Microsoft Dynamics 365 | Construction in Progress in Business Central (Demo)

I want to show you how you can easily track construction and progress in Business Central and then move that to fixed assets. The scenario is that my organization is building a new warehouse for our own use. We’re going to be the general contractor on this and we’re going to hire a number of subcontractors, along with a construction manager to ensure the project’s completion. So what I’m going to do is utilize the job cost function in Business Central to set up a project, establish a budget, manage the project with purchase orders against that job, record the cost of construction on the purchase orders, and finally, close the job and transition the expenses to fixed assets.

Setting Up the Construction Project

This is the job I’ve created to manage my construction project. The customer name is my organization, and it’s designated as an internal project. I’ve established a budget for it, along with a detailed work breakdown structure. The total budget for this project amounts to $1,853,000, distributed across various budget lines, all designated to be charged to the “Construction in Progress” GL account. This allocation will be tracked through the general ledger and eventually sent to the job cost system before being transferred to fixed assets.

Handling Purchase Orders

To manage this project effectively, I’ve created purchase orders linked to it. These purchase orders are categorized by responsibility center, allowing for easy tracking. Each purchase order contains lines allocated to the “Construction in Progress” GL account. These lines are associated with specific job numbers and tasks derived from the work breakdown structure. They are classified as billable line types. Another way to view this data is through the “Analyze” function in Business Central, which shows the actual amounts associated with the purchase orders issued.

Monitoring Project Progress

To assess the progress of this project, I’ve utilized reporting tools. The project’s budgets are well-defined, and I’ve also reviewed the purchase orders issued. In due course, I’ll proceed with invoicing these purchase orders and examine the actual costs incurred for this specific project.

Closing the Project

As the project nears its end, I’ll conduct a review of the actual costs against the budget. This evaluation may reveal variances, which have been managed appropriately. Once satisfied with the project’s status, I’ll proceed to close it out.

Transitioning to Fixed Assets

In the job, I’ll calculate the work in process (WIP) to ensure accurate accounting. Upon calculating the WIP, I’ll proceed with the final posting of these WIP adjustments to the general ledger. The project is then marked as completed. To finalize this process, I’ll transition the accumulated costs from “Construction in Progress” to fixed assets.

Adding a New Fixed Asset

Within my existing fixed assets, I will manually add a new asset with a planned lifespan of 30 years. I’ve provided the essential information for this new fixed asset and initiated the acquisition process. Currently, the cost of the new warehouse resides in the “Construction in Progress” account. I’ll transfer it to the fixed asset accounts by posting the necessary journal entries. This effectively completes the transition.

In summary, I’ve demonstrated how to efficiently manage construction progress within Business Central, starting with project setup, purchase order management, progress monitoring, job closure, and the eventual transition of costs to fixed assets.