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Posts Tagged ‘Project Portfolio Management’

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.

 

 

 

 

MANAGING PERFORMANCE BASED REVENUE RECOGNITION

Accounting Standards Codification (ASC) 606

-CURRENT UPDATES-

This paper provides an update to one of our previous six-part blog series “Are you Ready for the New Revenue Recognition Standards?”

It outlined the May 28, 2014 announcement that the FASB and IASB jointly issued ASC 606, Revenue from Contracts with Customers.  The intention around this change was to standardize revenue recognition practices across industries as existing practices fall short when it comes down to how value is delivered to the client based on obligations explicitly or implicitly specified in contracts.

IN THIS LATEST SERIES, WE WILL RECAP AND HIGHLIGHT THE MOST CURRENT CHANGES SINCE THE DEADLINES FOR COMPLIANCE HAS PASSED.

On May 28, 2014, FASB and IASB jointly issued ASC 606, Revenue from Contracts with Customers.  Due to inconsistencies in revenue recognition among industries, and the disconnect between U. S. GAAP and IFRS reporting, the Boards collaborated to reduce or eliminate those inconsistencies and thereby improve comparability between domestic and international best practices.  The resulting standards will therefore significantly affect the revenue recognition practices of many companies.

Depending upon the business’ current model and revenue recognition practices, this standard could have a significant impact on the amount and timing of revenue recognition, which in turn will impact key performance measures and debt covenant ratios, and may even change the way the company looks at capital investment and compensation.  The new standards are poised to change budgets, contract negotiations and current business practices.

Industry-Neutral Revenue Recognition

The core principle in the converged standard requires that an entity recognize revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration in exchange for those goods and services.  To accomplish this goal, a five-step process has been outlined in the new standard.  Every contract with a customer should be analyzed using these five steps to afford accurate reporting.

Step 1 – Identify the Contract with the Customer – A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations.  The guidance applies to all contracts that meet specific criteria as defined within the standard.

Step 2 – Identify the Performance Obligations in the Contract – Performance obligations are promises to deliver certain goods and services to a customer.

Step 3 – Determine the Transaction Price – The transaction price is the amount an entity is expected to receive in exchange for transferring goods and services to a customer.

Step 4 – Allocate the Transaction Price – The relative standalone transaction price of each good or service being transferred to a customer, including discounts and other variable amounts of consideration.

Step 5 – Recognize Revenue as Performance Obligations are Satisfied – This step happens when the goods or services are transferred to the customer.  The customer will have taken control of the goods or services at this time.  The amount of revenue that is recognized is the amount allocated to satisfy a performance obligation.

HOW CAN WE HELP YOU SUCCESSFULLY NAVIGATE THROUGH THESE CHANGES?

Project Partners will demonstrate how project-centric companies, using Oracle Projects and/or Oracle Project Contracts, can comply to the new standards with minimum disruption to existing business practices.  View 5-Step recap below.

ASC 606:  REVENUE FROM CONTRACTS WITH CUSTOMERS

PART 1

The core principle in the converged standard requires that an entity recognize revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration in exchange for those goods and services.  To accomplish this goal, a five-step process has been outlined in the new standard.  Every contract with a customer should be analyzed using these five steps to afford accurate reporting.

STEP 1   IDENTIFY THE CONTRACT WITH A CUSTOMER

The new revenue guidance defines a contract as an agreement between two or more parties that creates enforceable rights and obligations.  Essentially, all parties to the contract have to approve the agreement, are committed to fulfilling their obligations, and have Identifiable rights.  The contract must have commercial substance and collectability is probable.

STEP 2   IDENTIFY THE PERFORMANCE OBLIGATIONS IN THE CONTRACT

This step requires an entity to identify all the distinct performance obligations in a contract or arrangement.  A performance obligation (commonly referred to as deliverables) is a promise to transfer goods or services to a customer.  A good or service is distinct when the customer can benefit from said good or service on its own or with resources the customer already has, and the good or service can be transferred to the customer independent of other performance obligations in the contract.  Goods and services that are not distinct should be combined with other goods or services until the whole group is distinct.

To be distinct, a good or service must meet two criteria:

  1. It must be capable of being distinct, and
  2. It must be separately identifiable.

STEP 3   DETERMINE THE TRANSACTION PRICE

The Transaction Price is the amount of consideration an entity expects to receive for the transfer of goods or services to the customer.  The amount can be fixed, variable or a combination of both.  Transaction Price is allocated to the identified performance obligations in the contract.  These amounts are what are recognized as revenue when the performance obligation is fulfilled.

STEP 4   ALLOCATE THE TRANSACTION PRICE

Allocation of the Transaction Price comes into play when a contract contains more than one performance obligation.  The seller should allocate the total amount of the selling price to each performance obligation based on its relative Standalone Selling Price (“SSP”).  The Standard permits any method of allocation of the SSP, just as-long-as that estimation is an accurate representation of what price would be charged in separate transactions.

STEP 5   DELIVER SERVICES AND RECORD OUTCOME

The last step in the new revenue recognition standard is to recognize revenue when or as the performance obligations in the contract are completed.  A performance obligation is completed when or as control of the good or service is transferred to a customer.  The Standard defines control as “the ability to direct the use of and obtain substantially all of the remaining benefits from the asset.” (ASC 606-10-20).

The Standard allows for revenue recognition based upon two methods for measuring progress, Output and Input.

Outputs are the result of inputs and processes   of a business and are goods or services finished and transferred to the customer.  The output method measures results achieved.  Surveys, appraisals, milestones reached, and units produced or delivered are all examples of output methods.  Value to the customer is the objective measure of an entity’s performance.

Examples of an output method would include the number of feet of pipe used for a specific distribution project, or the number of electrical poles used from a transmission plant, to a final destination.

The input method is a more indirect measure of satisfying a performance obligation.  Inputs are measured by determining the amount of effort put into completing the contract.  The input method is implemented by estimating the inputs required to satisfy a performance obligation, and then comparing the effort expended to date against that estimate.

Examples of input methods would be cost-to-cost, labor hours, or material quantities.

The Board decided that, at least conceptually, an output measure is the best depiction of the entity’s performance because it directly measures the value transferred to the customer.  Although the Boards did not state that the output method is the preferred method, they felt that in most cases it is the most appropriate method that is consistent with recognizing revenue as value is transferred to the customer.  A drawback to this method is that there may not always be a directly observable output to reliably measure progress.

 

CLICK HERE for a more in-depth discussion of this topic and read full posts to the ASC 606 Series on our website.

CONTINUE TO NEXT POST 2 OF 2…

“Let’s take another in-depth look at how to use Oracle to comply with the newest revenue recognition rules”  

 

www.projectp.com | Phone: +1.650.712.6200

 

 

 

PROJECT PARTNERS PROUDLY ACHIEVES PLATINUM PARTNER STATUS IN
ORACLE PARTNERNETWORK (OPN)

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: http://www.oracle.com/us/partnerships/index.htm

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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: http://www.projectp.com/

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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: http://www.oracle.com/partners

 

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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: 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 INFORMATION

CLICK TO REGISTER HERE for our FINAL PART (3) of the three (3) part series as we explore how Project Partners has addressed the pain associated with AFE’s and the manual efforts.  We will showcase how we’ve developed an easy to use Authorization for Expenditure solution that extends the functionality of Oracle EBS Projects applications and 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 2?  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

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Our prebuilt, configurable Microsoft® Excel workbook to submit, control and monitor all
scheduled processes and reports for Oracle ERP Cloud.

Helping hundreds of customers just like “Franny” to efficiently manage scheduled processes and reports in Oracle Cloud. The Cloud Process Scheduler is a unique process and report scheduler workbook available to the enterprise from Operations and Finance to HR and Sales, empowering these teams and enabling any user to:

  • Define scheduled processes and reports that need to be run periodically
  • Setup fixed and variable parameters for each process and update variable parameter dates quickly.
  • No need to remember parameters or the order in which processes need to run thereafter, it does it automatically
  • Setup process dependencies to enable efficient workflows.
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  • Start the entire set of processes with 1-click. Reducing the number of keystroke by 100%.
  • Organize work into a group of activities and then process it as a unit.
  • Monitor the status of each process in the set as it completes, while you are easily completing other work.

To learn more about the FEATURES & BENEFITS and get a glimpse into how the Cloud Process Scheduler really works, take a few minutes and view a brief Cloud Project Financials DEMO HERE. We believe that this product will significantly change how you manage your processes and reports in the Cloud and enable you to increase your user productivity.

HOW DOES MY ORGANIZATION GET STARTED?

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Questions?
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MORE ON CLOUD PROCESS SCHEDULER

P: #1.650.712.6203 Email: cfryc@projectp.com

End-to-End Integration of Enterprise Resource Planning Applications for Project Organizations

How to Unlock the Value of your Project-Based Business Systems

Visibility & Control for Project-Driven Organizations

With the maturity of Cloud-based business applications, organizations can attain real-time visibility into the performance of their business with a single source of truth for business operations and finances. This modern technology can enable enterprise organizations to become more competitive and profitable on a single, inter-connected Enterprise Resource Planning (ERP) platform for tracking and managing the entire services business lifecycle.

Successful services organizations require modern systems that provide seamless integration between their ERP and Project Portfolio Management applications and processes. An integrated application infrastructure can be configured to lead your project-driven organization forward to greater efficiency from the moment a new sales opportunity is identified through to project sourcing, project delivery, and financial accounting.

In this blog, we will discuss the functionality and execution discipline of an integration business application solution for project-based organizations. This is the first blog in a series by Project Partners LLC, in which we will delve deeper into “How to Unlock and Maximize the Value” of each functional area of the services business lifecycle. 

Watch this video for an overview of our blog series Enterprise Resource Planning Applications for Project Organizations 

Modern Project Portfolio Management addresses all of the external inputs to and outputs from the business operations of the Enterprise. An integrated methodology is necessary to tie all functional areas into a cohesive system including ERP, Human Capital Management (HCM), Supply Chain Management (SCM), Customer Relationship Management (CRM), Enterprise Performance Management (EPM), as well as Project Management. etc.

Companies set to benefit from this approach include organizations in industries such as: Professional Services (incl. Architecture & Engineering Services), Construction (Contractor and Sub-contractor), ETO/ATO, Utilities, Government (Federal) Contracting, State and Local Government, Financial Services, IT, Owner-Side Construction, Aerospace & Defense, Product Development, Capital Projects and other indirect projects organizations. These organizations may represent entire companies or embedded sub-divisions or service lines within broader global enterprises.

Foundational Applications

Business applications for enterprise organizations begin with the core financial applications, which include GL, AP, AR, Assets and Cash Management, in order to record and manage their financial transactions.  Although managing Project financials can be accomplished directly with these applications via a project/task identifier in the GL chart of accounts, this is a very inefficient mechanism as it places a large burden on the GL to hold and report large volumes of project transactions. Further, this approach makes the operational groups totally reliant on the finance organization to provide them with the reporting they need to efficiently execute and manage projects.

Project Financial Management Applications
By providing an efficient bridge between finance and operational needs, Project Financial Management applications enable operations with a single source of truth for all project information. These applications provide visibility into the project structures, plans, and an aggregation of all project costs, revenue, and invoice information while seamlessly interfacing with various financial applications needed to record, process and report financial information. Further, these applications serve as a true sub-ledger by holding detailed project transactions for reporting and audit while providing finance with summarized entries that result in an uncluttered GL.

Enterprise Resource Planning (ERP) Applications
ERP for Project Organizations can be defined to include Financial Applications (including GL, AP, AR, FA, and Cash Management), HR Applications (HCM), and Supply Chain Management (SCM) Applications (including Sourcing, Self-Service Requisitioning, Procurement, Contracts and Receiving), in addition to Project Financial and Execution applications.

Human Capital Management (HCM) Applications
As people resources are a critical element to executing projects, HCM applications are also critical for project-driven organizations. These applications provide a single source of truth for people, organizations, jobs/roles, and cost rates for human resources. Project Partners’ core competencies derive from integrating Financial and Project accounting applications seamlessly with HCM to leverage these core entities.

http://www.projectp.com/ppblog/wp-content/uploads/2017/09/Human-Capital-Management-HCM-Applications.png

For these foundation applications, our Team has helped our clients structure financial processes based on industry standards and best-practices, and then further align these to the unique operational needs of the specific organization. This includes helping define project structures and classifications, resource types and sources, and cost types that best meet the organization’s. Project Partners also assists with mapping project transactions to financial structures to enable the automated flow of data across applications and accounting.

Labor Costing for projects is our specialty, be it standard costing based on person, role, location and job levels, actual costing based on salary rates from HCM, or payroll costing based on periodic paid amounts. We bring a deep understanding of this complex function across industries and provide solutions that fulfill your project and financial needs while meeting all labor cost security requirements.

Project Sourcing Applications

Customer Relationship Management (CRM) Applications
Projects and new delivery orders for production are typically sourced from Sales using CRM applications for execution of external contract work or from an approved budgeted portfolio of projects for indirect or capital work.

Sales opportunities in CRM applications are the initiation point for proposals that result in closed transactions and downstream execution.  An integrated application work-flow from CRM to Project Delivery and Execution applications allow sales and delivery organizations to work together on the best possible proposals (using estimates from past projects, products, or templates), then quickly plan and execute on the contract to close sales. Contract and Grant Management applications can optionally be included to manage complex contracts or execute work funded by grants.

Enterprise Performance Management (EPM) Applications
Budgeting and execution of proposed capital and indirect is reviewed, incorporated into organizational budgets, and approved for execution on a periodic (annual) basis using EPM applications.

When EPM applications are integrated in project financials, they enable a top-down and bottom-up planning and review process to arrive at the best possible mix of budgeted and approved projects. This integration also provides a means to optimize internal resources (demand and supply) and project prioritization and selection. Niche portfolio management applications, such as the Primavera application suite and Oracle Instantis, also provide good functionality in this space according to specific scenarios and requirements.

Enterprise Performance-Management (EPM) Applications

In addition to using best practice approaches to associate project sources to project execution applications, Project Partners provides software integration solutions that optimize and automate the entire project initiation and delivery process.

Project Delivery and Execution Applications

Successful project planning and execution across multiple functional areas requires a project execution management and work-flow application, such as Primavera Unifier, to compliment project financial management applications, such as Oracle E-Business Suite (EBS) and Oracle ERP Cloud (Oracle Fusion Applications).  In addition, Primavera P6 and other project management applications are used for more sophisticated project scheduling. These applications provide functionality to manage the core elements of project delivery including schedule, materials, and resources, while Primavera Unifier runs the work-flow, approvals, contract management and cost-control cycles, with touch-points across all applications.

Supply Chain Management (SCM) Applications
SCM applications, such as sourcing, procurement, procurement contracts, inventory, etc., become critical for business operations that rely on procured items as a large percentage of project costs – typically construction and manufacturing project-driven organizations. These applications source their demand as driven from project plans and subsequently provide purchase commitment transactions back to the project financials system for an accurate Management view of project cost (and liability).

In addition to the project delivery and execution applications discussed, Project Partners can implement and support the leading industry specific business process optimization applications to provide functionality tailored to your industry requirements. Project Partners provides expert services in all of the following environments:

  • Professional Services Firms: Oracle ERP Cloud configured for Services Resource Planning (SRP)
    • In our following blog-posts we will explore this packaged Oracle Cloud solution from Project Partners – (See it demonstrated Live at Oracle Open World in October in San Francisco!)
  • Project-driven Industries: Oracle ERP Cloud integrated with Primavera Unifier/P6/Analytics
  • Capital Construction for General and Sub-Contractors: Primavera Prime
  • Construction for Owners, for system-wide Project Controls and Execution: Primavera Unifier
  • IT/Ideation/Product Development: Oracle Instantis and Oracle Product Lifecycle Management (PLM) Applications
  • Assemble/Engineer to Order: Shop-floor/Manufacturing Automation Applications
  • Utilities/Capital Intensive Industries: Oracle Asset Management Applications
  • Service Providers: Field Service Applications

 

Enterprise Resource Planning Applications for Project Organizations

 

With process and software solutions to integrate back-office financial applications to front-office delivery and execution systems, Project Partners brings significant industry and business process experience. We deliver solutions to project-driven organizations that optimize and integrate all business systems and operations. Today’s organizations require this cohesive end-to-end technology platform to operate more efficiently and competitively and to drive more value and ROI out of their IT investments.

Our implementation and integration solutions are designed to automate, streamline, and control project financial and project execution management processes end-to-end and, as a result, enable you to

  • Improve sales and service profitability with standardized offerings, costing, and pricing
  • Improve cash flow and customer satisfaction with accurate and timely invoices
  • Enhance worker productivity, competency/skill, and engagement
  • Work load balance across initiatives, projects, and cross organizational management
  • Automate manual operational/financial processes and reduce redundant administration
  • Facilitate cross organization interaction through workflows and social collaboration
  • Streamline your financial consolidation and monthly close cycle
  • Have a real time, trusted, single source of truth for your business data and supporting transactions
  • Use role based dashboards and Key Performance Indicators that provide insight into people, customer, project, and financial performance

 

Contact us to unlock the value of your Project business applications

Stay tuned for additional blog-posts on modernizing your enterprise business systems on a single ERP platform to maximize your business application investments.

Learn More:

Video: Business Applications for Project-Driven Organizations
Video: Oracle ERP Cloud Video Series
Solution Overview: Project Partners Services Resource Planning

Project Portfolio Management (PPM) is about more than just managing multiple projects.  A PPM solution provides centralized visibility into the entire project portfolio to help planning and scheduling teams identify the most suitable approach to deliver projects and programs. A successful Project Portfolio Management solution consists of three fundamental components that must be implemented in adherence to business value and strategy.

1 – Project Selection

To be successful with project portfolio management, you should select and initiate projects based on your organizational capabilities and goals.  In order to do this, you should have a systematic method and decision process.

A good way to start is by gathering a Project Inventory  current projects.  Here are some examples of information you will want to capture.  You will want to capture the goal of the project, project dates, resources being allocated to the project by role and other criteria, the risk of the project (may be as simple as High, Medium, or Low); the expected return of the project, and who benefits from the project.

You will also want to Score and Categorize Your Projects.  To do this, identify logical criterion for scoring and categorizing projects (e.g. strategy alignment, limiting risk, increasing efficiency, increasing sales, reducing expenses or process steps, Benefits/Feasibility, legal, regulatory, security, etc.).  Set up a scoring mechanism for each project based on the criteria (Note:  The scoring range will be agreed on for each criterion and each person can score projects based on their biases).  Aggregate or average the scores from all individuals to come up with a score for each criterion for each project.

Once completed, you will now gather your project inventory including the scores along with current and forecast costs (for new projects, use expected costs).  List your projects by rank order based on scores and put a line under the project sum equaling your total available portfolio budget (Note: Rank may not be based on score alone. Modify your total budget based on any contingency funds you are holding).  Projects above the line can be initiated or are already in progress.  Projects below the line are held in reserve should you kill or cancel other projects or come up with more money.

2 – Project Resources

No company has the resources to meet all of its business needs in the best of times and even more importantly when times are tough.  PPM gives you visibility into resource availability and allocation across your project portfolio. By ranking and prioritizing projects, you’ll be able to strategically allocate resources and maximize project delivery.

To be successful with project portfolio management, you should know where your people are working and what more can be done with available capacity.  You don’t have to have sophisticated tools to track your resources but you do need common methods for definition of resource information (location, department, division, etc.); competencies (skills and levels), where the resource is currently being allocated (both project and non-project); and resource development opportunities.

To start, define your resources using the information identified above and more if needed.  Establish each resource’s available capacity to work based on their project focus and the resource calendar.  You will then inventory your Total Resource Capacity (TRC) by resource and aggregate individual resource capacity by role (Note:  If a resource has multiple roles, you will have to define how to split out their TRC by role). For each resource, sum up their total allocation to current projects.  This is their Project Allocated Capacity (PAC).  You can do the same for each role across all active or proposed projects.  Finally, you can compute the Total Available Capacity (TAC) by computing TAC = TRC – PAC.  Do for both resources and roles over time.  You’ll be able to forecast the availability of resources for future projects by capacity and role needed.

3 – Project Information

Project portfolio management relies heavily on accessibility and accuracy of information. You should have common procedures, applications, and training for the effective sharing of relevant information to drive portfolio analysis, decision making, goal setting, project status, project prioritization/ranking, and consumed and available resource capacity.

Throughout the project lifecycle, from intake to closeout; be sure to communicate risks, issues, decisions, changes, lessons learned, and actions taken and document the reasoning for each.  Set up logs for each project to track the information and make the information available to all stakeholders.

Successful PPM relies on these three fundamental components and must be managed in adherence to business value and strategy. When implementing a Project Portfolio Management solution, keep in mind that change should be managed at both the organization and project levels.  A corporate change management (organizational change) discussion may be a great way to introduce a PPM solution and get everyone on board.

Learn more: 5 Major Benefits of Implementing a Project Portfolio Management Solution

Optimize your PPM implementation with Oracle Instantis EnterpriseTrack. This end-to-end PPM solution provides a top-down approach to managing, tracking, and reporting on enterprise strategies, projects, portfolios, processes, resources, and results.

For more information visit our Resource Library

Oracle Primavera Instantis EnterpriseTrack is a leading cloud PPM solution used by IT and business process leaders to improve strategy execution and financial performance through more effective work and resource management. Instantis EnterpriseTrack 17.1 is the latest product release and it includes the following key enhancements:

  • Finance report organization
  • Two new reports: Pipeline Report and Last Modified Date Report
  • Last updated date support for reports and data extracts
  • Report capability to export non-wbs activities links
  • API improvements
  • Finance, snapshot and team member search API
  • Ability to search all assignments /activities for a project
  • New project % complete algorithm
  • Updated calculated expressions with integer/float fields
  • Added calculated expression field type to program and activity UDFs
  • Ability to change one-to-many project role settings
  • Classification fields can now be required

Project Partners can work with you to most from your Instantis EnterpriseTrack 17 investment. Take the first step to maximizing the value of your business applications by contacting our team today.

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