Monitor Project Progress and Performance with WIP
As a project progresses, materials, resources, and other expenses are consumed and must be posted to the project. Work in Process (WIP) is a feature that enables you to estimate the financial value of projects in the general ledger while the projects are ongoing. In many cases, you might post expenses for a project before invoicing a project. When only expenses have been posted, your financial statement will be inaccurate. For more information, see Understanding WIP Methods.
To track the value in the general ledger, you can calculate WIP and post the value to the general ledger.
You can calculate WIP based on the following, which is found on the Project Card > WIP, Recognition Settings & Allocations fast tab > Value Type field. The Value Type specifies the value on which the WIP calculation should be based.
- Cost Value- Uses the cost amount from project ledger entries.
- Sales Value - Uses the sales amount from the entries.
Within each of these two WIP calculation methods, you can then decide if you will include usage entries, budget entries (when using Advanced WIP only), Sales Entries, or both Usage and Sales Entries. You can further decide if you want to include or exclude from WIP your Resources, Costs, or Items, and if you want to include non-chargeable transactions in WIP calculations.
If you want to view the result using a different method, you can change the method and calculate WIP again. There is no limit to the number of times that you calculate WIP. When you run Calc. WIP, WIP is only calculated, it does not post to the general ledger. After you have calculated WIP, you can post to the general ledger by running the Post WIP to G/L process.
Key Terminology
For additional information on key terminology used with WIP, see the table below, or:
Term | Calculated as |
---|---|
BTC (Budget to Complete) | Active Budget – Usage |
BAC (Budget at Completion) | Active Budget |
BC% (Budget Completion %) | Usage / Active Budget |
ETC (Estimate to Complete) | Estimated remaining hours for project/task to be completed |
EAC (Estimate at Completion) | Usage + ETC |
EC% (Estimated Completion %) | Usage / EAC |
VAC (Variance at Completion | BAC – EAC |
Define a WIP method for a project
WIP, Recognition Settings & Allocations
When you create a new project, you must specify which project WIP method that applies.
- Choose the icon, enter Projects, and then choose the related link for Project List.
- Choose the New action. For more information, see Create projects.
- Navigate to the WIP, Recognition Settings & Allocations fast tab > Use Advanced WIP: Specifies if you want resources, items or expenses handled differently. If all three usage types should be treated the same then leave this box unchecked.
- If the project is Time & Material:
- Value Type: select a WIP method from the list - either None, Cost Value or Sales Value.
- Entry Type Filter: Specifies the project ledger entry type(s) for resources, expenses and items that will be included in the WIP calculation.
- Exclude Expenses: Specifies if expenses will be excluded from the WIP calculation.
- Exclude Items: Specifies if items will be excluded from the WIP calculation.
- Include Non-Chargeable: Specifies if non-chargeable entries will be included in the WIP calculation.
- If the Project is Fixed Price:
- Cost Type: Specifies the cost type of the project. Use the lookup to select the cost code. Options in the dropdown list come from the Role Center > Setups > Project Setup > Cost List.
- Use Contract Amount: Specifies if the contract amount should be used for the fixed portion of the WIP calculation. Toggle "on" to use the Contract Amount.
- WIP Split Type: Specifies how WIP on fixed price task is split.
- None: no splitting.
- G/L-Posting: G/L Posting creates a G/L entry for each usage entry.
- WIP Split Key: Specifies the measure to use weigh amounts, when splitting WIP on fixed price tasks. Options include:
- Quantity
- Cost Price
- Sales Price
- Value and Entry Filter: Specifies the base for the WIP calculation for task lines of contract type "fixed". Options include:
- None
- Budget Cost
- Scheduled Billing Price
- If the project is Time & Material:
The WIP and Revenue Recognition page includes the ability to save a filter for future use. To access the filter in the WIP and Recognition page:
Select the filter icon
Next, select +Filter
After creating the filter you wish to use, select the stacked icon in the Views section and type in a descriptive name of the new filter.
Press enter key to create new filter.
Once the Filter is created, use the stacked icon to access properties to Rename, Save As, or Remove the filter.
WIP Calculation
The fields in the Project Card > WIP Calculation fast tab for Fixed Price projects allow you to manually set the WIP % calculation, or for Time & Material projects, set the ETC Risk Factor % (TM) field (Estimate to Completion Risk Factor %). After WIP calculation completes, it displays the WIP % (Fixed Price) and for Time & Materials projects - BTC % (Budgeted Completion %) as calculated by the WIP calculation process.
WIP Calculation fast tab -Time & Material
Date Filter - enter a date to display the calculated WIP as of a specific date.
BC % (TM): After you run the Calculate WIP process, the calculated WIP for T&M projects displays here. This is the Budgeted Completion % and is calculated based on Budget To Completion Resource Usage Qty. where the Task Lines have a Contract Type T&M.
Tip
BC% (TM) is calculated as: SUM(Resource Usage / Resource Budget *100
Note
If BC% > 100%, then the field will be shown in red. (Non-Editable)
Important
The field is NOT used in WIP calculation and is used for informational purposes only to identify potential project risk in relation to BC%. If there is a risk for write-offs, **ETC Risk Factor % (TM)**can be used for a more soft/correct valuation until Write-Off is a fact.
EC % (TM): Estimated Completion % is calculated by the system based on the ETC Res. Usage Qty where the Task Lines have a Contract Type T&M. The factor you enter here can be applied by to decrease the WIP amount calculated to take risk into account (such as hours that might not be paid for (which in the end relates to Write-offs).
Tip
EC% TM is calculated as: SUM(Usage Res. Qty. / (EAC = SUM(Usage) + SUM(ETC Res. Qty.)) *100 (Non-Editable)
Important
This field is NOT used in WIP calculation and is used for informational purposes only to identify potential project risk in relation to BC%. If there is a risk for write-offs, ETC Risk Factor % TM can be used for a more soft/correct valuation until Write-Off is a fact.
ETC Risk Factor % (TM): Specifies the percentage part of the calculated WIP amount. This field is user editable, and you can set the Risk Factor in the interval from 0 to 100.
In general, WIP calculation is not changed unless you use the ETC Risk Factor % to factor down the calculated WIP amount. The calculated WIP amount is based on settings for Entry Type and Value Type. Advanced WIP offers the possibility to use all combinations for each usage type.
When the WIP amount is calculated the system multiplies the WIP amount (based on defined Entry & Value Type) with the ETC Risk Factor % TM. When the ETC Risk Factor % TM = 0, no WIP is calculated. When ETC Risk Factor % TM = 100 100% WIP is calculated. ETC Risk Factor % TM cannot be more than 100.
WIP Calculation fast tab - Fixed
BC % (FP): Displays the Budgeted Completion % that is calculated based on BTC Res. Usage Qty where the Task Lines have a Contract Type Fixed.
Tip
BC% (FP) is calculated as: SUM(Resource Usage Qty / Resource Budget Qty *100.
EC % (FP): Displays the Estimated Completion % and is calculated based on ETC Res. Usage Qty where the Task Lines have a Contract Type Fixed.
Tip
**EC% (FP) is calculated as: SUM(Usage Res. Qty. / (EAC = SUM(Usage) + SUM(ETC Res. Qty.)) *100 (Non-Editable).
Important
The EC% (FP) field is NOT used in WIP calculation but is a calculated default value in WIP% (FP) which you can manually change.
WIP % (FP): Use this field for WIP calculation with a default value coming from EC% (FP). Value can be changed by user. The system uses this field to calculate the WIP % on Fixed Price projects.
Est. WIP Amt.: Displays the estimate WIP amount calculated when you run Calculate WIP on Fixed Price projects.
WIP Postings
Posting WIP deletes all WIP entries related to the project after posting the WIP calculation. Once posted, WIP G/L entries are inserted and are the audit trail for the WIP Posting.
Calculate WIP on T&M and Fixed Price Projects
WIP Calculation process
Navigate to the Project Card of an open project. You can also run WIP from the Role Center > Processing > Calculate WIP, or from the Project Dashboard > WIP > Calculate WIP. Options for WIP processing include:
- WIP and Revenue Recognition
- Calculate WIP
- Post WIP to G/L
- Clear WIP
Caution
Setting the project completed before running WIP is optional, but the project does not have to be completed to calculate WIP. If you do set the status on the project to Completed and run WIP, it will clear out all WIP entries and complete final accounting for the project.
WIP and Revenue Recognition
Use the WIP and Revenue Recognition page to calculate and post WIP (Work in Process) on specified projects.
Navigate to the Role Center > Processing > WIP > WIP and Revenue Recognition.
Calculate WIP until Date: Specifies end date for WIP calculation. Change the date filter to view the effect of WIP calculations based on date entered.
WIP Posting date: Specifies Posting date for WIP Posting.
Include Contract Type Tasks TM: Specifies, if selected (true), to run WIP calculation for all tasks that have a Contract Type of 'Time and Material'.
Include Contract Type Tasks FP: Specifies, if selected (true), to run WIP calculation for all tasks that have Contract Type of 'Fixed'.
From the ribbon, you can select other options:
Project: view the Project Card or the Project Plan for the selected project.
Entries > Entries: view the transactional entries for the project.
Actions > WIP:
Calculate WIP: Calculate WIP for selected projects.
Post WIP to G/L: Post calculated WIP to G/L for all selected projects.
Clear WIP - run the clear WIP process.
Update FP% Equal EC%: Update the WIP % (FP) to be equal to the EC % (FP) values.
Update FP% Equal BC: Update the WIP % (FP) to be equal to the BC % (FP) values.
Update ETC Res. Qty.: Updates the ETC Res. Qty. with the value from BTC Res. Qty. on task lines in the selected projects.
Reset ETC Res. Qty.: Resets ETC Res. Qty. to zero on all task lines in the selected projects.
Related > WIP Entries > WIP Project Entries: Displays project entries for the selected project.
Related > WIP Entries - WIP G/L Entries: Displays WIP G/L entries for the selected project.
Projects that are available for WIP calculation are listed in the grid:
No.: Specifies the Project number.
Description: Project description.
Project Manager: Project manager of the selected project.
BC % (FP): Budgeted Completion %. Calculated based on BTC Res. Usage Qty. on Task Lines (Fixed Price) (Fixed Price).
EC % (FP): Estimated Completion %. Calculated based on ETC Res. Usage Qty. on Task Lines (Fixed Price).
WIP % (FP): Specifies the percentage part of the calculated WIP amount (Fixed Price). Risk Factor can be set in the interval from 0 to 100.
Est. WIP Amt.: Estimated WIP amount - calculated by the system.
Calc. WIP: Calculated WIP amount, based on the Calculate WIP until Date date filter.
Calc. WIP Clear: Calculated WIP Clear amount, based on the Calculate WIP until Date date filter.
Posted WIP: Posted WIP amount, based on the Calculate WIP until Date date filter, based on the Calculate WIP until Date date filter.
Posted WIP Clear: Posted WIP Clear amount, based on the Calculate WIP until Date date filter.
WIP Checked: Specifies if selected (true) that WIP is enabled for the project.
WIP Checked by: WIP Checked by User ID.
WIP Checked Date: Date WIP was checked.
Other fields are available by adding them using Personalize. For more information on this topic see: Personalize Your Workspace:
- Resource Usage Qty
- Total Usage Cost: Specifies total usage cost for project.
- Item Usage Cost: Specifies total usage cost of items for the project.
- Item Usage Quantity: Specifies total usage quantity of items for the project.
- Item Budget Cost: Specifies total budget cost of items for the project.
- Item Budget Qty: Specifies total budget quantity of items for the project.
- Expense Budget Cost: Specifies total budget cost of expenses for the project.
- Expense Budget Qty: Specifies total budget quantity of expenses for the project.
- Expense Usage Cost: Specifies total usage cost of expenses for the project.
- Expense Usage Qty: Specifies total usage quantity of expenses for the project.
- Resource Budget Qty.: Resource Budget Qty. from active budget
- Resource Group Budget Qty.: Specifies resource group budget quantity for project from active budget.
- BC % (TM): Estimated Completion %. Calculated based on ETC Res. Usage Qty. on Task Lines (Time & Materials)
- EC% (TM): Estimated Completion %. Calculated based on ETC Resource Usage Qty. on Task Lines (Time & Materials)
- ETC Risk Factor % (TM): Estimated Completion %. Calculated based on ETC Res. Usage Qty. on Task Lines (Time & Materials)
Calculating WIP
From the Project Card Choose WIP > Calculate WIP.
On the Project Calculate WIP page, fill in the fields:
Posting Date: Specifies the posting date for the document.
Calculate WIP until date: Specifies end date for WIP calculation. Change the date filter to view the effect of WIP calculations based on date entered.
Document No.: Specifies the number of a document is created by the calculation.
Include Contract Type Tasks TM: Specifies if this boolean is true then run WIP calculation for all tasks that have a contract type of Time and Material. If this boolean is false, then WIP calculation wil exclude all tasks that have a contract type of Time and Material.
Include Contract Type Tasks FP: Specifies if this boolean is true then run WIP calculation for all tasks that have contract type Fixed. If this boolean is false, then WIP calculation wil exclude all tasks that have a contract type of Fixed.
Click OK.
The project WIP entries created by running the batch project will have the Project Complete check box selected to show that they are completion entries.
For Time & Material projects, the BC % (TM) field displays the updated WIP calculation(s).
For Fixed Price projects, the WIP % (FP) calculation takes the percentage you entered in the WIP % (FP) field and calculates the est WIP Amt. amount. The percentage is multiplied against either the budget cost, the contract amount, or the total of the scheduled billing payments, depending on the option selected in **WIP and Recognition Settings (Fixed section).
Closed by Date and Closed by Entry No
The Closed by Date is used by WIP Calculation to more accurately assess when a transaction is partially or fully invoiced, and a closed status and date in order to determine an accurate WIP posting.
It's important to understand how the Closed by Date and Closed by Entry No. fields are updated when running the WIP Calculation process. When a transaction is closed, the Open field in the Project Ledger Entry is not selected (FALSE) and the transaction is updated with a close date and a close entry #. The line is not closed by partially invoicing it - it is closed when fully invoiced with the last invoice. When a transaction is closed, the system populates the Close Date and Close Entry # fields.
For more information on the Closed by Date and Closed by Entry No. fields and how they interact with WIP processing results, see: Advanced Projects - WIP Processing - Closed by Date and Closed by Entry No. - YouTube
Scenarios that set the Closed by Date and Closed by Entry No
Scenario | Source of Closed by Date |
---|---|
Full Invoice of a Transaction | Closed by Date = Invoice Date when it was fully invoiced |
Use 'Close Invoice Lines' in Invoice Suggestions | Closed by Date = Work Date |
Partial Invoice and then use 'Close Invoice Lines' | Closed by Date = Work Date |
Uncheck 'Chargeable' | Closed by Date = Work Date |
Move Entries with Audit - non-chargeable | If non-chargeable, new entry will have Closed by Date of original transaction |
Move Entries with Audit - chargeable | If chargeable, original entry will have Closed by Date = Posting Date of reversing entry |
Move transactions: When moving a transaction (for example, moving a transaction from one task to a different task), the following entries occur in Project Ledger Entries after running WIP Calculation:
- The original line:
- Open field is unselected (false).
- The Closed by Entry No. is assigned.
- A new transaction is created as a reversing entry to offset the original entry.
- The Open field is unselected (False).
- The Closed by Entry field on this new transaction matches the Closed by Entry field of the original transaction.
- The Closed by Date value matches the Closed by Date (original transaction's posting date) value.
- A new transaction is created for the "move to" task.
- The Open field is selected (true).
- The Closed by Entry field is 0 (no value).
- The Closed by Date is blank.
- The original line:
**Chargeable value:
- When you change a transaction from "chargeable" to "non-chargeable" (by deselecting the Chargeable field on the transaction), WIP Calculation sets the Closed by Date on the transaction to the current business date, and sets the Open field to unselected (FALSE).
Usage line: When you generate and post an invoice on a usage line, WIP Calculation does the following:
- The Usage line:
- Closed by Date will be set to the invoice date of the associated Sales line.
- Closed by Entry No. will be set to match the Closed by Entry No. of Closed Entry No. of the associated Sales line that closed it.
- Sales line:
- Created as a reversing entry where the Total Cost offsets the usage line Total Cost.
Important
The Closed by Date works in with the combination of settings in the Project Card > WIP, Recognition Settings & Allocations > Value Type = Sales Value or Cost Value AND Entry Type Filter = Usage and Sales - open entries.
- The Usage line:
TM Usage Entries
TM Usage Entries uses the posting date and chargeable field to determine if a transaction is included in WIP Calculation.
- WIP will continue to accumulate - the closing date is not used.
- Closing Date does not clear WIP.
- The only way to reverse TM entries is to use the Clear WIP process. For more information on Clear WIP, see: Running Clear WIP
Post WIP to G/L
You can post WIP on multiple projects at one time by accessing Post WIP to G/L from the Role Center > Processing > WIP > Post WIP to G/L, or from the Project Dashboard > WIP > Post WIP to G/L.
You can post WIP for multiple projects at one time or you can do individual projects by using filters. The WIP entries can be posted in the WIP and Revenue Recognition page by selecting Actions > WIP > Post WIP to G/L.
To post WIP to GL from an individual project Card, select WIP > Post WIP to G/L.
- On the Project Post WIP to G/L page, fill in the fields, as necessary.
- Posting Date: Specifies the posting date for the general ledger entries that are posted by this function.
- Document No.: Specifies a document number for the general ledger entries that are posted by this function.
- Use Posting Date in GL/WIP Entries: Specifies if you want to use the reversal date as the posting date for both the reversal of the previous WIP calculation and the posting date for the new WIP calculation. This is useful when you want to calculate and post the historical WIP for a period that is already closed. You can reverse the old postings and post the new calculation in an open period by choosing a reversal date in the open period.
- Adjust Pay.Inv.: Specifies the value of the Adjust Payment Invoice field.
Tip
The project WIP general ledger entries created by running the Post WIP to G/L process will have the Project Complete check box selected to show they are completion entries.
Create Invoice Suggestions
Running the Invoice Suggestion process pulls existing chargeable Usage lines into the Invoice Suggestions section so you can create an invoice. For more information on Invoice Suggestion, see: Invoice Suggestion
After you have created a Sales Invoice (see Direct Invoicing - Sales Invoice page) and posted it, you can then run the WIP Calculation process again to relieve the WIP balance that was created by the Sales Invoice posting.
Repeat this process through the life of the project until the project is complete.
Running Clear WIP
When the project is finished, run the Clear WIP process to complete all WIP postings and run the Post WIP to G/L to post these results.
To run the Clear WIP process on multiple projects at once, access the option from the Role Center > Processing > WIP > *Clear WIP. You can either specify an individual project number or clear the number filter to run it on all projects.
You can also access Calculate Clear WIP via an individual project by opening the Project and navigating to WIP > Clear WIP.
Enter any Options or Filters and click OK.
To review the WIP Entries in the Project G/L Ledger, navigate in the Project Plan to WIP > Project WIP Entries.
To view Project Ledger WIP entries
All project-related entries are recorded in project registers and are numbered sequentially. From the project register, you can get an overview of all project ledger entries.
- Navigate to the Project Plan you wish to review posted WIP entries.
- Select WIP > Project WIP Entries or WIP > Project WIP G/L Entries to review Project WIP entries posted to the G/L.
You can also review posted and unposted WIP entries on the Project Card > WIP Postings fast tab. The left-side displays WIP entries To Post and the right-side displays WIP entries that are Posted. To review entries, click the numbers that display to open Job WIP Entries page (in the To Post section) or Job WIP G/L Entries page (for Posted section).