Cost Accounting Software

Posts Tagged ‘Project’

AbitibiBowater abandons pilot project to convert newsprint to packaging paper
MONTREAL – AbitibiBowater has abandoned efforts to manufacture brown packaging grades of paper but says it will continue to seek other ways to address declining North American demand for newsprint, its main product.

Read more on The Canadian Press via Yahoo! Canada News

Project Management Software Project Insight Chosen by Nat’l Western Life
IRVINE, CA–(Marketwire – October 19, 2010) – Project Insight, project management software provider, announces its selection by National Western Life Insurance ( NWL ) for the organization’s project management needs. National Western Life is a thriving life insurance company with a growing number of information technology (IT) projects. Previously, projects were managed with whiteboards and with …

Read more on Marketwire

by LEE HOOI SENG, AMN, CA(M), FTII, FCA, CFP, RFP, MA, (Chartered Accountant) More Info: www.asiaictpm.org Lee Hooi Seng and his team from LLTC Chartered Accountants (www.lltc.com.my) will help you to understand the Accounting and Financial aspects of Project Management, including how to apply proper accounting principals to a project. He will cover Project Financing, Taxation, Cost Accounting and Budgeting as well. Article jypg.wordpress.com

Engineering Services and Project Consulting companies across disciplines, namely, electrical, mechanical, electronics, construction, architectural and those addressing infrastructure execute projects wherein tracking Project Budget and Actuals for material, labor, revenue and other expenses is essential. These companies execute a wide range of projects across industry verticals which make it important for them to adopt best practices.

In order to deliver on milestones within budget you need to have effective co-ordination and communication between the various departments involved, coupled with accurate tracking of materials, expenses and revenues. In other words, you require a strong project management and job costing mechanism built into a robust accounting system.

Business Challenge:

For every project, post analysis and requirement scoping, a detailed design and component selection is undertaken. A Bill of materials is then created which goes to the purchase department wherein it has to be logged in against the specific project. In such a complex scenario there is a major challenge in material management, tracking and planning. Also since there are various costs that have to be incorporated into the project billing, such as material cost, time cost of man hours spent by personnel from multiple departments, you require a system that could ensure accurate time and materials costing while providing estimates to its clients. The billing process is also quite complex as invoices need to be raised at any phase of the project, hence it is essential for project cost visibility at all times in the project cycle.

Apart from needing a project job costing solution, there is also a requirement for accounting software that could meet your financial requirements, ranging from Indian tax compliance and payment, accounts receivable and accounts payable, bank reconciliation and general ledger.

All small and mid-sized companies are concerned about the impact that growth would have on its technological investments and would want a modular, scalable solution that would adapt to its unique workings and keep pace with the organization’s growth.

Solution:

An ERP system having a strong project job costing module that integrates with the financial modules and purchase order addresses these rigorous requirements. A sophisticated, robust operating and accounting system, The Project Job Costing module makes the estimating, tracking, costing, and billing of projects easy and manageable, thus simplifying the cost control and planning. Project Job Costing connects project activities with company financials, provides extensive inquiry and reporting capabilities and helps ensure accurate and timely accounting and billing processes throughout the life of a project. The powerful features incorporated in

Project and Job Costing help in identifying potential issues, tracking costs, ensuring profitability and determining success factors for any project. The automated billing features in this job cost accounting software streamline customer invoicing and reduce the time spent managing this process.

Benefits:

The project and job costing module in an ERP enables you to place orders, receive materials, track materials and assign manpower against specific projects. Since it automatically tracks the project cost throughout its life cycle, it allows the managers to keep track of project profitability at all times.

The strong reporting feature avoids delays in the project work flow due to communication lapses, prevents misallocation of materials and ensures effective utilization of manpower and resources to guarantee profitability.

By providing a greater understanding of the profitability and multi-level costing of projects, the ERP also helps you to estimate better. Since it helps in tracking arrival and dispatch of materials at all times, it also facilitates supply chain management.

There is no shortage of general accounting packages available however if you are in the building and construction industry you should seek out a specialised solution designed just for your industry. Why? ………Because construction is so different and it’s so easy to fail.

The issues start with the construction projects themselves. These can often involve large value contracts and what concerns the business is that changes in the scope of works (called variations) are often greater than the project’s planned “gross profit”.

Unless variations are managed properly the viability of the business is at risk. Purpose built Construction Accounting Software will include facilities to highlight these and to produce the required paperwork through the various stages a variation goes through before it is approved by the client. This ensures that should either the Head Contract or Subcontract be disputed then the required paperwork is in place to help the business justify its claims in a court of law.

With construction project varying in their scope of works; the corresponding changes to the value of contracts and subcontracts; and payments being made out of sync with deliverables, it is easy to see why the stakeholders strive to clearly recognise their position in all projects and to implement corrective actions to avert liquidity issues downstream.

Construction companies generally fail for liquidity reasons – therefore, Construction Accounting Software will focus on providing tight liquidity management with the current status for all projects always available. To complicate matters, good project managers will aim to maximise, under the terms of the contract, the income from their projects. This will result in an influx of funds however funds received prior to expenditure should not be confused as “profit”. They are “project prepayments” and should be clearly reported as such.

Profit reporting is another unique feature of the industry. Traditional accounting assumes that the client is only invoiced for work provided. However construction projects are typically executed over a number of financial periods and depending upon the contract this could mean that the client is invoiced in advance. Using general accounting software, companies would then overestimate their profits and pay tax on them. Later they would have to do reversals when all the activities required to complete the project required payment. A proven approach is to report on current “earned value” by projecting both Income and total project costs to completion.

Construction Accounting Software needs to take a wider view of the world than standard accounting systems. For example, the projects themselves involve considerable risks that can cause cost increases or time delays or both. Firms need to manage these risks and ideally the construction project management software would feature an integrated operational risk management software system. This would ensure the key items of work, decision or verification are properly managed and account for the value of the identified risks.

The Taxation Laws (of Australia and probably elsewhere) are another reason why construction accounting is different. Tax treats certain construction specific transactions in a special way. For example:

* Goods & Services Tax (GST) on Progress Claims

* Retentions

In summary, Standard Accounting Systems, fail to provide what the industry requires; namely a package that mitigates disputes, manages risks, conforms to industry Taxation requirements and accurately reports liquidity and profits. These functions can only be effectively met through specialised Construction Accounting Software.

A summary of integrated project accounting software for project-driven companies by Synergy Business Solutions. Highlighting how the solution delivers strategic business value to firms and how Synergy proves a solution works with your data before you purchase.

FREE construction estimating software training videos help you organize your Estimating, Accounting & Project Management Software processes. Pick one or more of OUR processes that will get you on the right track to Consistent and Profitable Estimates. Please visit us at www.asktheestimator.com

Should you purchase project accounting software for your business?

Project accounting software helps companies track and manage customer-focused or internal projects, providing information about project profitability, revenue and expenses by project, and project-related tasks, resources, timelines, and much more.

Project-centered companies frequently use project accounting software as their primary or only accounting software, so that one system handles all aspects of their accounting needs. This type of specialized project accounting software can be used by project-centric businesses such as job shop or professional service firms.

Even if you want to manage expenses or profits by job or task, that does not necessarily mean you need project accounting software. Conversely, even if you are not a project oriented business, project accounting software may be beneficial for you.

Here are some key factors to determine if project accounting software is right for you:

Do you need WIP or revenue recognition information more frequently than once a year? If so, software that automates the calculation of WIP and revenue/cost recognition based on milestones and/or activities may save you a very significant amount of time and effort. Do you need to track costs and/or revenues by activity? Many organizations don’t think of themselves as “project” based, but still need to track costs and/or revenues by something — perhaps you need to track costs by grant code, or by marketing campaign, or by job. Project accounting can be just as useful for internal projects as for customer based projects, especially the project accounting modules that are part of larger ERP or MRP systems.

There are many other features and functions of project accounting software, but these issues are frequently deciding factors in one direction or the other.

If you are thinking about buying project accounting software for your project centric company, there are literally thousands of good software programs to choose from. This is a big decision that can seriously impact your business for better or worse, so make sure you do your homework before you finalize your choice.

Gail Hoover King, Rockhurst University, Cost Accounting Teaching Tip, CTLA 2008