1. To-Increase Dynamics 365 for Finance & Operations
  2. Advanced project management
  3. Setting up and maintaining Advanced project management
  4. Set up subcontract management

Set up subcontracting to subcontractors

In construction business, it's common to subcontract subprojects or activities to another company, which does the work you. If you subcontract a subproject or activity, you purchase a service from a vendor. This service usually includes a combination of labor, equipment, and materials.

To be able to subcontract work to another company, in Advanced project management, specific setup is required:

  • Define which vendors are subcontractors.
  • If applicable, set up subcontractor retentions.
  • Set up the pricing that applies to subcontracting.
  • Set up procurement categories that are used for subcontracting.


Project manager Project manager Start Start Set up subcontractors Set up subcontractors To set up subcontractors, you use vendors. You can create a new vendor or mark an existing vendor as subcontractor. For more information on setting up and maintaining vendors, refer to Maintaining vendor information. Procedure 1. Go to Accounts payable > Vendors > All vendors. 2. In the list, find and select the desired record. 3. Click Edit. 4. Expand the Subcontracting section. 5. Select Yes in the Subcontractor field. Notes You can review the list of subcontractors here: Project management and accounting -> Setup -> Advanced project management -> Subcontract -> Subcontractors. All vendors with the subcontract setup are automatically listed here.If you hire external workers as subcontractor workers, for each subcontractor, define the applicable Wage control ledger dimension on the Subcontractors form. This is used if a related subcontractor worker posts hours on an hour journal or timesheet. This ledger dimension replaces the standard payroll allocation. Set up subcontractor retentions Set up subcontractor retentions You can use subcontractor payment retentions to withhold an agreed upon amount from the payments for the delivered work by a subcontractor. At a later moment, if no defects are identified, the retained amount can be released and paid. To define the payment retention terms for subcontractors, the vendor payment retention terms are used. You can define these payment retention terms for vendors that are marked as subcontractor. For more information on vendor payment retention terms, refer to Manage vendor payment retention for projects. Set up subcontracting pricing

Set up pricing for subcontracts

For work that is often or usually subcontracted, you can set up the relevant subcontract pricing that is used as default pricing in the estimation of a project quotation.

 Set up subcontract procurement categories Set up subcontract procurement categories To be able to create subcontracts, a procurement category is required. The procurement category is used to create purchase order lines for subcontract lines. The procurement category is used to define the type of work a WBS line relates to. This makes it easier to find the right subcontractor for a WBS line. You can set up several procurement categories that can be used in subcontracts. To use a procurement category in subcontracts, this setup is required: In the General section, the Subcontract check box, is selected for the procurement category. In the Products section, one product of type Service is added to the procurement category. You can only add one product to a procurement category and a product can only be added to one procurement category. For more information, refer to Set up and maintain procurement category hierarchies. Procedure 1. Go to Procurement and sourcing > Procurement categories. 2. In the tree, select 'In the tree, select the category you want to set as subcontracting.'. 3. Click Edit category hierarchy. 4. Select Yes in the Subcontract field. End End Apply retentions  to subcontracts? Apply retentions  to subcontracts? Yes No

Activities

Name Responsible Description

Set up subcontractors

Project manager

To set up subcontractors, you use vendors. You can create a new vendor or mark an existing vendor as subcontractor.

For more information on setting up and maintaining vendors, refer to Maintaining vendor information.

Set up subcontractor retentions

Project manager

You can use subcontractor payment retentions to withhold an agreed upon amount from the payments for the delivered work by a subcontractor. At a later moment, if no defects are identified, the retained amount can be released and paid.

To define the payment retention terms for subcontractors, the vendor payment retention terms are used. You can define these payment retention terms for vendors that are marked as subcontractor.

For more information on vendor payment retention terms, refer to Manage vendor payment retention for projects.

Set up subcontracting pricing

Project manager

For work that is often or usually subcontracted, you can set up the relevant subcontract pricing that is used as default pricing in the estimation of a project quotation.

Set up subcontract procurement categories

Project manager

To be able to create subcontracts, a procurement category is required. The procurement category is used to create purchase order lines for subcontract lines. The procurement category is used to define the type of work a WBS line relates to. This makes it easier to find the right subcontractor for a WBS line.

You can set up several procurement categories that can be used in subcontracts. To use a procurement category in subcontracts, this setup is required:

  • In the General section, the Subcontract check box, is selected for the procurement category.
  • In the Products section, one product of type Service is added to the procurement category. You can only add one product to a procurement category and a product can only be added to one procurement category.

For more information, refer to Set up and maintain procurement category hierarchies.

Set up subcontracting pricing

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