Key WIP Terminology

This list of key WIP terms provides a quick reference for the abbreviated names and a brief definition of each process, as well as key definitions used in WIP.

FP

Fixed Price project

TM

Time and Material project

BC

Budgeted Cost

ETC

Estimate to Completion

Usage

Transactions created related to cost activity such as Resources, Items or Expenses. These transactions store both a cost and sales price component.

WIP

WIP (or Work in Process) is billable time and expenses that have not yet been billed on a client invoice. It is work that is already completed, or expenses already incurred, but it is unbilled or in the process of being billed. The Project Plan includes a Contract Type field, which can be set to either TM (Time & Material) or Fixed. When the WIP Calc process is run, it first assesses whether the transaction/project/task is a TM task or a Fixed Price task and then either uses a Percent Complete from Scheduled Billings or Budget Costs (on Fixed projects) or invoiced usage (on Time and Material projects) to determine WIP. The option of which of these methods to use is setup in the Project Card > WIP, Recognition Settings & Allocations > Fixed Price > Value and Entry Filter.

Clear WIP (previously Calculate WIP Recognition)

Used on Fixed Price projects to clear any remaining WIP postings that are open at the conclusion of the project.

WIP and Revenue Recognition (previously Update Cal and Post WIP)

The WIP and Revenue Recognition page (previous Update Cal and Post WIP) is used to update, calculate and post WIP (Work in Process) for TM projects. You can also use the page to review things like posted WIP, Posted WIP Clear, and Budget Costs for Items, Expenses and Resources, as well as Total Usage Cost. Use the Calculate WIP until Date and the WIP Posting Date as a way to filter and preview the WIP postings based on the dates you enter. Further, through the Actions > WIP menu items, you can calculate WIP, Post WIP to G/L, Clear WIP, update Fixed Price % to Equal the Estimated Completion %, Update the Fixed Price % column to equal the Budgeted Cost column, update the ETC (Estimate to Completion).

  1. Fixed Price Contract Types: When a project has a task that is set to Fixed Price Contract Type, the amount that is calculated for WIP is based on either the contract amounts derived from the Scheduled Billings, or Total Budget Cost (LCY) derived from the Project Plan. To determine which method is used, you configure this option on the Project Card > WIP and Recognition Settings > FIXED > Value and Entry Filter. Options include

    1. None
    2. Budget Cost
    3. Scheduled Billing Price.

    WIP is then calculated by using the Contract Amount times the Percent Complete.

    You can manually enter user-defined WIP percent complete value in the Project Card > WIP Calculation fast tab > Fixed Price > WIP % (FP) field. You can also use the WIP and Revenue Recognition page to view the BC% FP (Budget Complete %) column (which is populated with an estimate of percent complete by the system). You can then manually populate the WIP FP % by using the WIP and Revenue page > Actions > WIP > Update FP % Equal BC%. The values in the BC% (FP) column are copied into the WIP % (FP) column.

  2. TM Contract Types: When a project has a task that is set to TM (Time & Materials() Contract Type, the amount that is calculated for WIP is based on usage and invoiced transactions.

    Once it is determined that the transaction is for a TM Contract Type, then WIP Calc identifies if transactions are billed, partially billed or unbilled. Next, it looks at Project Card > Time & Materials > Value Type to determine whether WIP calculation is to be based on Cost or Sales. Cost value will use the cost amount from project ledger entries and sales value will use the sales amount from the entries. There are separate settings for Resources, Expenses and Items in this section so these can be configured differently if needed. It also looks at the Entry Type Filter to specify the project ledger entry type(s) for resources, expenses or items that will be included in the WIP calculation. Options include:

    • Usage entries
      • Budget entries
      • Sales entries
      • Usage and sales entries
    Important

    On a TM project, when previously unbilled items are subsequently invoiced, running theWIP Calc process again will recognize when the items are invoiced and will relieve WIP for those invoiced quantities. For Fixed Price projects, WIP is relieved by running the Clear WIP process.

Calculate WIP (previously Calculate WIP Capitalization)

The Calculate WIP process (previously Calculate WIP Capitalization) is the process of posting a record to Unbilled AR (or WIP) asset account for Fixed Price Projects.

Contract amount

Note

Contract amount is only used for WIP processing on Fixed Price projects.

Contract Amount specifies the amount contracted on the project or price for the project. Contract amount can only be specified for project summary billing level. If not specified, budget entries will be used to calculate the contract amount.

Important

The Project Card contains a Contract Amount field which is only displayed if the Use Percent Complete Invoicing. This Contract Amount field is only used in conjunction with Scheduled Billings and is not used for WIP processing.

  1. FP - Fixed Price: Total Amounts entered in the Scheduled Billings page, or the total of the Budgeted Costs.

  2. TM - Time and Materials: Contract amount is not used in WIP processing for TM projects.

Chargeability

Indicates if a record is billable in the Invoice Suggestion page.

Resources

Records with a source that is an Employees or Equipment

Items

Records with a source that is an Inventory Item

Expenses

Records with a source that is an expense entry or G\L Account

COA

Chart of Accounts

Milestone

Used in conjunction with Scheduled Billings.Can be established so that project managers can identify if a milestone has been completed. If a milestone has been setup and is not designated as completed, the corresponding payment (milestone billing) cannot be generated.