Construction and project-based businesses live and die by job cost control. The finance team needs accurate work in progress and revenue recognition; project managers need to know, at any point, what has been committed and what is left in the budget. This guide covers how Dynamics 365 handles project accounting and the questions to settle before configuration.
Business Central or Finance and Supply Chain Management?
Business Central includes Projects (previously called Jobs): project tasks, budgets through planning lines, usage posting from purchases, time and inventory, invoicing, and several work in progress methods including cost value, sales value, percentage of completion and completed contract. It suits many contractors and project-based businesses.
Finance and Supply Chain Management, with project management and accounting, adds deeper budgeting and forecasting, commitments, more flexible contract structures, and suits larger organizations with complex projects across entities. Our selection guide explains the broader differences.
Project structure
- How you break down a project: phases, cost codes, tasks.
- Whether estimates are prepared in a separate estimating system and imported.
- How change orders are recorded, approved and reflected in budget and contract value.
Budgets and commitments
- Original budget, approved changes and current budget per cost code.
- Committed costs from purchase orders and subcontracts not yet invoiced.
- Forecast cost to complete, updated by project managers each period.
Commitment reporting is one of the most important views for project managers. Confirm how it will be produced in your chosen product before you go live.
Procurement and subcontractors
- Purchase orders linked to project tasks.
- Subcontract agreements, progress claims and holdbacks.
- Compliance documents such as insurance and safety certificates.
Holdback (retainage) on subcontractor and customer invoices is common in Canadian construction. Standard functionality varies, so define the exact process and test it.
Billing and revenue recognition
- Billing types: fixed price milestones, progress billing by percent complete, time and materials, unit rates.
- Holdback on customer invoices and its release.
- Work in progress calculation each month-end, with clear reports for the accountant.
Labour and equipment
- Time entry from site, with cost rates by trade.
- Equipment usage charged to jobs at internal rates.
- Union or certified payroll requirements handled through your payroll system.
Reporting
- Job cost report by cost code: budget, committed, actual, forecast, variance.
- Work in progress schedule for the finance team and lenders.
- Margin by project, client and project manager.
Next step
See how we configure Dynamics 365 for construction and projects and for engineer-to-order projects, or book a projects consultation.