Budgeting for Construction Projects in Dynamics AX 2012 R3

By Robert Mountain | October 9, 2015

When budgeting a construction project, the things we are most concerned with, besides revenue, are the cost of our labor, material and equipment. These are three major items that can lead to the success or failure of our project. To effectively budget and track your progress, a budget for a construction project in Dynamics AX should give a project manager an overview by transaction type (labor, material and equipment) and a detailed view by Project Category and Category Group.

Accomplishing Construction Budget Goals with Dynamics AX


The expansion of the Work Breakdown Structure functionality allows Project Managers to schedule projects directly in Dynamics AX 2012 or to integrate from Microsoft Project if they so choose.  Using the WBS within Dynamics AX lets the Project Manager prepare a detailed estimate of the amount of work necessary to complete the project by role or individual resource.  From there, the WBS can be imported directly to the Project Budget, using Project Category and Activity to provide a detailed budget of hours.  While the same budget lines can be produced from an Hours forecast, the WBS and Scheduling options provide additional information the Project Manager will find useful.  Knowing how many electricians, plumbers, etc. a project will need and when they will be needed can cut down on wasted time and effort.


Just as with labor hours, an Item Forecast can be established for your construction project, allowing the Project Manager to estimate the quantity and type of material needed for the project.  The Item forecast can also be imported to the Project Budget by Project Category and Activity.  The down side to Item Forecasts is you have to have the items set up in AX.  Procurement Categories aren’t going to cut it so you have to be specific.  On the plus side, you can use Project Categories a little more extensively if you would like.  Either way, you still have the original Item Forecast to go back to and look at your original amounts.


This is an area that Dynamics AX doesn’t really have a home for when it comes to Project Accounting.  The challenge is to make it simple enough to use and to isolate the transactions related to equipment in your project.  I have a couple of suggestions that may fit the bill, however you will have to decide for yourself which one meets your needs.

Equipment as a Worker – You could conceivable set up your equipment pieces (i.e. trucks, dozers, cranes, etc.) with worker records alongside your human worker records.  You could then use the resource assignment and WBS to schedule equipment as you would a worker, thus allowing you to import both Labor and Equipment to the Project Budget.  The down side is that all of the lines would be Hours type transactions so they would tend to get lumped together in some views of the Budget and Budget vs. Actual review.  The up side is you have a detailed breakdown of the usage on all of your individual pieces of equipment.

Equipment as Inventory – Equipment seems to lend itself to the Inventory process rather handily.  You could create a Product record for each piece of equipment (or you could create a single product record for all trucks, all dozers, etc.) and use Inventory to transfer between Projects using an Inventory Site/Warehouse for each project.  This gives you a way to track where your assets are and when they are assigned to a specific project and you can set the cost and sell price for each one.  You can also use Procurement categories to keep track of your equipment by group, class, etc.  You can include the equipment in your Item Forecast for import into the Budget and use the Project Categories to separate which transactions are true material and which are equipment.  Be advised however, you will need to carefully set up the posting options for your equipment products as they will be a bit different from material transactions

Equipment as a Project Expense transaction – Probably the simplest process.  Simply set up your Project Categories to reflect your equipment and transaction away.  Of course, you won’t have as much detail as you would with some other options so keep that in mind.

I’m sure there are any number of other options that might come to mind so don’t limit yourself to these three.

The decisions you make about Project WBS, Project Categories, Project Category Groups and your Cost Template will influence how you interpret your budget results.

Dynamics AX 2012 provides you with an inquiry to review your Project budget balances and gives you a number of options on how to group your budget and actual transactions.

Transaction Type: This view groups everything into Hours, Expense or Item transactions.  Handy if you use separate Transaction Types for Labor, Equipment and Materials.  You do lose a little detail if you combine Equipment into Items or hours.

Transaction Type in Dynamics AX

Category Group: This is the Project Category Group.  This could come in handy if you are using Workers or Products to track your equipment.  Set up separate Category Groups for Equipment, Workers, Items, etc. and you will get a breakdown by group and each project category under that group.

Category:  This is referring to the Project Category.  A bit more granular than the group level inquiry.

Category Groups in AX 2012

Cost Template:  You can use multiple cost templates to view your project, and include or exclude various Project Categories on each cost template.  The cost template determines which actual transactions are included when calculating the percent complete of the project and thus, the revenue recognized.  You can use multiple iterations of the cost template to review your budget results.  For more information on cost templates, please refer to this Microsoft TechNet article.
Keep in mind that there will be other things that need to be budgeted for during a construction project that fall outside of labor, material and equipment.  These are just some of the basics that will most likely be seen in most projects of this type.

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