Is there any way to create a sales agreement for a Project in Project Management and Accounting module?
I need a sales agreement for a Fixed Price Project which will specify all details such as project name, project amount, duration of the project, payment terms, etc. Once this is done, I need this information linked to my project.
I tried Sales agreement form under item requirement in manage tab but it is not working. I think it is specific to any sales order that you create for a project.
You can’t create sales order or sales agreement for fixed-price projects. As you might have observed, the systems throws warning ‘Project type Fixed-price does not allow recording in this project.’ when you attempt to do so.
All these details we normally specify in the Project contract form. For example project amount, specify this in On-account transactions form which is basically a milestone/contract value for the project. Specify the payment terms etc in Funding source details of the project contract form. This will have link to the projects and vice-versa.
Duration of the project you can specify on the project’s Scheduling and resource assignments tab.
Yes, you are right. It is for the sales orders which are specific to the project only.
I am creating an outsourcing project where I am sending 4 of my consultants to some other company. Agreed project contract is Rs. 4,00,000 per consultant per month…for as long as the project goes. I have paying these 4 consultants @ Rs. 80,000 per month. If any consultant takes leave during this period that it would be deducted from his salary - both, what I am paying to my consultant and what client is paying me for consultant. Apart from this, I am also paying my consultant Rs. 5,000 per month as allowances.
My question here are
It’s a fixed price project…right?
how do I treat monthly payment that I receive from the client…should I treat it as milestone amounting to Rs 4,00,000 per month.
The salary that I am paying to my consultant should be treated as EXPENSE in the project…right?
In case of leave, salary will be deducted from both sides,how will this effect the milestone.
I am new to project management and learning it on my own. Please advice.
This agreed project contract RS 4,00,000 per consultant is actually the Sales price of the consultant not the contract value of your project if i understand it correctly. Suppose if your customer says that whatever be the consultant work period against the project the whole billing amount is fixed, say 10,00, 000 then this becomes your contract value for the project and the project type is fixed-price. But you specify that this billing happen as long as project goes and work on the project progresses. That means you don’t have the fixed set of contract value for the project and you are matching up costs and revenues here. So I believe this is a time & material project. Correct me if i am wrong.
So the amount (RS 80,000 + RS 5,000)/No. of working hours per month calendar becomes your cost price of the consultant per hour. You can define the cost price for the consultant against the project and whenever that consultant enters the timesheet/hours spent on the project this price will be considered against that project.
It’s a fixed price project…right?
This looks to me t&m scenario. Need more inputs to understand the same.
how do I treat monthly payment that I receive from the client…should I treat it as milestone amounting to Rs 4,00,000 per month.
Its basically an invoice for the work hours spent by the consultant in a month. You can directly bill the customer for the same agreed upon as per contract without keeping any milestones.
The salary that I am paying to my consultant should be treated as EXPENSE in the project…right?
Its a project expenditure. Basically Hours transaction. You can even consider it as an Expense based on your feasibility.
In case of leave, salary will be deducted from both sides,how will this effect the milestone.
We don’t have the privilege if you declare it as milestone but if it is an invoice based on no. of hours spent then the amount is calculated based on the sales price*work that is performed by the consultant.
If you provide more inputs on this, i can suggest the best possible billing type you can choose for. I also think of Progress billing scenario here, but let me have inputs from you before i conclude.
Mentioned below is the whole scenario. Please let me know if you need any further information.
My company is into staff augmentation i.e. we supply our AX consultants to outside companies based on certain agreement. My job is to create and maintain all the details mentioned in the agreement in AX by creating a project in project management & accounting module. I will also have to track revenue generated per month and cost incurred on the projects.
The agreement between customer and my company is that we will supply 4 consultants on following conditions.
Per month billing per consultant = USD 1,00,000 ( so for 4 consultant, it is USD 4,00,000 per month)
The client will pay us this USD 4,00,000 per month as long as the project goes.
Each consultant will be entitled for 1 day paid holiday. If the consultant takes more than 1 day off, then the client will deduct it from the monthly invoice (ex - if there are 22 working days in a month and the consultant takes 2 days off then the client will pay only for 21 days as 1 day is paid and other will be LOP)
The above agreement tells us what the client will pay me i.e. Revenue to my company. Mentioned below is what my company will pay to the consultants i.e. cost to my company.
Consultant A - Rs. 1,20,000 per month
USD 15,000 per month as allowance (as the consultants are working at client place, it is there monthly allowance
Consultant B - Rs. 1,00,000 per month
USD 15,000 per month as allowance (as the consultants are working at client place, it is there monthly allowance
Consultant C - Rs. 1,60,000 per month
USD 15,000 per month as allowance (as the consultants are working at client place, it is there monthly allowance
Consultant D - Rs. 80,000 per month
USD 15,000 per month as allowance (as the consultants are working at client place, it is there monthly allowance
Also, Consultant A and Consultant B, both took 1 more days off apart from the 1 paid holiday. So client will deduct USD 5,000 each for both the consultants. Thus Payment made for one month is USD 3,90,000.
Also, my company paid them less because of this and they were paid Rs. 1,10,000 and Rs. 90,000 respectively.
What I want to know here is
Where do I enter the agreement details that I have with the customer
What kind of project should I treat this
How and where should I track my companies revenue and cost. (I mean journals here)
Assuming that the project goes on for 3 months - February to April - and above mentioned 2 consultants took leave in March and for which I received less payment and also I made less payment to them. Can you please elaborate the process.
I understood your business scenario. The perfect fit for your requirement is Time and material rule.
You can follow the below process.
Create a project contract (which binds the agreement between your company and customer) with Invoice frequency= Monthly and define the funding source details like Terms of payment etc which i specified in my previous comment.
Define the Cost price & Sales price for this project contract as per your agreement for the consultants. Remember this is the Hourly rate so break the amounts you specified above into amount/hour and define here.
For example: Your company pays $15000 to Consultant-A. Considering 21 working days in your calendar month and 8 hours each for a calendar day, the cost price would be around $89.2857 per hour. Set the Cost price - Hour= $89.2857 for your contract.
Similarly the customer agreed to pay $100,000 per month for Consultant-A. Considering your work calendar, the sales price would be around $595.238. Set the Sales price - Hour= $595.238 for your contract.
Now create a project (T&M) and define the Start date, End date and resource assignments of your project in the Scheduling and resource assignments tab like i said earlier. Attach your work calendar here to this project same as that of employee.
Define a billing rule of type: Time and Material and Include your project & chargeable categories (Consulting hours) for your project. So if employee records other than this category the transaction will not be considered for customer invoicing.
Your consultants will submit the timesheet as they work on the project and the prices we have set will be picked up automatically from the system. So considering your worker is on leave for 1 day and worked for 20 days. The cost amounts and sales amounts of the project is automatically calculated based on no. of hours consultant entered for whole month. In our example cost per month= 820$89.2857 and revenue per month= 820$595.238 calculated automatically.
At the end of month you can generate the invoice and bill to the customer. You can track the project cost and revenues using project statements.
I am not going into Payroll module to give you details on pay statement and all as that is again different process but this you can follow or project tracking and invoicing. Now direct answers to your questions:
Where do I enter the agreement details that I have with the customer.
Ans: Project contract and Billing rules form
What kind of project should I treat this
Ans: This is the time & material project as you bill the customer as the work progresses. Your cost and revenues are in sync.
How and where should I track my companies revenue and cost. (I mean journals here)
Ans: You can use Hour journal or Time-sheet for recording no. of hours employee spent on the consultation. You can track the cost and revenues in the Project statements.
Assuming that the project goes on for 3 months - February to April - and above mentioned 2 consultants took leave in March and for which I received less payment and also I made less payment to them.
Ans: Refer to above calculations on how it can be mapped.
In Billing rules, Under project tab, when I select the project and click on Chargeable categories, I don’t see any available categories there. I have created a project category but still don’t see it. Where do you setup these chargeable categories?
In your response above (point 2), you mentioned breaking up cost and revenue into per hour and than add it. Where do you add these per hour charges…In project contract Cost Price & Sales Price tab OR enter it as Hour journal in Project form.
Lets say, I am paying $ 15,000 as allowance to the consultant per month as he is at the client’s place. And apart from this, I am also paying him his per month salary of Rs 1,20,000 which is additional to above mentioned $ 15,000. In this case, how do I treat this.
Couple of links to guide you through step by step creation of billing rules and project invoicing.