an oﬀ-balance group for unrecognized revenue: You may want to see the amount in your project reporting, but you do not want to post to the general ledger until the actual billing is done and thus the revenue is recognized. As another example, you can create an oﬀ-balance group for recording all work hours spent by employees on the project if you want to know the total amount associated with the number of work hours spent, but you do not want to post this amount to the general ledger. In addition, you can select the Expense check box to track the amounts in the oﬀ- balance account group as expenses. The system displays the transactions posted to this account group on the Project Budget form and on the Balances and Cost Budget tabs of the Projects form.

Recommendations for Creating Account Groups

Before you define account groups, you should identify the accounts that will be used in project-related transactions. We recommend that you consider the following rules and limitations as you plan the account groups you will create:

Each general ledger account can be mapped to only one account group.
The following accounts should not be included in account groups:
An asset account that you might want to use as a control account for the AR subledger. For such an account, AR is selected in the Control Account Module box on the Chart of Accounts (GL202500) form. This can be, for example, an accounts receivable account that is debited by customer invoices.
An asset account that is used as an Inventory account for stock items.
A liability account that you might want to use as a control account for the AP subledger. For such an account, AP is selected in the Control Account Module box on the Chart of Accounts form. This can be an accounts payable account that is credited by vendor bills, or a retainage payable account.
An account that is linked to a cash account. On the Chart of Accounts form, this account has the Cash Account check box selected.
Allocation and billing rules select transactions by account groups. If transactions of two accounts should follow diﬀerent allocation or billing rules or use diﬀerent rates, these two accounts should be included in diﬀerent account groups. If the transactions usually use the same rate, consider including their accounts in one group.

Account Groups: To Create an Oﬀ-Balance Group

In this implementation activity, you will learn how to create an account group to be used for collecting statistical information.

Story

Suppose that you are a construction project manager who is configuring project accounting for the ToadGreen Building Group company. You want to know the total amount associated with the number of work hours spent by employees on construction projects (including an extra work beyond the budgeted number of work hours), but you do not want to post these amounts to the general ledger because these expenses are billed monthly under separate project budget lines related to labor. You need to create an oﬀ-balance account group for tracking burden expenses in construction projects.

Step: Creating an Account Group To create an account group for tracking burden expenses, do the following:

On the Account Groups (PM201000) form, add a new record.
In the Account Group ID box, type BURDEN. Notice that the Active check box is selected by default.
In the Type box, select Oﬀ-Balance. Leave the Expense check box selected.
In the Description box, type Burden Expenses.
Save the account group.

Project Transactions: General Information

Project accounting is integrated with other functional areas of Acumatica ERP. Project-related information from other functional areas flows to projects by means of project transactions that are used for tracking budget costs and revenue. You can also create project transactions directly without involving other documents.

Learning Objectives

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

Capture project costs using project transactions
Make the system create a project transaction based on a GL transaction
Create a project transaction without posting to the general ledger
Review how the system has updated the project budget on release of the project transaction

Applicable Scenarios

You manually create project transactions if you need to directly capture project costs without updating the general ledger. The transactions created for a project update the actual values of the project budget with the incurred expenses that you may need in one of the following cases:

To control the amount of money spent on the project against the budgeted values
To bill the customer for the incurred expenses
To control the project profitability You manually create general ledger transactions for a project if you need to directly capture project costs without creating original documents (such as bills, purchase orders, or time activities).

Manual Creation of Project Transactions

You can create a project transaction directly on the Project Transactions (PM304000) form. When you specify the Debit Account and Credit Account for the project transaction and release the transaction, the system creates the following general ledger transactions on the Journal Transactions (GL301000) form, based on whether the amount of the project transaction is positive or negative:

For a positive amount, the GL transaction debits the debit account of the project transaction and credits the credit account.
For a negative amount, the GL transaction credits the debit account of the project transaction and debits the credit account. If either a debit account or a credit account is not specified in the project transaction, on the release of the transaction, the system does not generate the corresponding GL transaction. If the Subaccounts feature is enabled on the Enable/Disable Features (CS100000) form, you must specify the debit subaccount along with the debit account (if one is specified); otherwise, the project transaction will not produce a general ledger transaction. Similarly, you must specify the credit subaccount along with the credit account (if one is specified); otherwise, the project transaction will not produce a general ledger transaction.

Update of the Project Budget with Project Transactions

The project budget key is the combination of the project, project task, account group, inventory item, and cost code, if applicable. The system uses the project budget key to match the transaction with a project budget line. If a budget line with the same project budget key exists, the system updates the Actual Quantity and Actual Amount of the corresponding budget line. For a new project budget key that does not exist in the project budget, the system creates a new budget line. For a detailed explanation on the rules that the system uses to update or create budget lines, see Project Transactions: Update of the Project Budget Structure. For each line of a project transaction on the Project Transactions (PM304000) form, the system uses the following rules to update the budget of the corresponding project:

The system determines the number of lines to be updated as follows:

If an account group but no credit account group is specified in the project transaction line, the system will update one project budget line.
If the project transaction line has both an account group and a credit account specified, the system will update two project budget lines: the line with the project budget key that includes the account group, and the line with the project budget key that includes the credit account group.

The system updates the budget as follows, depending on the type of the account group specified in the Account Group or Credit Account Group column:

Expense: The system updates the cost budget line of the project on the Cost Budget tab of the Projects (PM301000) form.
Income: The system updates the revenue budget line of the project on the Revenue Budget tab of the Projects form.
Asset, Liability, or Oﬀ-Balance: The system updates only the project balance on the Balances tab of the Projects form; it does not update any revenue budget lines or cost budget lines of the project. The system also creates a line on the Project Budget (PM309000) form.

The system updates the actual amount in the project budget lines as follows:

If an account group of the Expense or Asset type was specified in the Account Group column, the system updates the actual amount by adding the amount in the project transaction line.
For an account group of the Income or Liability type that was specified in the Account Group column, the system updates the actual amount by subtracting the amount in the project transaction line.
If an account group of the Expense or Asset type was specified in the Credit Account Group column, the system updates the actual amount by subtracting the amount in the project transaction line.
For an account group of the Income or Liability type that was specified in the Credit Account Group column, the system updates the actual amount by adding the amount in the project transaction line.

The system updates the actual quantities in the project budget lines as follows:

For the account group that was specified in the Account Group column, the system updates the actual quantity by adding the quantity in the project transaction line.
For the account group that was specified in the Credit Account Group column, the system updates the actual quantity by subtracting the quantity in the project transaction line.

Project Transactions: GL Transactions Related to Projects

On the Journal Transactions (GL301000) form, you can directly create a general ledger transaction related to a specific project and project task. To associate the transaction line with a project, you specify this project in the Project/Contract column and the applicable project task in the Project Task column.

          If a general ledger transaction has a project and project task specified, in the Account column on the
          Journal Transactions form, you can select only an account that is mapped to an account group on the
          Account Groups (PM201000) form.

Creation of Project Transaction

When a batch of GL transactions is released, for each transaction line in the batch with a project and project task specified, the system creates the corresponding project transaction with the following settings specified in a row of the table on the Project Transactions (PM304000) form:

Project: The project associated with the GL transaction
Project Task: The project task associated with the GL transaction
Inventory ID: The inventory item associated with the GL transaction If no item is associated with the GL transaction, the system uses the empty item code, which is <N/A> by default and specified on the Projects Preferences (PM101000) form.
Debit Account: The account of the GL transaction
Account Group: The account group to which the account of the GL transaction is mapped on the Account Groups (PM201000) form
Credit Account: Empty

GL Batch Nbr.: The batch number of the GL transaction

        When a transaction is generated in another functional area of Acumatica ERP—such as accounts
        receivable, accounts payable, order management, or time and expenses—and posted to the general
        ledger, the system generates the corresponding project transaction in the same way as on release of
        GL transactions.

Amount and Quantity in the Project Transaction Lines

For each line of the project transaction that has been generated on release of a general ledger transaction, the system uses the following rules to specify the amount:

For the debit side of the GL transaction, the system specifies the actual amount in the corresponding project transaction line as follows:
If the type of the GL account matches the type of the account group, then the system copies the debit amount of the GL transaction line to the project transaction line with the same sign.
If the type of the GL account does not match the type of the account group, then the system copies the debit amount of the GL transaction line to the project transaction line with the reversed sign.
For the credit side of the GL transaction, the system specifies the actual amount in the corresponding project transaction line as follows:
If the type of the GL account matches the type of the account group, then the system copies the credit amount of the GL transaction line to the project transaction line with the reversed sign.
If the type of the GL account does not match the type of the account group, then the system copies the credit amount of the GL transaction line to the project transaction line with the same sign. For each line of the project transaction that has been generated on release of a general ledger transaction, the system uses the following rules to specify the quantity:
If the type of the GL account matches the type of the account group, the system copies the quantity of the GL transaction line to the project transaction line with the same sign.
If the type of the GL account does not match the type of the account group, the system copies the quantity of the GL transaction line to the project transaction line with the reversed sign.

Construction Project Budget: To Capture Project Costs

This activity will walk you through the process of capturing project costs by using project transactions.

Story

Suppose that ToadGreen Building Group is a general contractor building an Italian restaurant for its customer, the Italian Company. At the start of the project, the construction project manager made sure that the construction permit was promptly obtained for the construction site and that the design plans and specifications were prepared and agreed upon. The expenses related to the work must be reflected in the project budget and categorized in the general ledger because they will later be billed and reflected in financial statements. Further suppose that the construction manager has spent some time on extra communication, which has not initially been budgeted. This time should not be billed because the project manager's salary is fixed and is billed monthly under a separate project budget line related to labor. However, these expenses must be reflected in the project budget for better estimation of the burden and overhead of the construction project. Acting as the project accountant, you will enter the general ledger transactions to directly capture the costs and record the work related to gathering the requirements, getting all the necessary construction permits, and preparing the design plans and specifications. Then you will enter the project transaction to capture the additional expenses incurred by the construction project manager.

          A project transaction that does not aﬀect the general ledger can also be billed if necessary. In this
          activity, the processed project transaction will be le as an internal burden expense for informational
          purposes and will not be billed or allocated.

Configuration Overview

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

The Construction feature has been enabled on the Enable/Disable Features (CS100000) form to provide support for the construction functionality.
On the Projects (PM301000) form, the ITALIAN3 project has been created. The project tasks were added to the project and the project budget was defined.

Process Overview

On the Journal Transactions (GL301000) form, you will create a batch of general ledger transactions with the project, project task, and cost code specified to record the work related to the first phase of the construction project. You will release the batch, which will generate the corresponding project transaction. Then you will review this transaction on the Project Transaction Details (PM401000) form. Finally, on the Project Transactions (PM304000) form, you will create and release a batch of project transactions that represent additional work that will not be billed and do not aﬀect the general ledger.

System Preparation

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

Sign in to a company with the U100 dataset preloaded; you should sign in as a project accountant by using the bsanchez username and the 123 password.
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 4/15/2025. If a diﬀerent date is displayed, click the Business Date menu button, and select 4/15/2025 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 General Ledger Transactions To create a batch of general ledger transactions to represent the work related to the first phase of the construction project, do the following:

Open the Journal Transactions (GL301000) form.
On the form toolbar, click Add New Record to create a new batch of general ledger transactions, and in the Summary area, make sure GL is selected as the Module.
In the Description box, type Construction permits, design plans, specifications.
On the table toolbar, click Add Row to add the first row, which represents the expenses associated with procuring construction permits, and specify the following settings in the row:

Account: 54300 - Project Other Expense
Project/Contract: ITALIAN3
Project Task: 01 - General Requirements
Cost Code: 01-300
Debit Amount: 15,400
Transaction Description: Construction permits

Add a second row, which represents the expenses for design plans and specifications, and specify the following settings in the row:

Account: 54300 - Project Other Expense
Project/Contract: ITALIAN3
Project Task: 01 - General Requirements
Cost Code: 01-330
Debit Amount: 37,500
Credit Amount: 0
Transaction Description: Design plans and specifications

Add a third row, which balances the batch of transactions, and specify the following settings in the row:

Account: 23015 - Accrued Expenses
Project: X (inserted automatically)
Cost Code: 00-000 (inserted automatically)
Credit Amount: 52,900 (inserted automatically)

On the form toolbar, click Remove Hold to assign the general ledger transaction the Balanced status, and then click Release to release the transaction. When you release the general ledger transaction, for the line with the specified project and project task, the system creates the corresponding project transaction. In the created project transaction, the system inserts the account group to which the account in the transaction line is mapped.
On the Project Transaction Details (PM401000) form, in the Summary area, select ITALIAN3 as the Project. In the table, review the project transaction (shown in the following screenshot) that has been created based on the GL transaction that you have processed earlier. In both lines, the Billable check box is selected and the Billed check box is cleared, indicating that the transactions are pending billing.
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   Figure: Project transaction prepared on release of the GL transaction
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On the Projects (PM301000) form, open the ITALIAN3 project, and on the Cost Budget tab, review the cost budget lines with the 01-300 and 01-330 cost codes. Notice that the actual amounts in these lines have been updated with the amounts from the project transaction.

Step 2: Creating a Project Transaction Without Posting to the General Ledger To create a project transaction that represents the additional expenses, which do not aﬀect the general ledger, do the following:

Open the Project Transactions (PM304000) form.
On the form toolbar, click Add New Record to create a new project transaction, and in the Summary area, make sure PM is selected as the Module.
Enter Additional operational expenses (ITALIAN3 project) as the Description.
On the table toolbar of the Details tab, click Add Row, and specify the following settings in the added row:

Project: ITALIAN3
Project Task: 01
Cost Code: 01-311
Account Group: BURDEN Notice that the system warns you that the budget line with this project task, cost code, and account group has not been initially planned in the cost budget of the project.
UOM: HOUR
Quantity: 20
Billable: Cleared
Amount: 1,200 You leave the Debit Account and Credit Account columns empty, so that the corresponding general ledger transaction will not be created. The system also will not use this transaction as a basis for billing because you cleared the Billable check box in the line.

On the form toolbar, click Release to save your changes to the project transaction and release it. Notice that the GL Batch Nbr. column is empty, indicating that no corresponding general ledger transaction has been created.
On the Projects (PM301000) form, open the ITALIAN3 project, and on the Cost Budget tab, notice that a new cost budget line has been added to the budget (shown in the following screenshot) based on the project transaction that you created and released. The original budgeted values in the line are zero; the actual values in the line have been updated based on the project transaction that you have processed.
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   Figure: Project transactions prepared on release of the GL transaction
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You have finished capturing costs for the project.