Project Partners Blog

Posts Tagged ‘project management office’

Part 2 of 2

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, 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.

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.





HALF MOON BAY, Calif., January 16, 2019 – Project Partners, a global leader in optimizing business processes and IT investments within project-driven organizations, today announced that it has achieved Platinum partner status in Oracle PartnerNetwork (OPN).  By attaining Platinum level membership, Oracle has recognized Project Partners for its in-depth expertise and continued excellence in providing services for Oracle applications and technology.

“We are honored to be in the highest level of the OPN Program. With our new designation as a Platinum Partner in the Oracle PartnerNetwork (OPN), Project Partners will continue to strengthen and build upon its 20+ year relationship with Oracle,” said Randy Egger, President/CEO, Project Partners.  Our global team has continually demonstrated deep application expertise and are working to obtain additional certified specializations across Oracle application solutions areas to better serve our project-centric customers.”

The company offers deep industry expertise across key Oracle applications and technologies including the Oracle ERP Cloud, Oracle E-Business Suite, and Oracle Primavera applications.  In addition, we have developed products and solutions to support and augment our customers’ off-the-shelf products.  We are proud to be widely recognized as The Experts in Solutions for Project-Driven Organizations™ and look forward to continuing collaboration, sharing industry experiences and leveraging our Platinum Partner status to enable organizations, partners and Oracle.

With its Platinum status, Project Partners will benefit with the high level of engagement, commitment and resources available to OPN partners.  Platinum members receive dedicated virtual account management support to build joint development plans and help broaden specialization areas and revenue opportunities. Additional benefits include priority placement in the OPN Solutions Catalog, one free application integration validated by Oracle, joint marketing and sales opportunities, discounted training and more. For more information about the benefits of becoming an OPN Platinum level partner, please visit:


About Project Partners, LLC.

Headquartered in Half Moon Bay, California | Project Partners is the global leader in optimizing business processes and IT investments within project-driven organizations. We are dedicated to helping businesses achieve their goals with smart, effective and scalable Oracle Application solutions that improve processes and deploy technology to maximize project life cycle ROI. Our business process experts understand and support customers with their evolving business models and help them drive productivity to meet the demands of the market and their organization.

Project Partners has a diverse team who is expert in leveraging Oracle’s ERP Cloud, E-Business Suite and Primavera solutions. We have global locations worldwide to support multi-geographical operations and have executed implementations for hundreds of clients who manage tens of thousands of projects, thousands of users, multiple languages and currencies. In addition, we have developed products and solutions to support and augment our customers’ off-the-shelf products.  Project Partners is proud to be widely recognized as The Experts in Solutions for Project-Driven Organizations™.

Project Partners is a proud Oracle Platinum Partner, Oracle Certified Education provider and authorized Reseller of Primavera and Oracle Cloud PPM, and Cloud Financials.  We hold an Oracle Cloud Standard certification, with specializations in Oracle® E-Business Suite™ with Projects, Primavera and Oracle Validated Integration’s in EBS.

For more information, visit:


About Oracle PartnerNetwork

Oracle PartnerNetwork (OPN) is Oracle’s partner program that provides partners with a differentiated advantage to develop, sell and implement Oracle solutions. OPN offers resources to train and support specialized knowledge of Oracle’s products and solutions and has evolved to recognize Oracle’s growing product portfolio, partner base and business opportunity. Key to the latest enhancements to OPN is the ability for partners to be recognized and rewarded for their investment in Oracle Cloud. Partners engaging with Oracle will be able to differentiate their Oracle Cloud expertise and success with customers through the OPN Cloud program – an innovative program that complements existing OPN program levels with tiers of recognition and progressive benefits for partners working with Oracle Cloud.

To find out more visit:


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 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:


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).


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:

By Jason Ames, PMP

Concluding our discussion from the prior blog articles, we now address success factors number 4 and 5.

Finding the Bottlenecks

One of the big advantages to having an Enterprise Project Portfolio Management system is the ability to see how each project affects the rest of the projects. Project managers have been trained to look at the critical path of their own projects but do they know if other projects are impacting their performance?

Ask yourself these questions:

  • Do team members work on multiple projects?
  • Does your project share a facility with other projects?
  • Is your project dependent on another project’s output? Read the rest of this entry »

By Jason Ames, PMP

Continuing our discussion from the prior blog article, we are now ready to address success factor number 4:

Determining which Projects to Start and When to Shut Them Down

Selecting the right projects is as important, if not more important, to your success as executing projects efficiently. The projects you select should support your firm’s strategic direction and contribute to the bottom line. Once projects have been selected they need to be ranked against each other to determine which projects are the most critical and who will win when resource conflicts exist. Just selecting and ranking projects is not enough, projects need to be continually reevaluated to ensure that they still meet your organization’s strategic direction. Over time priorities change, new opportunities arise, project ROI decreases, so you need to know how changes effect your project portfolio and where to put your resources. Read the rest of this entry »

By Jason Ames, PMP and Kimberly McDonald Baker

Too often organizations make an investment in an Enterprise Project Portfolio Management (EPPM) system but they fail to recognize the full benefits. One of the reasons is that people fail to see an enterprise PPM solution as more than just a scheduling tool.

When used properly, however, an EPPM system can be a critical factor in driving business value, not only by making sure a project stays on schedule but also via ensuring that the right projects are selected, resources are used efficiently and decision makers have the information they need to drive corporate strategy.

Key Drivers of EPPM Success

1. Top down commitment, bottom up participation
2. All business systems talk to each other
3. Measuring what’s important
4. Determining which projects to start and when to shut them down
5. Finding the bottlenecks
6. Constant learning

This series of blog articles will address each of the above success factors. Read the rest of this entry »

By Robert D. Anderson, CPA

An article by Adam Bookman provides an interesting perspective on why about 68% of IT projects fail to deliver the original desired benefits. He quotes from a study done by the Standish Group that identifies three primary reasons:
1. The initiative was outsourced to IT and not owned by the business
2. The right tool drives success
3. Best Practices represent the best starting place

Looking back over 20 years in the Accounting and Finance role at major US firms and another 14 years consulting with large international companies, these findings agree with my observations. The most successful initiatives have always been the ones where people in the direct operational area take full ownership and IT plays a supporting rule. The worst initiatives have been the ones solely driven by IT with no business buy in. Read the rest of this entry »

Gartner’s February 2008 report “PMOs: One Size Does Not Fit All” found that there are very high rates of failure when setting up a PMO. Success or failure depends largely upon two aspects:

  1. How closely the PMO’s mission and objectives are linked to the real needs of the organization, and
  2. How well the role of the PMO is matched to the maturity of the organization.

As Project Partners has written in prior whitepapers and presentations (See Return on Investment – Building the Business Case for Project Portfolio Management and Return on Investment – Building the Business Case for Professional Services Automation), you should not attempt to become a Level 5 organization immediately – you need to evolve.

Benchmarking your organization’s maturity

As we have stated in the whitepapers referenced above, and as Gartner states in their 2008 report, the key to setting up a successful PMO is to first understand where your organization fits in the “Maturity Model” and then to organize a PMO structure that fits in your organization’s maturity model. The main goal should be to continuously maturing your organization’s PMO, moving up the scale from Level 0 to Level 5. The optimum level of maturity is recognized as being the level that delivers your organization’s strategic objectives most effectively and efficiently, and for many organizations that does not necessarily imply you must reach Level 5.

Gartner PPM
Maturity Model
Level 0: Nonexistent – ad hoc Level 1: Initial – reactive Level 2: Developing –emerging discipline Level 3: Defined –initial integration Level 4: Managed –increasing efficiency Level 5: Optimized –enterprise-orientation
People Staff assigned to projects on a first available basis. PPM activity limited to interests and actions of Individual managers. Priority projects get appropriate staffing: everything else is “first available.” Nascent PPM leader role – primarily still an individual manager focus. PMO(s) established. Programs  increasingly managed in-house. Project staffing/ resource capacity issues begin to be addressed. PPM leader role formalized and Increasing specialization trend beginning. Shared resource pools formalized. Network of PPM leaders exist companywide in a federated model. Centers of excellence improve workload management. Capacity planning enabled.
PPM leader role formalized and Increasing specialization trend beginning. Shared resource pools formalized.
PPM Processes Projects are assigned to line or staff managers. No formal PPM processes beyond high-level budgeting, except as provided by outside vendors. All internal processes  centered on management of critical projects. Vendors are often responsible for large initiatives. Project processes in place. PMO(s) organized. Emerging Understanding of PPM. Risk now reviewed. PPM function established. Projects are approved on a portfolio basis. Enterprise architecture (EA) functions involved. Similar projects managed as Programs. Portfolio is actively maintained. Portfolio extended beyond IT. Comprehensive PMO. Pipeline managed in real time.
Technology Intermittent use of project schedulers, spreadsheets and other point tools on a “by project” basis. Project scheduling tools and milestone reporting adopted. Project collaboration and team workspaces supported. Portfolio tool is in place. Reporting dashboards Workflow added to toolset. Business users adopt tools as useful. Single, integrated system supports reporting, Collaboration and analysis.
Projects done without formal cost, benefit or risk valuation. Projects have budgetary estimates, Actual cost can be estimated. Some benefit statements. Project cost and labor hours captured. Estimate of benefit made for each project. Costs are captured and forecast. Benefits are identified and related to strategy in the portfolio. The portfolio is modeled and Appropriately optimized, factoring in risk. Benefit realization is tracked. Programs have their own financial resources, and full life cycle. Costing is available.
Typical Tasks Performed
  • Task Lists
  • Project List
  • Isolated High-Level Scheduling
  • Task Lists
  • Project List
  • Remedial Collaboration
  • Isolated High-Level Scheduling
  • Multiple Manual Status Reports
  • Time Tracking
  • Expense Capture
  • Disconnected Project Mgt.
  • High-level Resource Allocation
  • Skills Management
  • Multi Project Collaboration (doc mgt./work flow)
  • Project Template
  • Static Portfolio
    (Dashboards, Benefits, High-Level alignment)
  • Integrated Project Management (risk & scheduling)
  • Actuals performance monitoring
  • Weighted estimation
  • Dynamic ROI
  • Portfolio Optimization
  • Soft Metrics
  • Stage gate performance
  • Integrated alignment
PMO Structures Mapped to Maturity Levels Individuals
Project Support
Project Management Office Portfolio Office,
Centers of Excellence,
Best-Practice Councils
Program Offices

PMOs: One Size Does Not Fit All Feb 2008, Gartner Inc.<!–%20entry%20label%203–>


How can you improve Organization/PMO maturity?

  1. Establish a vision. In order to know whether or not your efforts are successful, you must be able to articulate what will be different about your organization after you’ve launched the PMO
  2. Process. Adopt project management methodology, institutionalize its use within your organization, assign owners for every process, and use it and improve upon it continuously.
  3. PPM software. Introduce PPM software which enables more efficient and effective project, program and portfolio management delivery and support processes
  4. People Power. Expand project managers’ communications and interpersonal skills.
  5. End Result Driven. Encourage project manager certification, but manage, appraise, and promote based upon the end results achieved by project managers.
  6. Management Buy-In and Support. Strengthen involvement and support by executives and the leadership team by giving them what they need in order to be engaged, make effective decisions, and appreciate and support the project management maturity needs of the organization. Often this can be achieved via executive-level PPM software reports and/or dashboards.
  7. Project Planning/Execution. Developing effective and detailed plans at the beginning of the project; execute the project according to plan established.
  8. Reporting. What is not reported is not measured. Use scorecards and dashboards to keep everyone informed and involved.


Where does your organization fit in the maturity model?

In order to know what the focus of your PMO should be, you need to first conduct an honest assessment to determine where your organization presently fits in the maturity model.