Project Partners Blog

Project Partners, in conjunction with the OAUG Projects SIG, is hosting a webinar on October 22nd

Project-oriented organizations rely on project managers to manage project work, finances, progress, reporting, and to monitor the overall health of the project.  Typically this transactional and performance reporting interaction is done via HTML web pages to a robust enterprise system such as Oracle Projects.  However, since project managers must spend most of their time managing project work, and are therefore, only part-time users of enterprise applications, often they find the user interface difficult to assimilate.

Additionally, many project managers spend much of their time travelling, and therefore have considerable quantities of down-time that could be used for project analysis and management, but are unable to effectively do so since they are not networked to their enterprise environment.

The challenge is to provide a concise, yet robust means of interfacing with a comprehensive enterprise application such as Oracle Project Management that can also be taken offline when necessary to work in a disconnected mode. Read the rest of this entry »

Challenges

Determine if you have a demand or supply oriented environment

• Demand resource management is more prevalent with internal resource organizations, i.e. IT organizations. The primary focus is to assure that resources are optimally allocated to projects in keeping with the organization’s stated goals and objectives. Or, in other words managing the problems of “everybody is over-booked” or “there’s more work than resources”.
  
• Supply resource management tends to be more attuned to billable professional resources. The primary focus is in balancing staff retention, skill mix and gross margins by assuring that resources are optimized to their maximum capacity. Or in other words “Is everybody billable?” or “Do we have enough analysts or too many designers?”
  
• Professional services and other resource intensive organizations may have both issues at the same time Read the rest of this entry »

There is no cookie-cutter definition of an engineering-construction (E&C) company other than they are all project-oriented businesses who perform construction-related work for a client (often referred to as the owner – the entity paying for the work and for whom the work is performed). There are those who perform design-only work (engineering), construction-only work, or design-build work (a combination of both).

Engineering companies are essentially professional services organizations who specialize in providing engineering-design solutions to clients – often in specialized fields.

Construction companies can generally be classified as either (a) contractors who perform all or most of the work themselves, or (b) subcontractors, who perform specialized work such as electrical, mechanical, or masonry tasks. General contractors (GCs) are contractors who perform many different types of work (even engineering services), often manage overall aspects of large (sometimes global) projects – referred to as construction-management (CM), and usually have access to large bonding resources.

Special cases are owner-CM, or owner-performed work. In the former, an owner (such as a large natural resources company, a government entity, or a specialty retailer) may act as a GC who subcontracts most or all of the work on a project to others, but manages the overall work themselves (CM). In the latter case, owners may have the people and equipment resources to actually perform some of the work rather than contracting it to others.

This article is a discussion of solutions for general contractors who use Oracle Project Management and Project Partners User Interface Applications in the execution of design-build projects. Future papers will focus on the other members of the E&C family. Read the rest of this entry »

Introduction

Oracle Projects may be integrated with Inventory and WIP. This integration allows the tracking of project related transactions in Inventory and WIP. Some of those transactions will be interfaced to Oracle Projects. The simplest Inventory transactions that will be cost collected and imported to Oracle Projects are miscellaneous inventory transactions.

• Miscellaneous Issue from stock to a project,
  
• Miscellaneous Receipt from a project into stocks.
  

Those miscellaneous transactions are imported into Projects from any Inventory organization, whether or not the organization was classified as Project Manufacturing Organization. In a PJM organization those transactions are eligible for cost collection only if the stock locator is of another project or has no project at all.

The following transactions will be cost collected and imported into Oracle Projects only when executed within a PJM organization:

• Items receipts of a project related purchase orders for inventory destination. The items are delivered into a project locator of the inventory organization.
  
• Items issued from a project locator to WIP job (work order) of other project, or from a non project locator to a project work order.
  
• Project Transfers transactions which move items from one project locator to another project locator on the same organization, or from a non project to a project locator.
  
• Inter Organizations transfers from a project locator or non-project locator to another project locator in the receiving organization.
  
• Resources charging WIP work orders, which are project related. Resources may be employees’ labor time, outside processing supplier costs, machine usages etc.
  

Cost Management invokes the cost processor program for each inventory and WIP transaction, one by one, following their creation order. It calculates the cost amount of each transaction and may generate the accounting lines. When cost processor is responsible for generating accounting, it uses the accounts set up of Cost Groups and WIP Accounting Class. In a PJM organization you assign each project to the organization, and enter the project parameters. Among them you link a project to a single cost group and may link it to various WIP Accounting Classes. Cost Management system also offers some extensions that may be implemented for changing those default accounts.

Accounting Options for PJM Organization

When Project Manufacturing is enabled for all or certain inventory organizations, there are (starting 11.5.10) several alternative options for accounting, which differ in scope and path. On the setup form of a PJM organization you should select one value for each one of the following parameters:

• GL Posting Option:
  • Manufacturing: All inventory and WIP transactions are accounted by Cost Management process in Inventory, and sent from Inventory to GL. The project-related transactions are interfaced from Inventory to Projects as accounted.
  • Projects: Inventory is not interfacing any material or WIP transactions to GL. The project-related transactions are interfaced from Inventory and WIP to Projects.
• Account Option: This option is applicable only if GL posting option is selected as Projects.
  • Send Accounts to PA: Inventory and WIP transactions are interfaced to Projects with the accounts defined by the source. However, Projects will interface those to GL.
    
  • Use Auto Accounting: Inventory and WIP transactions are imported into Projects unaccounted. Oracle Projects is responsible for distributing those expenditures using Auto Accounting rules.

Inventory miscellaneous transactions imported from a PJM organization will always be accounted by Auto Accounting rules in Projects.

Several points regarding these options are worth noting when implementing Project Manufacturing:

• When selecting the Projects value for the GL Posting option, only transactions that are cost collected into Projects are accounted and posted in GL. All other inventory transactions, which are not charged to projects, will not be affecting any GL accounts. Any inventory transaction that represents a change in the physical on-hand value of inventory without adding or reducing any value to the project accumulated cost will not be cost-collected nor accounted in GL.
  
• WIP transactions represent resources adding value to the project-work-orders; hence those are always cost collected into Projects, and always accounted.
  
• PO delivery transactions into Inventory or Shop-Floor, and any subsequent correction or return transactions will always be accounted and interfaced to Projects as well. This is true for non-project purchase orders as well.
  
• When selecting the Projects value for the GL Posting option you have to enable a project number as a Common Project on the PJM organization setup form. In a PJM organization, users may enter transactions without project and task. By enabling a common project the system will capture any WIP and Inventory transactions with no project data, and interface those to Projects, all assigned to the predefined common project and task.
  

In the following paragraphs I would like to explain the advantages of interfacing unaccounted Inventory and WIP transactions to Projects.

Many companies use to apply indirect costs on top of direct costs. In Inventory and WIP you may setup overhead rates, and the cost processor calculates the additional cost elements, material overhead and resource overhead. Those overhead materials are cost collected and interfaced as separate burden expenditures. The alternative tool for applying overhead is the burdening functionality of Oracle Projects. Projects will not allow burdening of externally accounted transactions. However, when expenditures are imported as not accounted, Oracle Project’s burdening functionality can process the PJM transactions, and apply burden costs to those expenditures. The ability to use Project Burden allows companies to apply systematically the same burden multipliers on PJM and all other expenditures charged to the projects. For example, employees may sometime charge work order in WIP or charge directly a project and task on their timecard. Using this feature the burden calculation may be shared, and you could save the maintenance of duplicate rates schedules. In addition, Projects’ burdening allows for updates to the burden rates. The ability to re-burden and apply final burden multipliers, replacing the provisory initial multipliers is a unique feature available in Projects. There is no way to revise overhead rates in Inventory. Last point in favor of using project burdening over inventory overhead is the ability to treat differently the burden amounts based on project types. Company may choose to use burden on separate expenditure items (summarized burden items) for contract projects, but use burden on the same item for capital projects.

Some companies also need to account differently for billable versus not billable expenditures. Such feature is easily done in Projects, and is a lot more complex to achieve using the accounting engine of Cost Management in Inventory. You may set up transaction control in Oracle Projects to derive the billability of Inventory and WIP expenditure items. With the expenditure items marked as billable, you can use Auto Accounting rules of Projects to generate the appropriate accounting based on billability.

The accounting generation for project expenditures is easily configured and maintained when you use only Oracle Projects’ Auto Accounting. Companies which need to account for PJM transactions using rules based on project attributes, project organization, project classification, will find the easiest solution is to use Auto Accounting. Alternatively, achieving the same project-based accounting in Cost Management; would require developing the Accounting Generation Extension. This is a separate tool based on workflow engine, which requires extra development and maintenance effort. Even when you are using SLA in Oracle release 12, the configuration of accounting rules for Project’s source transactions is easier than the need to additionally configure similar rules for Inventory’s source transactions.

Sending all project-related transactions to GL through one source – Projects – eliminates the need to reconcile between project costs and their respective journal entries generated and posted by Inventory. Using the single path also eliminates the need to manage the period close of the inventory organization. Since Inventory would no longer be an accounting source, the closing of accounting periods for each inventory organization can be obsoleted.

All the above mentioned factors call for using a unified tool for generating project-based accounting. Those points become clear advantages when meeting the following two characteristics: Inventory and WIP transactions of a PJM organization are mostly project related; and when accounting rules are based on projects flows of revenue versus costs. If, on the other hand, the majority of Inventory cost is non project, you might not use the recommended method above.

In cases where companies require accounting in GL for significantly high amounts of the Inventory Materials asset account, the alternative method may be favorable. In these cases, using the classic Inventory flow for accounting and interface directly to GL has indeed a significant advantage. When there is high value of non-projects transactions in a PJM organization, those costs will charge a single common project. Oracle Projects, however, does a poor job in accounting for the balance of on-hand inventory by the end of each period. Oracle Projects setup at a PJM organization might not be a good solution for physical inventory based accounting.