This is an 8-part blog series on Microsoft Dynamics 365 Finance vs Adeaca Project Business Automation. The purpose is to analyze the Dynamics 365 ERP for the functional support you will need as a project-based company. Discover what is included in D365F and what you may need to supplement your implementation of it as a project-driven organization in the construction and engineering, ETO manufacturing, or professional services industries.
Successful Project Businesses understand the importance of being able to instantly see the financial impact of operational issues in their projects. For projects to be completed on time and within budget, both project operations and project financials must work in tandem within the same solution.
As mentioned in our previous blogs, effective financial management of projects demands much more than what traditional project accounting systems provide. Our previous blog comparing Microsoft Dynamics 365 Finance project management and accounting to Adeaca Project Business Automation (PBA) analyzed the month-end process project functionality. This blog will look at another specific project financial functionality: cost control.
Microsoft Dynamics 365 Finance
As much as we love Dynamics 365 Finance, the cost control functionality is poorly supported. In D365F, cost control is primarily done through the cost tracking form. This form completely lacks the concept of budget periods and provides little support for the all-important estimate-at-completion (EAC) process and analysis. The lack of budget periods means the cost tracking is not aligned with ledger periods, billing or revenue recognition cycles. The cost tracking form does not provide historic metrics to support trend analysis or Earned Value Analytics (EVA).
As a result, Project Business users of D365F for project cost control will find themselves continuing to use spreadsheets and other tools to fill in the gaps. This set up is costly to maintain and produces delays and errors in the data.
Adeaca Project Business Automation (PBA) Introduces a Sophisticated Costing Sheet
Adeaca PBA supports all aspects of the EAC process and the month-end budget review. The costing sheet is driven by budget periods, historic datasets and provides the perfect audit trail as well as all required metrics for EVA and trend analysis.
Complex engagements are often broken down into a multi-level project hierarchy, with each sub project potentially governed by a different department or business unit. The ability to embed projects into the costing sheet facilitates detailed insight into individual components of the engagement as well as the big picture overview of the entire project.
Project Costing is the Central Component of Project Cost Control
In order to establish up-to-date reliable project performance projections, the periodic budget review process needs to take center stage. Early detection is key to effective project cost control. By consistently evaluating Cost to Complete (CTC) and Estimate at Completion (EAC), project controllers can predict and record variances before they materialize, so they have time to take corrective action.
In addition, the budget review process computes updated expectations to project margins and productivity ratios against project deliverables. Project costing is period specific, and a complete history of past periods is stored for trend analysis to enable more effective and productive processes in the future.
Improved Cost Control Capabilities with PBA
Above and beyond D365F, Adeaca PBA adds the following capabilities (and more) to cost control:
- Estimate at Completion (EAC)
- Automatic and manual EAC adjustment
- Set EAC based on WBS estimates
- EAC revision control
- Workflow approval of EAC changes
- EAC variance and margin
- EAC based cash-flow projections
- EAC based revenue recognition
- Cost analysis by CBS, category, category group and cost code
- Productivity analysis
- Budget periods and trend analysis
- Hierarchy costing (embedded projects)
Check out this updated Whitepaper on Dynamics 365 Project Operations – the recent release from Microsoft that is an enhancement and combination of the previous D365 Finance project management and accounting module (PMA) and Project Service Automation (PSA).
This whitepaper provides a high-level overview of the functionality contained in Project Operations and compares it to Adeaca Project Business Automation. Understand exactly what capabilities are included, what you need, and how to get them.
Project Businesses Need More Than What Mainstream ERP Solutions Offer
Traditional ERP solutions do not put projects center stage. As a result, Project Businesses adopt standalone point solutions to compliment the ERP system. That means more applications and tools to integrate and more money spent to manage your portfolio of projects. When your financials and operations align in real time, your financial reports always reflect the current operational plan.