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Posts Tagged ‘Oracle Primavera P6 Enterprise Project Portfolio Management’

Are you part of a non-traditional Professional Services Organization and feeling the staffing data-burden?

Then you are probably experiencing the common demand around deploying groups of staffing managers to manage these applications, yet with limited budgets and the same needs to manage resource supply and demand in order for your organization to stay effective and profitable.

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Project Partners, Oracle Platinum Partner, and global leader in optimizing business processes and IT investments within project-driven organizations.

 

 

Part 2 of 2
LEVERAGING ORACLE PROJECTS TO MANAGE PERFORMANCE BASED REVENUE

As stated previously, the core principle in the new Standard requires that an entity recognize revenue to depict the transfer of goods or services to a customer in an amount that reflects the consideration given in exchange for those goods or services.

Impact to Balance Sheet and Income Statement

When a contract is signed, an asset and a liability are created for the total amount of goods and services promised to the customer.

Upon fulfillment of an identifiable performance obligation (commonly referred to as a “deliverable”), the liability is reduced, and revenue is recognized when that performance obligation is satisfied and accepted by the customer.

When payment is received for the goods and services provided, the asset is reduced.

This new methodology differs from the previous generally accepted practice of recognizing revenue when the customer is billed, and a receivable is created.  No longer will a company track unbilled revenue streams.  Oracle Projects provides the ability to configure your projects to meet the requirements of Step 5 of the new ASC 606 guideline with standard functionality.

Step 5 of the Standard requires a two-step approach.   Using Oracle Projects, work is performed, and delivery is recorded.  Then, a process to Generate Draft Revenue for the projects is run to complete the recognition process.

The following is an example of how your company can leverage Oracle Projects to meet ASC 606 compliance.

Service Contracts based on selling hours (T&E)

  • Work Based Revenue Recognition
    • Standard Oracle functionality of Time & Expense Billing
    • Set up project and billing information

  • Identify the Performance Obligations and set up as Budget Lines for the contracted number of hours

  • Delivery Team Charges Time & Expenses to the Project

  1. Revenue based on hours charged
  2. Acceptance of work performed implicit when customer signs timecard
  3. Invoicing takes place when the timecard is approved. This process can precede the actual recognition of revenue as the performance obligation is not yet complete.
  4. As each phase of the project is finished, revenue is recognized.

Run the Generate Draft Revenue Process for your projects to recognize revenue

Perform Work and Record Delivery

  • T&M Service Contracts based on specific Deliverables
  • Fixed Price Service Contracts based on Milestones
    • Mark Deliverable as Complete. Mark Billing Action as Complete

Run the Generate Draft Revenue Process for your projects to recognize revenue:

T&M/Fixed Price Service Contracts

  • A Fixed Price Service Contract requires the use of Billing Events generated from deliverables to generate revenue.
  • Invoicing can be generated per the terms of the contract; however, revenue cannot be recognized until the performance obligation has been met.

Unit Price Based Contracts

Oracle Planning and Control offers the ability to utilize a structure called Schedule of Values (“SOV”).  The SOV allocates value for various parts of the work from a contractual agreement.  The SOV schedule is also used as the basis for monitoring progress, tracking deliverables, and submitting and reviewing payment certificates for billing the client.  The user can either enter a contract in Oracle Project Contracts, or directly enter one.  Once a project is created, it can be updated from Oracle Project Contracts or directly entered in Oracle Planning and Control.

  • Enter Progress and record quantity completed for each SOV Task
  • In this case, a task has been set up for each performance obligation under the contract. As the task is completed and accepted, revenue can be taken

  • Billing Events are generated from Schedule Of Values progress and are used to generate revenue

Recent Enhancements to Support ASC 606

Oracle has been supporting organizations implementing these changes in their business to accommodate the new Standard.  To aid in the implementation and management of project revenue according to the new accounting standards, new consolidated patch sets to Oracle Projects have been released.

For companies using Oracle EBS Projects Suite Release 12.1.3 and above and Release 12.2.7 and above, Oracle has issued a patch set specific to each release to support management of project revenue according to ASC 606.

Below you will find screen shots of some of the new standard functionality available with these changes, recently published by Oracle.  As you can see, Oracle Projects addresses set up, tracking and revenue recognition via the use of a new Structure for Performance Obligations.

The new processes allow for the user to enable the use of Performance Obligation, create said obligations, publish and track progress against the performance obligation and generate revenue in accordance with the new standards.

As you can see Oracle Projects provides the ability to configure your projects to meet the requirements of the new ASC 606 guideline with standard functionality.

Oracle Licensing Requirements

  • Project Costing and Billing are required for all features discussed in this paper
  • Project Planning and Control (formerly known as Project Management) must be implemented to leverage Deliverable functionality
  • Schedule of Values functions are available in Oracle Project Planning and Control release 12.2.5
  • Application of Patch sets as described in this paper to take advantage of the ability to record and track Performance Obligations

CONTRACT MODIFICATIONS

Contract modifications, commonly referred to as change orders or amendments, occur when the price or scope of a contract is changed.  Depending on the circumstances, these changes are accounted for either as a modification to an existing contract, or as a separate contract.  Proper accounting treatment for modifications differs based upon this determination.

There are three steps to determine the proper treatment for a contract modification.

Determine Whether the Change Qualifies as a Contract Modification – A contract modification is any change to an enforceable rights and obligations of the parties to the original contract.  The Standards defines this as a change in scope and/or price of the original contract.  It does not need to be written, it can also be oral or implied through customary business practices.  Once an entity determines that a change is indeed a contract modification, it determines whether to account for it as a change to the original contract or as a separate contract.

Determine Whether the Modification is a Separate Contract – To determine that a modification is a separate contract, these two criteria must be met.

  1. The scope of the contract has increased with the addition of distinct goods or services, and
  2. The price of the contract increased by an amount comparable to the entities standalone selling price of the additional goods or services. (Selling price less ordinary selling costs)

Determine the Proper Accounting Treatment for Contract Modifications – If a contract modification is considered a separate contract, no changes to the existing revenue on the original contract are required.  The new contract is recognized as the performance obligations in the new, separate contract are met.  However, if the contract modification is not considered separate, then the modification is combined with the original contract.  There are two methods defined in the Standard for proper revenue recognition of a combined contract modification.

  • Prospective Treatment

If the remaining goods/services are distinct from those of the original contract and do not meet the criteria for a separate contract, the entity treats the original contract as terminated and accounts for both the original contract and modifications together as a newly created contract (ASC 606-10-25-13).

Revenue already recognized on the original contract is not adjusted.  All remaining transactions are accounted for on a prospective basis.

  • Cumulative Catch-up Adjustment

If the remaining goods/services are not distinct, the entity combines the increase or decrease of goods or services with the original contract’s promised goods/services to create a single performance obligation that is partially completed at the date of the modification.  The entity must adjust previously recognized revenue to reflect the changes of the modification to the transaction price.

USING ORACLE PROJECTS TO MEET THE OBJECTIVES OF CONTRACT MODIFICATIONS AS DEFINED
IN ASC 606

Begin by increasing the amount of the Agreement on the project, then adding an additional funding line for the increased contract amount to the project tasks.

If the contract modification is Prospective, the Date Allocated should reflect the date from which revenue recognition will occur.

Create a Revenue Event using the new Date Allocated and run revenue generation processes.  The new revenue amount will begin as of the new date as indicated.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

If the contract modification is cumulative, the Additional funding should be entered with the original Allocated Date.  When a new Revenue Event is created, use an event date that is retroactive to the original date.

 

The new revenue will “catch-up” in the currently open accounting period upon generation.

 

 

 

Project Partners Oracle Primavera P6 EPPM

Implementation Services

Making Your Cloud Vision a Reality.


Through implementation, customization, and integration Project Partners’ Oracle Primavera P6 EPPM experts provide clients with a comprehensive, real-time view of their portfolio, enabling a deep understanding of all projects within an organization anywhere in the world.

Oracle Primavera P6 Enterprise Project Portfolio Management (EPPM) is the most powerful, robust, and easy-to-use solution for globally prioritizing, planning, managing, and executing projects, programs, and portfolios in asset-intensive industries. P6 EPPM solution enables project driven organizations to intelligently manage their programs and projects—from small and simple to large and complex.

Are You Using The Latest And Greatest P6 EPPM Versions?

P6 EPPM cloud version  provides easy access to enhanced features that make it an excellent tool for project centric organizations to meet complex Project Portfolio Management requirements. In addition, it provides comprehensive business and industry solutions based on leading practices enabling  increased productivity, accelerating business performance and providing a lower cost of ownership across the organization.

Ready to Move to the Cloud?

Oracle Primavera P6 EPPM is Ready for You.

We provide expert cloud migration services to integrate P6 EPPM with your finance and asset management systems, providing a consolidated view of the  enterprise project portfolio for an accurate, up-to-date view of projects, people and financial performance.

With Project Partners comprehensive approach to implementation, we can quickly and easily – WITHIN 4-6 WEEKS – provide a full assessment, and develop your migration path to make your Cloud Vision a Reality.

 LEARN  MORE ABOUT OUR ASSESSMENT OFFER AND
CLICK HERE NOW TO GET STARTED

www.projectp.com | Phone: +1.650.712.6200

MULTIPLE, LARGE, & COMPLEX PROJECTS CAN LEAD TO MANY CHALLENGES FOR YOUR ORGANIZATION, HINDERING ITS GROWTH.

Growing rapidly and searching to improve operational efficiencies that will allow you to take on more business?

PROJECT PARTNERS ORACLE PRIMAVERA UNIFIER CONSULTING SERVICES

 We have helped many of our customers by providing their organizations a best-in-class cloud-based solution that enables governance across all project phases, from planning and building to operations and maintenance, and seamlessly manages capital projects and facilities of any size, in every vertical market across the globe.

OUR PROVEN STRENGTH.

We are a Primavera Authorized Reseller and are considered by our customers as one of the best in “Unifying“, integrating and tying your data together, even if your organization is running outside of the Oracle footprint.

CHECK OUT OUR SOLUTIONS FEATURES/BENEFITS DEMO

REQUEST A UNIFIER SOLUTION DEMO NOW

 

Project Partners solution experts will help your team assess, innovate, transform, and lead your business with our Primavera Unifier Services.

Experience a whole New Level of Visibility into Progress & Performance of Projects.

Connect With us Today – Schedule a Consultation:
Phone: #1.650.712.6203   Email: cfryc@projectp.com

_________________________________________________________________________________________________________

 Project Partners Blog Author: Donna Dignam | Principal Functional Consultant 
____________________________________________________________________________________________________________________

In April 2015, FASB (Financial Accounting Standards Board) issued ASU (Accounting Standards Update) 2015-05 to assist entities to determine when a customer in a cloud computing arrangement “CCA” (i.e. hosting arrangement) included a software license.

If a CCA includes a license to internal use software, the software license is accounted for by the customer as an intangible asset.  Basically, the intangible asset is recognized for the software license, and the payments or said license made over time are recognized as a liability.  If no software license is included in the contract, the company should account for the arrangement as a service contract, and the fees associated with the hosting service of the arrangement are expensed as incurred.

The Update did not give any guidance regarding the implementation costs for activities performed in a cloud computing arrangement as a service contract.  Since the FASB guidance in this area was not explicit, the Board decided to issue an Update to specifically address the resulting diversity in practice.

Who Is Affected by ASU 2018-154?

These Amendments on the accounting for implementation, setup and other upfront costs (commonly referred to as implementation costs) apply to entities that are a customer in a hosting arrangement that is a service contract.  Oracle Cloud computing arrangements where a license is sold to the customer along with a hosting arrangement with Oracle Cloud would be one such customer.

Main Provisions of ASU 20184

The Update’s intent is to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software and hosting arrangements that include an internal-use software license.  The current accounting for the service element of a hosting arrangement is not affected.

It is up to the company to determine which implementation costs to capitalize as an asset related to the service contract and which to expense.  Costs to develop or obtain internal use software that could not be capitalized under Subtopic 350-40, such as training costs and certain data conversion cost, also cannot be capitalized for a hosting arrangement that is a service contract.  The company in a hosting arrangement that is a service contract determines which project stage an implementation activity relates to.  Project stages include preliminary project stage, application development stage or post implementation stage.  Costs incurred for the application development stage are capitalized, while those costs related to the preliminary project stage or the post implementation stage are expensed as the activities are performed.

In addition, the company is required to amortize the capitalized implementation costs over the terms of the hosting arrangement.  The term of the hosting arrangement includes the noncancellable period of the arrangement plus periods covered by:

  1. Option to Extend – customer must be reasonable expected to exercise this option
  2. Option to Terminate the Arrangement – where the customer is reasonably expected NOT to exercise this option
  3. Option to Extend or Not to Terminate – where the vendor has control of exercising the option.

Impairment guidance, as if the costs were long-lived assets, and abandonment are to be applied based upon the existing guidance in SubTopics 350-40 and 360-10, respectively.

Income Statement presentation by the entity should be the same line item as the fees associated with the hosting service of the arrangement.  Similarly, classification of payments for capitalized implementation costs in the Statement of Cash Flows are done in the same manner as payments made for fees associated with the hosting arrangement.  In the Statement of Financial Position, capitalized implementation costs are presented in the same line item that a prepayment for fees associated to the hosting arrangement would be presented.

How is This Different and Why is it an Improvement?

Currently, GAAP does not specifically address accounting for implementation costs associated with a HASC.  Therefore, the Update improves current GAAP as it clarifies accounting and aligns the accounting for implementation costs for hosting arrangements, regardless of whether a license is conveyed.

For consulting firms, the new standards present an improved selling point as costs that were previously required to be expensed can now be capitalized.  For capital intensive industries, where cloud applications are being considered and dismissed due to financial considerations around increased expenses (and resulting decreased profitability metrics) due to cloud implementation, the new standard allows a way to capitalize the costs associated to both the license and the implementation and development costs around getting that application stood up.

When Does This New Update Take Affect?

For public entities, the amendments are effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. For all other entities, annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021 are required.  Early adoption is permitted at any time.

The amendments in this Update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.

Have Questions?
Simply reach out to us and our experts will immediately assist, provide additional information,
and answer any of your questions.

P: #1.650.712.6203  |   Email: cfryc@projectp.com

 

Author: Wendy Lamar | Managing Principal Consultant | Project Partners
Oracle E-Business Suite R12 Project Certified Implementation Specialist


Through this three (3) part educational web-series, Project Partners will arm you with critical steps and insight into a Project Financials cost-effective solution. This unique solution offering will assist administratively burdened organizations like yours to effectively manage Project Financials around Capital spend through all phases of the Capital Lifecycle (Concept Definition, Funding Approvals, Execution, Reporting, and Managing Project Costs).

WHY CAPITAL PROJECTS? – WEBINAR REGISTRATION

CLICK TO REGISTER HERE for PART 2 of the three (3) part series as we explore the WHY and HOW to leverage EBS Project Financials for Capital Projects. We’ll walk you through the solution focused around project costing to your specific business requirements, robust functionality, and use of authorizations for expenditures to further efficiency gains and extensive return on investments.

MISSED PART 1?  Don’t Worry…CLICK HERE to get a downloadable recording so you will be up-to-speed!   

Have Questions?
Simply reach out to us and our experts will immediately assist, provide additional information, and ensure you have associated playbacks. We look forward to your attendance, and will set up a call to fully understand your needs, and offer next steps around a Project Financials cost-effective solution that best fits your organization.

P: #1.650.712.6203 Email: cfryc@projectp.com

FOR ANNOUNCEMENT | IMMEDIATE RELEASE:

Project Partners is pleased to announce that they have been selected by The Metropolitan Water District of Southern California as the Delivery Partner for its Project Controls and Reporting Systems (PCRS) project.

Half moon Bay, CA–June, 2018 – Project Partners, the world’s foremost Experts in Enterprise Project Portfolio Management™ for project-centric organizations has been awarded the Project Controls and Reporting Systems (PCRS) RFP by its client The Metropolitan Water District of Southern California.  The Metropolitan Water District of Southern California (MWD), founded in 1928 and headquartered in Los Angeles, CA, is a regional wholesaler that delivers water to 26- member public agencies – 14 cities, 11 municipal water districts, one county water authority – which in turn provides water to 19 million people in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties.

MWD is an existing customer of Project Partners, and together the two firms have established a strong working relationship with key stakeholders and internal project management teams. Project Partners first initial engagement was a successful upgrade of MWD’s Primavera P6 to version 8.1 and installation of OP3 integration solution. Since that time, Project Partners has continued to engage MWD as a partner resource, providing strategic consulting assistance around their project related business needs.

On MAY 4, 2017, MWD issued a public RFP for Project Controls and Reporting Systems (PCRS) and Project Partners submitted with a winning response.  “We credit our solid project success with MWD, customer success references, and the ability to leverage our strategic partnership with Senturus, a leader in Cognos reporting, including a successful completion of a complex Cognos solution roll-out, ” says Tamim Kulaly, Project Partners VP of Primavera Solutions. “Our entire team is thrilled to continue the work with MWD and look forward to providing a successful implementation and upgrade to reduce their time and costs, improve project controls and reporting, and ultimately enabling them to better anticipate and meet future business demands.”

The winning scope of engagement includes an upgrade and configuration of the Oracle Primavera P6 application (P6) from Release 6.2.1 to P6 EPPM, latest release. The conversion and/or creation of approximately 300 in-progress and future project schedules using Metropolitan’s defined templates; the building of a Cognos BI reporting system consisting of a user interface, dashboards, reports, emailed reports, data warehouse, and custom Extract, Transform, and Load (ETL) code; installation and configuration of an integration tool to integrate Oracle E-Business Suite’s Project Accounting and Grants Management (PAGM) application with Oracle Primavera P6 (hereinafter the PAGM-P6 integration application); and, other ancillary work as required.

The Project Partners team that worked on the RFP and with MWD management throughout the process to deal close was comprised of Randy Egger, President/CEO, Tamim Kulaly, VP of Primavera Solutions and Terri Maginnis, Primavera Practice Director.


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About Project Partners
Project Partners, LLC is a privately held firm headquartered in Half Moon Bay, California, offering consulting services and enterprise software products to project-driven firms. Founded in 1997 by Randy Egger, the former chief architect of Oracle’s Projects Applications, Project Partners has grown to include many talented people, including some of the original Oracle Projects® developers, support specialists and implementation consultants. Over 400 firms around the world have selected Project Partners for expert services and products that deliver an enterprise project management solution, increasing productivity and reducing operating costs. We are proud to be an Oracle Certified Partner Specialized in Oracle E-Business Suite and Oracle Primavera applications as well as an Oracle Certified Education provider and an Oracle Primavera Authorized Reseller, including Oracle Cloud Financials and Oracle Cloud PPM.

Project Partners has executed global implementations for clients who manage tens of thousands of projects, thousands of users, multiple languages and currencies. At Project Partners we are not satisfied until our customers are delighted, and it is this dedication to joint success that has garnered us the highest praise from our clients. We are proud to be widely recognized as The Experts in Enterprise Project Portfolio Management™.

About The Metropolitan Water District of Southern California (MWD)
Founded in 1928 and headquartered in Los Angeles, CA, is a regional wholesaler that delivers water to 26- member public agencies – 14 cities, 11 municipal water districts, one county water authority – which in turn provides water to 19 million people in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties. Metropolitan is governed by a 38-member board of directors who represent their respective member agencies ensuring each member agency is part of the governance of Metropolitan.

Contact Information

  • Media contact:
    Rebecca Portela
    Vice President Marketing | Business Development
    rportela@projectp.com

By Kimberly McDonald Baker

A new white paper published by Oracle, Delivering Success in Public Infrastructure Projects, provides a compelling portrait of the quantifiable benefits delivered by Enterprise Project Portfolio Management, especially as pertaining to public infrastructure or civil engineering projects.

“Research from the Project Management Institute (PMI) suggests that performance in meeting project goals, timelines and budgets creates a financial impact of staggering proportions. Organisations with high performance in these three measures risk only US$20 million per US$1 billion spent, while their less successful peers jeopardise US$280 million for the same US$1 billion spent.”

Read the rest of this entry »

By Kimberly McDonald Baker

We want to be sure you don’t miss a new case study article featured in the November 2012 issue of Profit Magazine, titled “Unifying Financial and Project Management” In this article you will learn about Colonial Pipeline Company’s integrated Oracle E-Business Suite and Primavera systems, and a few of the benefits that Colonial is receiving.

With the new, integrated Oracle system, Colonial will have all project related financial records and information in one centralized repository. Project managers and the leadership team will be able to view individual projects or overall capital spend easily. With the new system, Colonial expects time spent on monthly status reporting to decrease by 75 percent, from 8,000 to 2,000 project management hours annually.

“This is a paradigm shift of work for our project managers from doing data manipulation to actually being a project manager,” says Phillip Chandler, Financial Controls Administrator at Colonial Pipeline Company. “This allows them to support our customers both internally and externally in a more effective manner.”

Chandler says Project Partners has helped Colonial implement best practices into its processes, making the company more efficient. “The Project Partners team is sensitive to the specific needs of Colonial. At the same time, they are able to present solutions from an outside perspective that we also need to grow as a business,” says Chandler. “Project Partners has provided the expertise and professionalism that we needed for developing and implementing our project.”

You can read the full article here.