Project CommitmentsLesson 5

Processing Negative Commitments

Back to V300: Project Accounting for Construction

Lesson 5: Processing Negative Commitments

Part 1: Project Commitments

If you need to track changes to the project commitments and to control the profitability of every change initiated

by a customer, you use the functionality of change orders. In this lesson, you will learn more about how change orders are used with commitments and how to process a commitment with a negative amount.

Change Orders for Commitments: General Information

By using the change order functionality in Acumatica ERP, you can manage changes to a project's committed values if the commitment functionality has been configured for project accounting. For more information on commitments, see Committed Costs: General Information.

Learning Objectives

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

  • Create a change order class for tracking commitments
  • Update cost commitments with a change order
  • Review the changes to the project budget that have been made with change orders
  • Make changes to closed commitments

Applicable Scenarios

You turn on the change order workflow for a project and enable commitment tracking if you want to distinguish purchases within the cost budget of a project, control changes made to the committed values of the project budget, and track these changes at the budget level. To make changes to the project budget, you create change orders, which do not alter the original committed values.

Configuration of a Change Order Class

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 exposes commitments on the Commitments (PM306000) form. To allow users to make changes to commitments, you configure a change order class on the Change Order Classes (PM203000) form. On this form, you select the Commitments check box to allow changes to committed values.

Change Orders for Project Commitments

You can track changes to project commitments that have been created based on project-related subcontracts and purchase orders that have the Normal and Project Drop-Ship type. On the Change Orders (PM308000) form, in a change order with the On Hold status, you can process the following changes to a project's committed values:

  • Creating a new purchase order or subcontract for a project
  • Adding a new line to an existing purchase order or subcontract
  • Adjusting an existing purchase order or subcontract by adding a new negative line
  • Making an addition to or deduction from an existing purchase order or subcontract with a positive or negative amount
                  The amount of a negative change order line may not exceed the Line Total amount of the
              purchase order.
  • Making an addition to or deduction from an existing purchase order line or subcontract line with a positive or negative amount
                  The quantity and amount of a negative change order line may not exceed the received or billed
              quantities and amounts of the purchase order.
  • Reopening a purchase order or subcontract When you release the change order, based on the Quantity and Amount of a commitment line on the Commitments tab of the Change Orders form, the system updates the related commitment document or creates a new one, depending on the type of the commitment line, and updates the Committed CO Quantity, Committed CO Amount, Revised Committed Quantity and Revised Committed Amount of the corresponding cost budget line of the project on the Projects (PM301000) form. For more information, see Change Orders for Commitments: Commitment Updates on Release of Change Orders.

Workflow of Managing Changes to Commitments

The following diagram illustrates the workflow of managing changes to commitments.

Change Orders for Commitments: To Create a Change Order Class

This activity will walk you through the process of configuring a change order class.

Story

Suppose that you, as the system administrator of the SweetLife Fruits & Jams company, need to configure a change order class to be used by a purchase manager for creating change orders for project commitments. The change order class must prevent users from changing the revenue and cost budgets of a project.

Configuration Overview

For the purposes of 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
  • Change Orders, which gives you the ability to track changes to projects with change orders

Process Overview

You will configure a change order class on the Change Order Classes (PM203000) form.

System Preparation

To prepare to perform the instructions of this activity, sign in to the system as the system administrator by using the gibbs username and the 123 password.

Step: Configuring a Change Order Class To configure a change order class that will be used for creating change orders for project commitments, perform the following instructions:

  1. On the Change Order Classes (PM203000) form, create a new record.
  2. In the Summary area, enter the following settings:
  • Class ID: COMMITMENT
  • Description: Change orders to commitments Notice that the Active check box is selected by default.
  1. Clear the Cost Budget and Revenue Budget check boxes, and leave the Commitments check box selected. With these settings, for the change orders with this class selected, users can make changes to only commitments without the cost and revenue budgets being affected.
  2. Save the change order class you have created.
    You have defined a change order class that can be used for creating change orders that affect project commitments.

Subcontracts: To Update a Negative Line in a Subcontract

In this activity, you will learn how you can update a negative line in a subcontract with a change order.

Story

Suppose that on 3/22/2025, the ToadGreen company hires a subcontractor, Standard Hardware Company, to perform a part of work for the hotel that is being built by ToadGreen. According to contract, Standard Hardware Company will install the watering system for the hotel and the price of performed work will be $450,000. The subcontractor agrees to provide the discount for the subcontract in the amount of $1,500. Later, because of minor scheduling issues, Standard Hardware Company has agreed to increase the discount amount to $1,600. Acting as the construction project manager, you will process all the needed documents in the system.

Configuration Overview

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

  • On the Enable/Disable Features (CS100000) form, the Construction, Cost Codes, and Change Orders features have been enabled.
  • On the Vendors (AP303000) form, the HARDCO (Standard Hardware Company) vendor has been created.
  • On the Projects (PM301000) form, the HOTEL project has been created. On the Summary tab, the Change Order Workflow check box is selected.
  • On the Stock Items (IN202500) form, the SUBCONTR non-stock item, which represents the work performed by subcontractors, has been created.

Process Overview

To record the work performed by a subcontractor for the project, you will create a subcontract document on the Subcontracts (SC301000) form. Then on the Change Orders (PM308000) form, you will create and process a change order with the negative line for this subcontract. On the Commitments (PM306000) form, you will review the resulting commitments that the system has created based on the subcontract.

System Preparation

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

  1. Sign in to the system as a construction project manager using the ewatson username and 123 password.
  2. 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 3/22/2025. If a different date is displayed, click the Business Date menu button, and select 3/22/2025 on the calendar. For simplicity, in this activity, you will create and process all documents in the system on this business date.

Step 1: Entering a Subcontract To create a subcontract, do the following:

  1. On the Subcontracts (SC301000) form, add a new record.
  2. In the Summary area, specify the following settings:
  • Vendor: HARDCO (Standard Hardware Company)
  • Date: 3/22/2025
  • Start Date: 3/22/2025
  • Description: Watering system installation for HOTEL
  1. On the Details tab, add lines with the following settings.
         Inventory ID    Project         Project Task    Cost Code       Line De-       UOM            Ext. Cost
                                                                     scription

     SUBCONTR        HOTEL           02              02-510          Watering       EA             450,000
                                                                     system

     SUBCONTR        HOTEL           02              02-510          Discount       EA             -1500
                                                                     on in-
                                                                     stalla-
                                                                     tion
  2. In the Summary area, in the Subcontract Total box, make sure that the total is 448,500.00.
  3. On the form toolbar, click Remove Hold to assign the subcontract the Open status. The system creates commitments to the project based on the subcontract lines.
  4. On the Projects (PM301000) form, open the HOTEL project and review the cost budget of the project. On the Cost Budget tab, make sure the budget line with the 02-510 cost code has appeared in the cost budget, and notice that the committed open amount for the lines equals the amount of the subcontract that you have processed ($448,500). The original committed values of the line equals the revised committed values. Step 2: Processing Changes to the Subcontract To change the project commitments by processing a change order to subcontract, while you are still viewing the Projects (PM301000) form, do the following:
  5. On the More menu (under Change Management), click Create Change Order. The system creates a change order and opens it on the Change Orders (PM308000) form.
  6. In the Summary area, specify the following settings:
  • Class: COMMITMENT
  • Description: Increasing the discount amount
  1. On the table toolbar of the Commitments tab, click Add Commitments.
  2. In the Add Commitments dialog box, which opens, select the unlabeled check box in the commitment line with the 02 project task, 02-510 cost code, SUBCONTR inventory item, and -1500 line amount; click Add Lines & Close. The system adds the selected purchase order line to the change order and closes the dialog box. Notice that the status of the added line is Update.
  3. In the added line, enter -100 in the Amount box. The system calculates the Potentially Revised Amount in the line, which is equal to -1600, as the sum of the Ext. Cost and Amount values. This is the revised amount of the subcontract line aer processing the change order will be finished.
  4. Save your changes to the change order. The Commitment Change Total in the Summary area must be equal to -$100, as shown in the following screenshot.
       Figure: Changes to project commitments
  5. On the form toolbar, click Remove Hold to assign the change order the Open status, and then click Release to release the change order.
  6. On the Subcontracts (SC301000) form, open the subcontract that you have created earlier in this activity, and on the Details tab, review the subcontract lines. Notice that the Ext. Cost of the line with the Discount on installation description is now -1,600. In the Summary area, notice that the total amount of subcontract has been adjusted and is now $448,400.00.
  7. Open the Commitments (PM306000) form. 10.In the Summary area, select HOTEL in the Project box and 02-510 in the Cost Code box. Make sure other boxes are cleared and review commitments that the system has created when you saved the subcontract with the Open status. There are two commitments:
  • The commitment with the SUBCONTR item and committed original and revised amounts of $450,000
  • The commitment with the SUBCONTR item and committed original amount of -1,500 and revised committed amount of -1,600 You have finished processing a negative commitment for the project.