Create a project contract to invoice for percentage-of-completion projects

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Important

This content is archived and is not being updated. For the latest documentation, see Microsoft Dynamics 365 product documentation. For the latest release plans, see Dynamics 365 and Microsoft Power Platform release plans.

Applies To: Microsoft Dynamics AX 2012 R3, Microsoft Dynamics AX 2012 R2, Microsoft Dynamics AX 2012 Feature Pack, Microsoft Dynamics AX 2012

Use these procedures to create a project contract, the related project, and billing rules for a percentage-of-completion project. In a percentage-of-completion project, you create customer invoices when you have completed a specified percentage of a project. You and the customer define the percentages for a percentage-of-completion project in the project contract. You can also specify the timing of the invoices by setting up billing rules for the contract.

Example

Your organization is a software consulting firm. You agree to develop part of a product for your customer, a software development company. Your organization agrees to deliver the software code for the product over a period of six months. The customer agrees to pay your organization a total of 100,000 for the deliverables, in increments of 25 percent of the contract. You agree to send an invoice for 25,000 to the customer when each 25-percent increment is completed.

Prerequisites

Before you create a contract for a percentage-of-completion project, you must set up following project information in the Project management and accounting parameters form:

  • In the Number sequences area, set up a number sequence for billing rules.

  • In the Journals area, set up a fee journal that is used by default to post billing rules.

Create a percentage-of-completion contract

Use this procedure to create a project contract that has percentage-of-completion terms.

  1. Click Project management and accounting > Common > Projects > Project contracts.

  2. On the Project contracts list page, on the Action Pane, click Project contract.

  3. In the New project contract form, complete the following fields:

    • Project contract ID

    • Name

    • Funding type

    • Funding source

    • Sales currency – By default, this currency is used for customer invoices that are associated with the project contract. However, you can modify the sales currency for a specific customer invoice.

    Click OK. This information is copied to the header of the Project contracts form.

  4. In the Project contracts form, complete the rest of the required information for the project. To change default values in the form, on the Action Pane, on the Project contract tab, click Edit.

Create a project for a percentage-of-completion contract

Use this procedure to create a project and any subprojects that are associated with a contract.

  1. In the Project contracts form, on the Project contract tab, in the New group, click Project.

  2. In the Create project form, select a project type of Fixed-price.

  3. Select a project group. A project group defines posting information for projects that are assigned to the group.

  4. Enter additional information about the project. For example, complete the following fields:

    • Project ID

    • Project name

    • Project group

    • Project contract ID – This field associates a project contract with the project.

      Note

      The Project contract ID field is automatically filled with the number of the project contract from the Project contracts form. However, you can change the project contract number.

    • Customer

  5. Enter any additional information that is required, and then click OK to create the project.

  6. After you have created the project, set the project stage to In process. For more information about how to set a project stage, see Modify a project stage.

Create billing rules for a percentage-of-completion project

After you have created the percentage-of-completion contract and project, use this procedure to create the billing rules that you negotiated with the customer.

  1. Click Project management and accounting > Common > Projects > Project contracts. Select a project contract.

  2. In the Project contracts form, on the Project contract tab, click Billing rule.

  3. In the Billing rules form, click New.

  4. In the Line type field, select Progress.

  5. On the Billing rule line details FastTab, in the Contract value field, enter the total value of the contract.

  6. In the Project field, select the project to which the billing rule applies.

  7. In the Category field, select the category for the billing rule.

  8. You can assign the billing rule to additional projects. On the Project FastTab, in the Available projects section, select a project, and then click Add. The project is displayed in the Selected projects section.

  9. You can enter a percentage to calculate the amount that the customer withholds from payments on an invoice. On the Payment retention terms FastTab, select the funding source, and then, in the Retention percentage field, enter the retention percentage.

  10. Repeat this procedure to create additional billing rules for the project contract.

See also

Create billing rules

Billing rules (form)

Project contracts (form)

Projects (form)

Project management and accounting parameters (form)