Flows

Use project change orders to make changes to the work breakdown structure of an existing project.

For more information on working with work breakdown structures, refer to Work breakdown structures.

Once a project quotation is confirmed and transferred to a project, you can no longer make changes to, for example, the work breakdown structure. So, if changes are required, you can make these changes on the related project. To be able to track and manage these changes properly, you can use project change orders.

Note

You can only use project change orders on projects that are created from a project quotation. This project quotation must be created according to the Advanced project management process.

Before you can use project change orders, make sure these Advanced project management parameters are set:

• Change order forecast model - Define the forecast model for proposed project changes. If a project change order is submitted, the proposed changes are added to this forecast model. As a result, you can track submitted changes that are pending approval. On this forecast model, make sure the Use project date as invoice date check box is selected.
• Forecast model for archived changes - Define the forecast model for processed changes. If a project change order is transferred to a project, the changes are added to this forecast model. As a result, you can track the changes history of a project. On this forecast model, make sure the Use project date as invoice date check box is selected.

The Advanced project management process for project quotations is fully based on and makes use of all functions as available in Dynamics 365 for Finance and Operations.

In this process, the focus is on the Advanced project management additions to the project quotation process.

For more information on working with project quotations, refer to Generate and manage project quotations.

You can subcontract parts of a project. use subcontracts to manage this, including the scope of work that you subcontract.

In the quotation phase of a project, you can subcontract activities. However, you can only activate a subcontract if the project quotation is confirmed, and a project is created.

Use the integration journal to import a tender in Microsoft Excel format to a project quotation work breakdown structure.

In the project execution phase of a project, you can subcontract activities.

In the quotation phase of a project, you can subcontract activities. However, you can only activate a subcontract if the project quotation is confirmed, and a project is created.

In a project contracting environment, a quotation or bid typically starts with a tender Microsoft Excel format.

These tenders often have large work breakdown structures. So, it is time-consuming to manually enter this in Dynamics 365 for Finance and Operations.

Use the WBS bid import to easily create a work breakdown structure based on a tender.

On bid import, the Microsoft Excel tender is imported into the project quotation work breakdown in Dynamics 365 for Finance and Operations.

The import is done via an integration journal.

A work breakdown structure (WBS) is a description of the work to be done for a project.

It is a hierarchy of tasks that represents the composition of work, cost, and duration of each task. 

To create a WBS, you can use three types of nodes.

• Root node: Root node is the project header node. 
  This is created automatically and is shown by default after you click Advanced WBS.
  When you transfer a project quotation to a new project, the root node becomes the main project.
  When you add the project quotation to an existing project, the root node is ignored.
• Project node: In the WBS, you can have multiple sub-projects which are called project nodes.
• Activity node: Activity nodes contain the project tasks.

  • Standard - You can add tasks to lines of type Project and Standard.

  • Summary - You can add summary lines to lines of type Project.

  • Detail - You can add detail lines to lines of type Summary and Detail.

• You can use these activity types.

You can add several activities under the root node or a project node.
You can add an activity under an activity. You cannot add a project node under an activity.
For more information on working with work breakdown structures, refer to About work breakdown structures

You can apply price changes to a project change order in several ways:

• Apply price indexation to a project.
• Change the project WBS and accordingly change the related prices.

In Advanced project management, you can use several ways to define the sales price for a project quotation.

You can:

• Use the project price setup.
• Define specific prices for project quotations.
• Define specific prices for project lines in the work breakdowns structure of a project quotation.
• Define contract totals for work breakdown structure project lines of type Fixed price.

You can define the default set up for pricing priority on the Advanced project management parameters.

You can change it for each project quotation. You can also define prices during the design of the work breakdown structure.

The sales representative manages the customer interaction with regards to the project quotation.

Use project logistics to view the relation between a project and the orders that are directly or indirectly created for the project.
In an advanced discrete manufacturing environment, the supply chain planning is very important.

Product demand

Product demand can come from all levels of projects. 

The product demand must be covered in time to have it in place.

Project logistics enables master planning by project and provides material availability overview by project.

Transactions

You can use different types of transactions to cover the product demand.

You get an overview of the transactions for a selected project and a good insight into the progress of the supply chain planning of that project.

Project logistics

Project logistics gives you an overview of the selected project. All its sub-projects, activities, and related product demand lines, including BOM lines, are shown.

It also shows how these product demand lines are covered. The coverage can be a hard allocation, but it can also come from master planning (anonymous orders).

This information is shown in the Project logistics hierarchy:

• Item requirements (shown as sales orders)
• Sales orders
• Production orders
• Purchase orders
• Planned production orders
• Planned purchase orders
• Planned transfers
• Transfers
• Purchase requisition
• On hand inventory reservations

Note:
Ensure that:

• Your project has item requirements.
• You have a well-defined master plan and that is run before you use project logistics.

You can review and allocate the work breakdown structure budget by cost codes.

You can review and allocate the work breakdown structure budget by activity.

You can review and modify the bid values and bid rates, as calculated by the WBS calculation. You can, for example, compare the bid value with the calculated markup.

You can change the bid value in these ways:

• Add a contingency.
• Apply an index.
• Manually change the bid rate or bid value.

Before you can use Advanced project management, define the Advanced project management parameters.

You can use activity templates to quickly create tasks in the work breakdown structure.

For each activity template, you can define values and estimate lines that are used as default values for work breakdown structure tasks.

If you enter an activity template for a new task in the work breakdown structure, the default values of the activity template are copied to the task.

You can group activity templates to structure the activity templates and make it easier to find the proper activity template.

Set up shown below is required for bid import.

• Initialize document templates
• Set up integration parameters

In construction projects, quantities are often calculated based on specific settings. In Advanced project management, this setup is done in calculation groups.

Use calculation groups to define:

• The formulas that are used to calculate the estimate line quantities for activities in the work breakdown structure.
• The models with the default formulas for each transaction type.
• The setup that is required for progress billing: a variable that is marked as scheduled unit. For progress billing, usually, the scheduled unit variable is a percentage.
• The setup that is required for subcontracting: a variable that is marked as scheduled unit and for which the unit is defined as well. Reason: Subcontracting uses purchase orders, and on the purchase lines a unit is required.
• A cost price (expense) or sales price (expense) for a specific scheduled unit.

Use calculation groups to define:

• The formulas that are used to calculate the estimate line quantities for activities in the work breakdown structure.
• The models with the default formulas for each transaction type.
• The setup that is required for progress billing: a variable that is marked as scheduled unit. For progress billing, usually, the scheduled unit variable is a percentage.
• The setup that is required for subcontracting: a variable that is marked as scheduled unit and for which the unit is defined as well. Reason: Subcontracting uses purchase orders, and on the purchase lines a unit is required.
• A cost price (expense) or sales price (expense) for a specific scheduled unit.

In construction business, it's common to hire external persons to do (a part of) the work for you. If you hire an external worker, you purchase a service from a vendor. This service usually includes only labor.

To be able to hire subcontractor workers, in Advanced project management, specific setup is required:

• Set up the subcontractor and related workers.
• Set up the subcontractor worker cost price (hour).

You can use cost codes to budget and track cost in a project. A cost code represents a fixed activity or cost category.

You can use:

• External codes, for example, based on an external standard or list. This can be required for external reporting.
• Internal codes, for example, for reporting and analysis purposes.

A cost code is always linked to a cost code standard. To each project quotation and related projects, one cost code standard can be linked. You can do so on the project quotation work breakdown structure root node. In a project quotation and the related projects, you can only use cost codes of the linked cost code standard.

Cost code standards are, for example, provided by these organizations:

• CSI (Construction Specifications Institute).
• NAHB (National Association of Home Builders).

You can group cost codes for reporting and analysis purposes.

Set up default cost prices for hour, equipment, and expense project categories. 

To use equipment in project quotations and projects, the ‘Equipment’ transaction type is available. Define the categories for equipment in the same way as categories for hours.
Set up the equipment categories and related information to use equipment journal entries in your projects. You can set up equipment in Microsoft Dynamics 365 Asset management or in To-Increase Enterprise Asset Management solution.

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.

You can use progress billing as an alternative way to invoice a project. In progress billing, you invoice the amount of work completed so far.

Before you can use progress billing, you must set the progress billing parameters on the Advanced project management parameters.

In progress billing, you can apply retentions. You can set up and use retentions that are based on:

• Percentage of work completed
• Invoiced amounts schedule

Set up the cost prices and sales prices for project categories. Note that item cost prices are derived from setup in the Product management module.

You can set up:

• Cost prices for hours, expenses, and equipment.
• Sales prices for hours, expenses, equipment, fee, and subscriptions.

Set up default sales prices for hour, expense, equipment, fee, and subscription project categories.

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.
• Hire external persons to do (a part of) the work for you. If you hire an external worker, you purchase a service from a vendor. This service usually includes only labor.

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.

When the integration journal is published to the advanced WBS, you can change the bid values and bid rates in the advanced WBS.

You can update these changes to the integration journal to keep the bid rates and bid values intact.

In a project quotation work breakdown structure, you can set prices on several levels. For example, project quotation, task, or estimate line.

The total sales value is calculated based on the quantity times the sales price.

If the project type is:

• Time and material: sales prices have a direct consequence for the project invoicing.
• Fixed price: sales prices are shown by the on-account transactions.

In construction projects, quantities are often calculated based on specific settings.

In Advanced project management, this is done with calculation groups.

Calculation groups define:

• The formulas that are used to calculate the estimate line quantities for activities in the work breakdown structure.
• Models with the default formulas for each transaction type.
• The setup that is required for progress billing: a variable that is marked as scheduled unit. For progress billing, usually, the scheduled unit variable is a percentage.
• The setup that is required for subcontracting: a variable that is marked as scheduled unit and for which the unit is defined as well.
  Reason: subcontracting uses purchase orders. On the purchase lines, a unit is required.
• A cost price (expense) or sales price (expense) for a specific scheduled unit.

You can use cost codes to budget and track cost in a project. A cost code represents a fixed activity or cost category.

You can use:

• External codes, for example, based on an external standard or list. This can be required for external reporting.
• Internal codes, for example, for reporting and analysis purposes.

A cost code is always linked to a cost code standard. To each project quotation and related projects, one cost code standard can be linked. You can do so on the project quotation work breakdown structure root node. In a project quotation and the related projects, you can only use cost codes of the linked cost code standard.

Cost code standards are, for example, provided by these organizations:

• CSI (Construction Specifications Institute).
• NAHB (National Association of Home Builders).

You can group cost codes for reporting and analysis purposes.

You can use progress billing as an alternative way to invoice a project. In progress billing, you invoice the amount of work completed so far.

Progress bill helps to temporarily claim the revenue internally before the customer has approved the progress bill. 

As a result, a fee journal is posted, which can be reversed when required for a financial impact.

Note:

• To apply progress billing to a (sub)project, on the related project quotation WBS, the Use progress billing check box must be selected for the related WBS project line.
• Progress billing requires a scheduled unit, a forecast quantity, and a bid rate for each activity. 
• The sum of the progress amounts of all lines is the total progress amount to be invoiced.
• Only one open/active progress bill can exist per root project.

You can choose to temporarily claim the revenue internally before the customer has approved the progress bill. As a result, a fee is posted.

You can choose to only recognize the revenue on the final posting of the progress bill after the customer has approved.

You can use project inventory tracking to make sure that project-specific inventory is only used by the project to which it is assigned.

Project inventory ensures a direct relation between demand lines and coverage unlike regular master planning which is done anonymous.

To track project inventory, you use project inventory numbers on projects and tracking dimension groups on products:

• Tracking dimension group: Assign a tracking dimension group, with the project dimension active, to the products for which you want to track project inventory.
• Project inventory number: If you want to track project inventory for a project, you must assign a project inventory number to the project.

As a result, you can track project inventory for the products with a tracking dimension group for which the Project inventory number dimension is active.

If there is demand for a project, for example an item requirement, with a project inventory number defined, this demand can be fulfilled with on hand inventory:

• With the same project inventory number defined.
• Without a project inventory number defined.

BOMs

If you have project demand for a BOM product, and project inventory is tracked, the project inventory number is applied to all levels of the BOM.

However, if for a product on a BOM line no project inventory tracking is active, the project inventory number is not applied to this product, and also not to BOM levels beneath this product.

Master planning:

If you run the master plan for demand for the same product but with different project inventory numbers defined, a separate planned order is created for each project inventory number.

If you have project-specific demand, for example an item requirement with a project inventory number defined, and:

• Anonymous inventory on hand is available, master planning takes this inventory to cover the project-specific demand.
• An anonymous production order or purchase order is available, master planning does not consider these orders to cover the project-specific demand. Instead, master planning creates project-specific planned orders to cover the project-specific demand.

Split pegging:

If you have, for a project, several project-specific item requirement lines with the same item, one planned order is created for these requirements.