Back to V300: Project Accounting for Construction

Lesson 7: Tracking Project-Specific Inventory

Part 1: Project Commitments

This lesson describes how to configure inventory tracking to make it possible to reserve items purchased for a

project and track them separately from free stock.

Project Inventory Tracking: General Information

In Acumatica ERP, you can configure the project inventory (that is, the inventory items to be used for a particular project) so that all items purchased and sold for the project will be separated from other inventory and reserved for the project in the warehouse. This helps you to accurately capture inventory expenses and revenues related to the project inventory in a project budget. This also helps you to avoid any delays associated with items not being available when they are needed for the project.

Learning Objectives

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

Configure a project inventory
Process documents with stock items related to projects
Review project and GL transactions generated during the processing of sales and purchases of items

Applicable Scenarios

You configure the project inventory of particular projects if you are using stock items in these projects and want to track detailed information about the inventory to be used for these projects, as well as to be able to perform the following operations:

Manage the flow of stock items related to projects
Reserve items for particular projects in one warehouse or multiple warehouses
Track project-specific quantities for stock items, to prevent these items from being used for non-project purposes
Use valuated costing for project-specific stock items to issue and receive project items at accurate costs that are not aﬀected by the costs of non-project items

Configuration of Inventory Tracking in Projects

If you have enabled the Inventory and Order Management and Inventory features on the Enable/Disable Features (CS100000) form and are using the related functionality, you can use the enhanced integration of projects with inventory by enabling the Project-Specific Inventory feature. Once you have enabled the feature, you configure the applicable projects to use the needed inventory tracking mode. For each project, you select one of the following modes in the Inventory Tracking box on the Summary tab of the Projects (PM301000) form:

Track by Project Quantity and Cost: To track the quantity and project-specific cost of the stock items reserved for the project.
Track by Project Quantity: To track the project-specific quantity of the purchased items that are reserved for the project. In this mode, the system tracks the item cost by general cost calculation rules (that is, the cost is not project-specific). One cost layer holds the item costs recorded for the same inventory item with the same project budget key but received to diﬀerent locations of the same warehouse.
Track by Location: To track the quantity and cost of the purchased materials at the warehouse location level. For more information about using this mode, see Purchase of Materials and Services: Inventory Tracking by Warehouse Location. In an existing project, you can change the inventory tracking mode only if no items have been received for the project yet.

Inventory Tracking in Projects

For a project in which the Track by Project Quantity or Track by Project Quantity and Cost inventory tracking mode is selected in the Inventory Tracking box of the Projects (PM301000) form, you create and process documents with stock items as follows:

To purchase stock items for the project, you create a purchase order on the Purchase Orders (PO301000) form, selecting the project and project task for each item. The expenses are captured to the project cost budget as a project commitment.
To receive items in a warehouse, you process a purchase receipt on the Purchase Receipts (PO302000) form. To separate the project items from free stock, the system automatically creates a virtual project-specific location within the warehouse location where the materials are received. The purchased materials are reserved for the project and cannot be issued for another project.

To issue the materials for the customer, you process an inventory issue for the project on the Issues (IN302000) form. The quantity available for issuing is defined by the warehouse location, the project, and the project task.

               If the Allow Issue from Free Stock check box is selected in the project settings on the Projects
               form, you can also issue materials that are not reserved for the project from free stock.

To transfer leover materials from the project stock to free stock, you create an inventory transfer on the Transfer Project Inventory to Free Stock (PM508000) mass-processing form. For more information, see Project Inventory Tracking: Mass Processing.

Tracking Item Costs

In a project with the Track by Location or Track by Project Quantity mode selected in the Inventory Tracking box of the Projects (PM301000) form, the cost of the issued materials is not project-specific and is defined by general cost calculation rules. The cost of an 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. In a project with the Track by Project Quantity and Cost mode selected, the system tracks project-specific cost. That is, for each combination of project and project task, the system calculates the cost of each item depending on 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, if applicable.

Project Inventory Tracking: To Track Project Inventory by Quantity and Cost

The following activity will walk you through the process of tracking the costs and quantities of the items being used for a project.

Story

Suppose that the ToadGreen Building Group company is building a hotel for the Equity Group Investors customer. A ToadGreen project manager has created a project to track the progress of work, expenses, and revenues. The project work began in mid-February, 2025. To plan the purchases of items and be sure that there will be enough materials to proceed, the project manager needs to reserve stock items for this particular project. Also, because of regulatory requirements, the materials used for work must be issued at the exact cost at which they have been purchased. On January 30, 2025, the project manager purchased 360 pallets of bricks and 480 concrete blocks and requested that the items be delivered to the company's warehouse. Later, a project architect revised the blueprints and found out that the initial estimation of materials was insuﬀicient. As a result, the project manager decided to buy 120 pallets of bricks and 80 concrete blocks in addition to the previous purchase. To speed up the process, the construction project manager decided to purchase the materials from another vendor, who agreed to deliver the materials in two days but at a higher price. Then some of the purchased materials were shipped to the project site. Acting as a construction project manager, you will process a purchase of items for the project. Then you will issue the quantity of the purchased items that were shipped to the project site, and review the cost of the project items.

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 and Construction, which provides support for construction projects
Inventory and Order Management, which provides the sales order and purchase order functionality
Inventory, which provides the stock item functionality
On the Customers (AP303000) form, the EQUGRP customer has been created.
On the Stock Items (IN202500) form, the CONCRBK8 and REDBRICK stock items have been defined.
On the Vendors (AP303000) form, the CONCRESUP and STONEC vendors have been created.
On the Projects (PM301000) form, the HOTELR project has been created and activated. In the project, Track by Project Quantity and Cost is selected as the inventory tracking mode.

Process Overview

On the Purchase Orders (PO301000) form, you will create two purchase orders with lines related to the project. You will receive the purchased items to a company's warehouse by processing purchase receipts on the Purchase Receipts (PO302000) form. Then you will process an inventory issue transaction on the Issues (IN302000) form to record that a partial quantity of the materials has been used for the project.

System Preparation

Before you start creating a project and processing a purchase, do the following:

Launch the Acumatica ERP website, and sign in as a construction project manager. You should sign in by using the ewatson 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 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: Purchasing Project Inventory To create and process purchase orders 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: CONCRESUP
Project: HOTELR
Description: Purchase of project materials (masonry)
Date: 1/30/2025

On the Details tab, add a purchase order line, and specify the following settings in the added line:

Inventory ID: REDBRICK
Warehouse: TGCONSTR (inserted automatically)
Order Qty.: 360
Unit Cost: 75
Project: HOTELR (inserted automatically)
Project Task: 04
Cost Code: 04-210

Add one more purchase order line, and specify the following settings in the added line:

Inventory ID: CONCRBK8
Warehouse: TGCONSTR (inserted automatically)
Order Qty.: 480
Unit Cost: 180
Project: HOTELR (inserted automatically)
Project Task: 04
Cost Code: 04-220

On the form toolbar, click Remove Hold. Then click Enter PO Receipt. The Purchase Receipts (PO302000) form opens with the purchase receipt.
On the form toolbar of the Purchase Receipts (PO302000) form, click Release.
Set the business date to 2/15/2025.
On the Purchase Orders form, create one more purchase order, and specify the following settings in the Summary area:

Vendor: STONEC
Description: Purchase of project materials (masonry)
Project: HOTELR
Date: 2/15/2025

On the Details tab, add a purchase order line, and specify the following settings in the added line:

Inventory ID: REDBRICK
Warehouse: TGCONSTR (inserted automatically)
Order Qty.: 120
Unit Cost: 85
Project: HOTELR (inserted automatically)
Project Task: 04
Cost Code: 04-210 10.Add one more purchase order line, and specify the following settings in the added line:
Inventory ID: CONCRBK8
Warehouse: TGCONSTR (inserted automatically)
Order Qty.: 80
Unit Cost: 195
Project: HOTELR (inserted automatically)
Project Task: 04
Cost Code: 04-220 11.On the form toolbar, click Remove Hold. Then click Enter PO Receipt. The Purchase Receipts form opens with the purchase receipt. 12.On the form toolbar of the Purchase Receipts (PO302000) form, click Release.

Step 2: Issuing Stock Items for the Project To directly issue stock items for the project (to record that some of the materials have been delivered to the project site) and capture the issued cost to the project, do the following:

Open the Issues (IN302000) form.
On the form toolbar, click Add New Record, and in the Summary area, type Materials issued at project site in the Description box.
On the table toolbar of the Details tab, click Add Row, and in the row, specify the following settings:

Tran. Type: Issue
Inventory ID: REDBRICK
Warehouse: TGCONSTR (inserted automatically)
Location: R01
Quantity: 160
Unit Price: 75
Reason Code: INISSUEPROJ
Inventory Source: Project Stock
Project: HOTELR
Project Task: 04
Cost Code: 04-210

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

Tran. Type: Issue
Inventory ID: CONCRBK8
Warehouse: TGCONSTR (inserted automatically)
Location: R01
Quantity: 200
Unit Price: 180
Reason Code: INISSUEPROJ
Inventory Source: Project Stock
Project: HOTELR
Project Task: 04
Cost Code: 04-220

Save the inventory issue transaction. In the table footer, notice that the system shows the quantities of the items that are currently available for the project.
On the form toolbar, click Release to release the inventory issue transaction.
Open the Project Transaction Details (PM401000) form.
In the Summary area, specify HOTELR as the Project and 04 as the Project Task. Find and review the lines in the table, which are the project transactions that have been generated on release of the inventory issue. The amount of the line with the REDBRICK item is $12,400. The amount of the line with the CONCRBK8 item is $36,428.57. The generated project transactions have debited the MATERIAL account group.
On the Projects (PM301000) form, open the HOTELR project. 10.On the Cost Budget tab, make sure that new lines with the 04-210 and 04-220 cost codes have been added to the cost budget. The actual values in these lines have been specified based on the amounts of the project transaction lines.
You have issued a partial quantity of the stock for a project and recorded expenses.

Project Inventory Tracking: Generated Transactions

The following sections describe the GL transactions and project transactions that are generated for sales and purchases of stock items and non-stock items requiring receipt for projects.

          For the list of transactions that are generated for non-stock items not requiring receipt that are being
          purchased for projects, see Purchasing Services for Projects: Generated Transactions.

GL Transactions Generated on Release of an Inventory Receipt

On release of a project-related purchase receipt with a stock item, the corresponding inventory receipt is created. When the inventory receipt is released, the system creates the following batch of general ledger transaction.

Account                      Source of Account     Project                Debit                  Credit

Inventory account            Posting class of      X (non-project         Received amount        0.00
                             the item              code)                  (quantity * item
                                                                          price)

PO accrual account           Posting class of      X (non-project         0.00                   Received amount
                             the item              code)                                         (quantity * item
                                                                                                 price)

On release of a project-related purchase receipt with a non-stock item requiring receipt, the corresponding inventory receipt is created. When the inventory receipt is released, the system creates the following batch of general ledger transaction.

Account                      Source of Account     Project Budget         Debit                 Credit
                                                   Key

Expense account              Inventory item        Project, project       Received amount       0.00
                                                   task, and cost code    (quantity * item
                                                   in the inventory re-   price)
                                                   ceipt line

Inventory account            Inventory item        X (non-project         0.00                  Received amount
                                                   code)                                        (quantity * item
                                                                                                price)

On the Financial tab of the Receipts (IN301000) form, you can click the link in the Batch Nbr. box to view the details of the general ledger transaction on the Journal Transactions (GL301000) form.

Project Transaction Generated on Release of the Inventory Receipt

On release of the general ledger transaction which was created on release of the inventory receipt with a stock item, the system generates no project transaction. On release of the general ledger transaction which was created on release of the inventory receipt with a non-stock item requiring receipt, the system generates the following project transaction.

Project Budget Key                  Account Group              Debit Account                 Amount

Project, project task, inventory    Account group mapped       Expense account of the        Amount
item, and cost code in inventory    to the Expense account     item
receipt line                        of the item

You can review the created project transaction on the Project Transaction Details (PM401000) form. In the Selection area of this form, you select the project in the Project box.

GL Transactions Generated on Release of an Inventory Issue

On release of an inventory issue with a stock item issued for a project, the system generates a batch of general ledger transactions.

Account                      Source of Account     Project Budget         Debit                 Credit
                                                   Key

PO Accrual account           Posting class of      X (non-project         0.00                  Issued amount
                             the item              code)                                        (quantity * item
                                                                                                cost)

Expense account              Reason code in the    Project, project       Issued amount         0.00
                             inventory issue       task, and cost code    (quantity * item
                             line                  in the inventory is-   cost)
                                                   sue line

You can view the reference number of the GL batch in the Batch Nbr. box on the Financial tab of the Issues (IN302000) form. You can click the link in this box to view the details of the batch on the Journal Transactions (GL301000) form.

Project Transaction Generated on Release of the Inventory Issue

On release of the general ledger transaction created on release of the inventory issue with a stock item for project, the system generates the following project transaction that updates the project's actual amounts:

Project Budget Key                  Account Group               Debit Account               Amount

Project, project task, inventory    Account group mapped        COGS account of the         Amount
item, and cost code in inventory    to the GOGS account         item
issue line

You can review the created project transaction on the Project Transaction Details (PM401000) form. In the Selection area of this form, you select the project in the Project box. Part 2: Project Billing and Retainage | 59