Project costing is an essential aspect of managing projects and finances within any business that deals with diverse tasks and projects. For Dynamics Business Central users, mastering job costing can significantly improve your ability to track project expenses and profitability accurately. This blog post provides an easy-to-follow guide on how to calculate project costing in Dynamics Business Central, ensuring you get the most out of your ERP system.
What is Project Costing?
Project costing involves calculating all costs related to a particular job or project, including labor, materials, and overhead. This is crucial for businesses in industries such as construction, consulting, and any other sector where individual projects’ costs need to be tracked separately from the overall business expenses.
Step-by-Step Guide to Calculate Project Costing in Business Central
1. Setting Up Project Cards:
The first step in project costing is to set up a Project Card for each project. In Business Central, each Project Card serves as a hub for tracking all information related to a specific project. To set up a Project Card:
Navigate to the Project module and select ‘New.’
Enter the details of the Project, including a unique job number, description, and the responsible manager.
2. Defining Resources and Costs:
Assign resources such as personnel, equipment, and materials to the job. Each resource can have associated costs, such as hourly rates for labor and per-unit costs for materials.
Go to the ‘Resources’ tab on the Project Card to assign resources and define costs.
3. Allocating Budgets:
Input estimated budgets for various aspects of the job to help monitor and control financial performance against actual expenditures.
Use the ‘Budgets’ function within the Project Card to set budgeted amounts for resources and expenses.
4. Recording Actual Costs:
As the project progresses, record the actual costs incurred. This includes time sheets for labor, material purchase orders, and any other expenses directly related to the job.
Record these costs directly in the Project Card to ensure they are allocated to the correct project.
5. Analysing Project Performance:
Business Central allows you to compare actual costs against budgeted amounts to assess the financial performance of each Project. This analysis helps identify any cost overruns or savings and provides insights into profitability.
Use the ‘Project Ledger Entries’ and ‘Job Statistics’ pages to view detailed reports on Project performance.
Utilizing Project Costing Reports
Dynamics Business Central offers various reports and insights that can help manage and review Project costing effectively:
Project Cost FactBox: Provides a summary of Project status, including total budgeted vs. actual costs.
Cost Overruns: Identifies Project where actual costs exceed budgets.
Profitability Reports: Analyses the profit margins of completed projects.
Understanding and implementing Project costing in Dynamics Business Central can significantly impact your project management’s effectiveness and profitability. By following these steps, you can ensure that every project is tracked meticulously, helping you make informed decisions about your business operations.
Should you have any questions or need further assistance with job costing in Dynamics Business Central, our support team is always available. We’re here to help you leverage Business Central to its fullest potential, ensuring that your project accounting is precise and streamlined.