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How to set up the Project Costing option

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Description

Sage 50 Accounts Plus and above and Sage 50cloud Professional have an enhanced Project Costing option which helps you to maintain accurate details about projects and enables you to track costs, revenue and stock movement of a project.

The overall objectives of a project costing process are to manage your projects, give you total control and a thorough understanding of your project costs. With a good understanding and better control of your costs they can potentially be reduced, and therefore increase your revenue and profit, improving the productivity of your business.

Resolution

Set up Project Costing

When creating a company, Project Costing is enabled by default. However, if it has been disabled, you can enable it by following these steps.

  1. Settings > Company Preferences > Parameters tab.
  2. Select Enable Project Costing check box > OK.

To optimise your system performance, as a guideline, we recommend that you maintain fewer than 2000 project records.

Project Costing options

Sage Project Costing helps you to track the progress of your projects using a range of statuses, cost codes and resources.

Project Costing - Status

The project costing option helps you to track the progress of your projects using a set of statuses that you can define to suit your business. For each status, you can enter a code and description, and specify whether the status allows you to make cost postings to the project and whether you can delete the project record.

By default, the following five project statuses are available:

Status Code Definition Make Postings? Delete Record?
ACTIVE Active Yes No
SNAG Completed, open Yes No
COMPLETED Completed, closed No Yes
SUSPEND Suspended No No
INITIAL Pre-acceptance Yes No

When you create a new project record, Sage Accounts automatically assigns the default status set in the Configuration Editor. When you first use Project Costing, the default status is ACTIVE, however, if required, you can change this.

As a project advances, you can change the status to reflect the stage in the life cycle, for example, when a project is in progress and you need to make cost and billing postings to it but do not want to delete it. At this stage, the status should be ACTIVE or a similar status that allows postings and prevents deletion. When the project is complete, you may want to delete the record therefore you should change the status to COMPLETE.

For further information about setting up or amending your project costing statuses, please refer to the section To set up or amend project statuses, cost types, cost codes and custom fields later in this article.

Project Costing - Cost Type

So that you can analyse project costs, each cost code is allocated a type. This means you can group similar types of cost together for reporting purposes.

For example, if you set up cost codes for electricity, water, gas and rent you could assign them all the OVERHEADS cost type.

By default the following cost types are available:

  • LABOUR
  • MATERIALS
  • OVERHEADS
  • MIXED
  • OTHER

For further information about setting up or amending your Project Costing cost types, please refer to the section To set up or amend project statuses, cost types, cost codes and custom fields later in this article.

Project Costing - Cost Codes

With Cost codes you can identify the various types of cost that a project incurs, for example, the materials that make up a product or the labour element of a job. When you enter a cost for a project you must associate a cost code. This helps you to analyse the costs for your project at a later date.

Cost codes can relate to specific items or activities or they can define phases or group activities on a project. The level of detail you use for your cost codes is entirely up to you and depends on the degree of cost analysis you want to achieve.

For example, to achieve a summary analysis of overheads for your projects, to group all of this type of cost together, use the default OHD1 cost code. However, if you want to analyse overheads in detail, you can set up an individual cost code for each type of overhead, such as electricity, water, gas, rent and so on. Setting up individual cost codes allows you to accurately break down and analyse overheads incurred. By allocating each individual cost code with a cost type, detailed in the previous section, you can also analyse overheads in total.

By default, the following four cost codes are available:

  • LAB1 (Labour Charges)
  • MAT 1 (Material Charges)
  • OHD 1 (Overheads)
  • MIX 1 (Mixed)

For further information about setting up or amending your Project Costing Cost Codes, please refer to the section To set up or amend project statuses, cost types, cost codes and custom fields later in this article.

Project Costing - Resources

All projects require people, staff or outside contractors, to use materials, machines and other means to complete the project or job. Each of these components, including the people, contributes to the progress of the project and incurs costs.

Project Costing Resources are used to identify any entity whose costs can be allocated to the project. When you post Project Only Costs to your project you can specify what resources the project uses.

Before you can assign a resource to a Project Only Cost, you must set up your resources list. You can create as many resources as required and specify a charge rate and unit of measurement for each. When you enter a resource code and a quantity into a Project Only Cost, Sage Accounts uses the rate and unit information of the resource to calculate a total cost for the transaction.

For further information about setting up or amending your Resources, please refer to the section To create, amend or delete a Resource later in this article.

Set up or amend project statuses, cost type, cost codes and custom fields

You can create your own statuses and cost codes, and define the labels for your custom fields to customise the Project Costing feature to suit your specific business requirement.

  1. Settings > Configuration > Project Costing tab > enter the following project settings:

    Project Status You can use this section to add, edit or delete project statuses. You can add a maximum of 99 statuses.

    To add a new status > Add > enter a short code and description for the status.To specify whether the status allows you to make cost postings to the project or whether you can delete the project, select the Allow Postings and Allow Deletion check boxes as required.

    Tip: You cannot set up a status with both of these check boxes selected.

    To edit a status > select the status from the list > Edit.

    To delete a status > select the status from the list > Delete.

    Tip: You can only delete a status if there are no Project Records currently using it.

    You cannot delete the default status. In addition, you must always retain at least one status, which if it is the only one remaining, is set as the default. To change the default status, select the status you require and click Set as Default.

    Cost Type You can use this section to define your project cost types, up to the maximum limit of 99 types.

    To add a new Cost Type > Add > enter a unique name > OK.

    To amend a Cost Type > select the type from the list > Edit.

    To delete a Cost Type > select the type from the list > Delete.

    Tip: You can only delete a type if there are no cost codes associated with the type

    Cost Codes You can use this section to define your project cost codes, up to the maximum limit of 99 codes.

    To add a new Cost Code > Add > enter a unique code, description and cost type for the Cost Code > OK.

    To amend a Cost Code > select the code from the list > Edit.

    To delete a Cost Code > select the code from the list > Delete.

    Tip: You can only delete a Cost Code if there are no transactions associated with the code.

    Project Custom Fields The Project Record contains three analysis fields that you can use to categorise projects for reporting and analysis purposes. For example, you could categorise projects by project manager, project type and geographical area.

    In the Project Custom Fields area, use the Field 1, Field 2 and Field 3 boxes to set up the labels for the analysis fields.

  2. To save your changes > Apply > Close > when prompted to save changes > No.

You have now set up your project statuses, cost types, cost codes and analysis fields. Your next step is to create a list of resources for your projects to use.

Create, amend or delete a Resource

Project Costing uses the resources to identify any item or person whose costs can be allocated to a project. When you post Project Only Costs to your project, you can specify what resources the project uses. Before you can assign a resource to a Project Only Cost, you must set up your resources list.

Create
  1. Projects > Resources > Add > complete the Resources window as follows:
    Reference* Enter a unique reference for the resource
    Name Enter the name of the resource, for example, Plumber.
    Unit of measure Enter the unit of measure, for example, per hour.
    Cost Rate Enter the cost rate per unit
    Cost Code Enter the Cost Code fro the resource, for example, LAB1.

    * denotes a compulsory field.

  2. OK > Close.
Amend
    1. Projects > Resources > select the resource from the list > Edit > make the required changes.

You can't change the reference of a resource.

  1. OK > Close.
Delete
    1. Projects > Resources > select the resource from the list > Delete.
    2. Yes > Close.

You can't delete a resource if it appears on any transactions for an existing project.

Next steps..

Once you have set up your projects you're ready to start processing using projects.

 

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