Project accounting: Utilizing ERP to effectively track costs and resources
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Many organizations are project driven, with projects comprising a key part of revenue and success. Therefore, project accounting is a significant business need, to increase visibility into project status and to effectively allocate resources. Unfortunately, many enterprise resource planning (ERP) systems lack robust project accounting capabilities, leaving many companies in search of a system that aligns with their needs.
Project accounting helps companies monitor projects, providing real-time information to better understand the various drivers that impact their overall health. Some of these key drivers include:
- Tracking expenditures against budgets
- Monitoring project net margins against plan or budgets
- Having visibility into a project's future or committed expenses
Most organizations understand the importance of project accounting, but are limited by their current technologies. Companies with ERP systems without strong project accounting capabilities often turn to time-consuming spreadsheets that become outdated quickly and make resource tracking difficult.
Some ERP platforms perform project accounting tasks, but do not allow managers to be proactive in managing projects. Others have project accounting as an add-on to the core platform, but the best systems can satisfy the needs of project-based businesses out of the box. Four such ERP systems are: NetSuite®, Microsoft Dynamics® AX, Microsoft Dynamics SL and Deltek Costpoint®.
To monitor project health and resources on a timely and effective basis, an ERP system must have some core features and functionalities. However, some systems are better fits for certain businesses than others. Effectively monitoring project health has become even more critical to remain competitive, and companies must learn how to understand system capabilities to choose a platform that matches their business needs.