What is Dynamics 365 Project Operations?

In this post we will dig deeper into the pros and cons of Microsoft Dynamics 365 Project Operations, a comprehensive Professional Services Automation (PSA) solution designed for project-centric business processes on the Dynamics platform. Launched as the successor to Dynamics 365 Project Service Automation (PSA), the platform combines Microsoft Project for the Web, Dynamics 365 Sales, and Dynamics 365 Finance.

The primary design objective of Project Operations is to eliminate data silos between sales, delivery, and finance teams. It’s using Microsoft Dataverse, to integrate data across the different Dynamics applications. It manages the project lifecycle, including the initial deal pursuit to resource allocation, time tracking, and proforma invoicing.

Project Operations offers three distinct deployment models: Lite, Resource/Non-stocked, and Stocked/Production. Depending on your needs you can select the deployment model that makes the most sense for your specific operational complexity. With the recent inclusion of Microsoft Copilot and Generative AI, Project Operations can now assist project managers in some routine administrative tasks, such as generating status reports, identifying potential risks, and drafting task plans based on general project knowledge and historical data.

In this article, we use our experience as a Microsoft Partner serving project-driven companies for the last 20 years to provide an honest assessment of D365 Project Operations and its capabilities. We want you to understand what it is and what it isn’t. Below we go into details regarding its features, limitations, and comparisons to alternatives.

Things we cover in this post:

• Common Uses of D365 Project Operations
• D365 Project Operations Features and Capabilities
• Copilot AI Features in Project Operations
• Limitations of Dynamics 365 Project Operations
• Compare D365 Project Operations Alternatives
• Deployment types
• Project Operations Integrations
• Pricing
• When to Use Microsoft Dynamics 365 Project Operations

Common Uses for Dynamics 365 Project Operations

Dynamics 365 Project Operations has a defined set of capabilities. Commonly it is best suited for companies that manage multiple ongoing projects that are typically smaller in size, are focused mainly on professional services, and have low complexity.

It is especially beneficial for smaller professional services companies that struggle with consistent planning, tracking of resource hours and expenses, and the related financial processes. These companies need to integrate these projects into their core business operations, including CRM deal flow, workflow hand-offs and cohesive reporting while balancing multiple projects to satisfy specific requirements.

D365 Project Operations Features and Capabilities

Microsoft touts many features and capabilities with Project Operations. Here is a quick summary of what is included.

Project Management

Using Microsoft Project for the web Project Operations has a drag and drop project scheduling tool. While this scheduling tool is simplified as compared to more advanced applications (e.g. Microsoft Project), it includes dashboards, task management, timeline scheduling, interactive Gantt charts, and a work-breakdown structure.

Opportunity Management

Depending on your deployment model, Project Operations can be closely integrated with Microsoft Sales (CRM). This options does include a pricing and costing engine to use for deal management in CRM.

Resource Management

With a built-in resource profile tool, Project Operations allows you to match resources up to project requirements based on skillsets.

Time and Expense Management

Project Operations is focused primarily on professional services organizations. As such, a core feature is a timesheet tool to submit time and expense reports via a mobile app or browser.

Project Accounting

Based on the previous version of Dynamics 365 project management and accounting, Project Operations offers some basic accounting functionality to adhere to GAAP or IFRS standards. This budget does directly correlate to the WBS. Your project budget hierarchy is the same as your scheduling hierarchy. It does not support an independent cost breakdown structure for your project.

Project Dashboards

Project Operations comes equipped with some dashboards and visualization tools to help with resource utilization, forecasting and budgeting.

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Copilot AI Features in Dynamics 365 Project Operations

Microsoft has recently updated Project Operations to offer AI-augmented processes. By integrating Copilot directly into the project lifecycle, Microsoft aims to reduce the “administrative tax” on project managers.

Key AI capabilities currently available and rolling out include:

1. AI-Driven Task Plan Generation

By simply providing a project name and a brief description, Copilot uses Natural Language Processing (NLP) to suggest a complete Work Breakdown Structure (WBS). It analyzes historical project data to recommend realistic task durations and effort estimates, which the PM can then refine or approve.

Our take: While Copilot is an excellent “blank page” killer, its plans often require significant refinement for complex industries. In our experience, AI-generated plans excel at capturing standard phases but can overlook specific technical dependencies or unique client constraints. Treat these as a high-quality draft, not a finished schedule.

2. Automated Project Status Reports

Copilot automates data aggregation by pulling project KPIs to draft comprehensive status reports. This moves beyond simple data points by using AI to provide a narrative summary of the project status.

Our take: The real value here is the hours saved on manual data entry. However, we’ve found that while the AI is great at reporting what happened, it still requires a human touch to explain why it happened. Always review the summary for nuance before sending it to a high-level executive or steering committee. It may also need refinement with expert opinion from project managers for what is really going on in the project.

3. Proactive Risk Assessment

Copilot can monitor project metadata and risk data entered in the system (scope, schedule, and budget) to identify risks. It suggests specific mitigation plans based on historical performance data within the Microsoft ecosystem.

Our take: This is a powerful reactive tool that alerts you to risks already present in your data. True proactive management, however, requires looking at signals outside just the risk register, to find trends in the movement of KPIs over time that you might not otherwise notice.

Critical Limitations of Dynamics 365 Project Operations

While Microsoft Dynamics 365 Project Operations serves as a foundational platform for general project management, it lacks certain capabilities that many project-driven organizations need. For these companies, the system presents several functional and architectural hurdles that can impede clean and efficient project management processes. Here are a few of those limitations:

1. Deployment Model Complexity

Project Operations utilizes three distinct deployment models: Lite, Resource/Non-stocked, and Stocked/Production. The challenge for the customer is that functionality changes significantly depending on the model you choose. This creates a rigid environment where a business may find that a critical feature they need is simply unavailable in their chosen deployment path, leading to expensive workarounds or compromised processes.

2. Architectural Overhead: Dual-Write and App-Hopping

To bridge the gap between sales and finance, Project Operations relies on a “Dual-write” architecture. From a user perspective, this often means your team must navigate between multiple applications (Sales and Finance) to complete a single project workflow. This architectural complexity doesn’t just increase the training burden; it creates data synchronization risks and a fragmented user experience that comprehensive business systems are supposed to eliminate. Furthermore, it increases the complexity and costs of implementation.

3. The Flexibility Gap: No Native “Options” or Add-ons

Microsoft built Project Operations to meet a wide swath of general requirements, resulting in a universal set of fixed features. There are no native options or advanced add-on packages to tailor the system to specific industrial needs.

4. Performance Issues

Many users report performance issues with the Project Operations scheduling engine, especially when trying to manage large projects with lots of tasks. Updates to the schedule can take a long time and require several steps. This may prove problematic for large engineering, construction, or manufacturing projects that require hundreds or even thousands of tasks.

5. No Cost Breakdown Structure

Project Operations comes with a single WBS. It does not support the concept of an independent Cost Breakdown Structure (CBS). The WBS must be used for both schedule and financial management. If you typically manage your project budget in a different hierarchy than your schedule, you must choose to either manage your schedule or your budget in Project Operations and the other someplace else. Or, you compromise on the CBS and WBS by managing them in the same structure.

What are the alternatives to Dynamics 365 Project Operations?

While Project Operations is the default project system for Dynamics, what are your options? For many project organizations, it actually isn’t the best way. You generally have three paths when looking for an alternative to Project Operations:

1. Extend Project Operations with ISV solutions or customizations. Partners like HSO, SiS, sa.global and others do offer industry-specific layers on top of Project Operations for AEC or professional services organizations. These tools add features like better reporting or specific industry logic. But they don’t solve the underlying architectural issues. If you are dealing with limitations to Project Operations itself (as described above), such as performance, the CRM/ERP architecture split, or scheduling issues, you will still have those with these ISV add-ons.
   
   Furthermore, writing your own customizations invites many issues such as ensuring future compatibility. In this situation, you likely still end up making things work with customizations or working outside the system.
   
   
2. Run projects outside Dynamics. Many firms choose to run projects in external tools like Excel or Microsoft Project or in third-party PSA apps like Kantata or Certinia. This keeps your project managers in familiar territory. But it creates dangerous operational silos of you are using Dynamics 365 Finance as your ERP. When your delivery data lives outside your ERP, you lose real-time visibility into vital information such as schedule delays and margin erosion. Your finance team ends up chasing data instead of using it to make critical decisions.
   
   
3. PlanAutomate EPM. PlanAutomate EPM is the only Dynamics-native replacement for Project Operations because it is fully embedded in Dynamics 365 Finance and offers many more capabilities and options than the alternatives above. It provides a seamless connection between your project schedules, resources, supply chain, and financials. You get deep process synchronization and real-time visibility without the app-hopping. It’s built specifically for the project-driven business that requires a single source of truth for both finance and operations.

Deployment types

Project Operations offers multiple deployment options. Depending on which you path you choose, the capabilities provided are very different.

Here are the current deployment types:

• Lite deployment – deal to proforma invoicing
• Project Operations for resource/non-stocked scenarios
• Project Operations for stocked/production order scenarios

The first two options extend the Dynamics 365 Sales application. The third leverages D365 Finance ERP as well. However, these options have very different feature sets. For example, depending on which you choose your may have project scheduling or not, or you may have to use a different tool. Also the functionality may sit inside different end-user applications; some may reside in Sales and other in Finance. Learn more about the D365 Project Operations deployment options here.

In practice, we see a lot of Lite and Non-stocked scenarios with customers. These options put the project management functionality on the CRM side of the house, not the ERP / operations side. This can work well for light project management needs that are strictly resource based. These options of course require Microsoft’s CRM as well. To track financials, you would also need the Project Accounting module inside D365 Finance.

For the stocked deployments, we see a lot of customers coming to us with some critical functional gaps. These typically involve detailed financial tracking and period-specific costing, estimation, and planning/scheduling for large projects.

Learn more about Project Operations deployment taxonomy.

Project Operations Integrations

Project Operations has two main integrations with the rest of the Dynamics platform, Finance & Supply Chain, and Sales (CRM). The integration with Dynamics 365 Finance ERP helps lower overhead by streamlining implementation, administration, and management, across different disciplines. This is by far the most compelling integration. The integration with D365 Sales, helps streamline the opportunity estimation process.

However, Project Operations does not natively integrate with D365 Business Central ERP. Business Central is Microsoft’s SMB ERP, and there are no current plans to offer integration with this application at this time. There may be third-party tools and companies that can offer this integration if needed.

Other integrations with Teams and other Microsoft applications are possible. Dynamics also offers a full REST API for integrations with other applications outside the Microsoft ecosystem.

D365 Project Operations Pricing

As of January 2026, the updated pricing for Project Operations licenses is $135 per user per month. This could vary based on your volume and term. Learn more about Project Operations pricing here.

When to Use Microsoft Dynamics 365 Project Operations

Project Operations has a certain set of capabilities that can work well in the right situation. The key is knowing when Project Operations makes sense for your company. This requires the answer to a few simple questions.

• Are you a services-based organization?
• Are your projects simple (not a lot of tasks)?
• Are you happy running your project financials and costing in the same structure as your schedules?

If you answered yes to all three questions, then Project Operations may work for you.

If you answered anything other than yes for any of the three, you may need to explore other options.

Don’t buy a business system if it doesn’t support your whole business or can’t help you grow in the future. If an application only covers a small portion of your needs but you still need to support the bulk of your processes with ancillary apps, tools and spreadsheets, or make massive custom modifications to it, we suggest you keep looking.

Microsoft References for this Article:

• Project Operations Product Page
• Project Operations Deployment Taxonomy
• AI Copilot Capabilities in Project Operations

About Adeaca

Adeaca is a full-service Microsoft Partner that has been deploying Microsoft Dynamics solutions for project-driven organizations since 2007. It combines the power of the D365 platform with its own scalable project management system. Adeaca is the exclusive service partner for PlanAutomate’s EPM solution.

Work with Adeaca and PlanAutomate if you want to move from fragmented tools and processes to a single, streamlined platform and way of working that integrates all your project business functions. If you are project-driven and currently or are looking to utilize Microsoft Dynamics 365, contact us today to find out if we can help.