Work Breakdown Structure in Dynamics 365 Finance and Supply Chain
Using the work breakdown structure in Dynamics 365 for a project can help address a key challenge for the many people involved. From customers, billing, progress management, activity tactics, and resourcing to price, and estimation, giving audiences a centralized view helps them in several key ways.
We know we need metrics to run a business, but the level of aggregation of a top-level project is too diffuse to be useful. Every stakeholder in a project does not need the insight other project workers do, but the deliverables of a project must be visible to everyone who works on it.
In this blog, we will highlight the different parts of the work breakdown structure (WBS) and show you how easy it is to create in Dynamics 365 Finance and Supply Chain (or Dynamics 365 Finance and Operations).
What is a Work Breakdown Structure in Dynamics 365 Finance and Supply Chain?
Fundamentally, the breakdown is from the big picture values of hours, calendar, cost, and revenue for the project to subsections which can be divided any way our team chooses.
As you can see from the diagram, the WBS is composed of the project, subprojects, and activities. Usually, they call out deliverables or subsets of effort to reach a customer deliverable, but the breakout can come from other themes as well. Examples of some of these other themes include:
- Sales pursuit costs
- Subcontractor assignments
- Trades or departments such as Design, R&D, application engineering, electrical construction, excavation, etc.
- Installation specifics
- Building codes, customer billing, and other industry-specific standards
These constitute the vectors in journals for posting cost for hours, materials, and expenses. This allows you to compare and forecast at every level of aggregation.
A huge benefit of project management is that projects for the same “repeatable” skills and capacities are always different, while we seek the highest repeatability we can achieve. The project and its WBS deliver an income statement for each serious undertaking in the legal entity under one chart of accounts in Dynamics 365 Finance and Operations. This discussion refers mostly to billable projects and does not explore the controls of project contracts in Finance and Operations in any depth.
What Makes a Work Breakdown Structure in Dynamics 365?
There are several optional moving parts that come together to make a work breakdown structure. Here is a list of some of those parts:
Types of Projects:
- Fixed Price
- Time and Material
- Internal
- Investment
- Time
- Cost
The mechanics of billing and revenue recognition vary with the missions of projects. Subprojects allow us to group under one parent project the subsets in commercial terms diversified by the following. Non-revenue projects may be included under a billable project to track costs only.
Bill/Invoice Multiple Parties:
In some projects joint ownership requires separate customers to be addressed by various rules of shared contract. This includes intercompany projects for shared services.
Multiple customers of a joint venture:
Different customers may participate in different activities requiring billing rules to specify who pays to what limits for what based on specific activities or subprojects.
Billing rules:
You can use billing rules in the project contract to control pricing and billing for a single customer to diversify agreements negotiated for specific contracts or subprojects.
Time and Material:
In time and material (T&M) projects, the different activities deserve their revenue estimates, accruals, invoices, and historical statistics. This is achievable by subprojects and activities.
Drafting estimates
Use data across projects to draft estimates and to improve repeatability via projects, subprojects, and activities.
Subprojects and categories:
Subprojects and categories allow us to diverge general ledger posting alignment under the same parent project to account for efforts like those just listed. This divergence of posting accounts is handy in cases where a major unit of delivery such as capital equipment is attended by for example a warranty liability or contract subscription. A project can track these postings while presenting the customer with a bill for all-in pricing or optionally the details.
Projects and subprojects:
These allow us to set price details where negotiated for customer, contract, region, or union for ease of estimating and billing T&M
Establish Effort and Ownership in Your Work Breakdown Structure
A big part of what makes your WBS work effectively is establishing an ownership hierarchy. It's important to establish a focused effort from everyone on your team with clear roles and responsibilities. This helps the project flow more effectively and ensures people stay focused on the tasks relevant to them. Here are some of the ways work breakdown structures can help you do that:
Segregating change requests and orders:
Doing this from the original budget increases stakeholder collaboration and can align with the changes proposed, accepted, closed, and billed separately.
Deliverable and quantified units of work:
Project managers, site supervisors, and subcontractors need deliverable and sometimes quantified units of work to map an agenda for the day, week, month, etc. Activities and subprojects are appropriate milestones for this detailed effort and can accept cost and revenue postings to reflect the teams’ efforts.
To align these efforts, many project managers use the schedule details of the activities to recruit and commit specific resources of people, subcontractors, equipment, and other costs.
Earned Value Analysis:
For a given planned activity and its schedule, project managers like to use earned value analysis to track the health of the effort exerted, and adjust budget or client expectations as assessment accumulates early and throughout the effort.
Pause or prevent postings:
For completed work, the teams need to be able to indicate the completion (or pause) and prevent postings for specific activities or subprojects to keep an eye on the prize. This is even more critical in change order tracking since they are frequently billable in different terms than the original workload and tender.
Parent project:
In projects with longer-term maintenance and warranty liabilities, the parent project can host the subproject of the operating maintenance and replacement cost stream for the customer-owned or leased assets stood up for the maintenance and R&D engineers to shepherd.
Likewise, the parent project frequently hosts subprojects to deliver upgrades or additional capabilities to the customer.
The differences between activities and subprojects in D365F&O are highlighted in the table in the appendix. Here are some examples of these missions for the WBS:
How to Create a Work Breakdown Structure in Dynamics 365 Finance and Supply Chain
Without digging into all of the features of the Subproject and the Activity nodes, let's get you started creating your own WBS to pilot several Dynamics 365 Finance and Supply Chain concepts.
1. Create a new project
Start by going to Project Management and Accounting and navigating to Projects > All Projects > click on "New". Note how the subproject is simply a project record with a parent project.
2. Create a subproject
Go to Project Management and Accounting> Projects > All Projects > (select parent to update) > Project > New > Subproject.
3. Create the work breakdown structure
Start by selecting the project you want to update the WBS for (in this case, the sales pursuit subproject).
In the WBS form add lines: new, indent, update details
- Insert line
- Add description
- Add placeholder category for hours (can be a scheduling category if no cost is desired)
- Update hours here or in detail
- If the activity is subordinate to another, use an indent to reflect this
- The new activity will get an ID number unique across all projects even though the activity may be used in many projects by the same name.
4. Add details for forecast specifics for expenses, hours, and materials as required:
5. Save it as a WBS template to reuse in future projects
You can then import it for future projects.
Recap
In ten minutes, you can begin to define the Dynamics 365 Finance and Operations WBS you need and start posting to the detailed level as well as start comparing costs and revenue for the perspectives described. This process can be launched as early as a project quotation so that the effort of estimating a project is utilized optionally at the launch of a won segment of work.
There are two interesting evolutions in play both requiring a balanced WBS structure to exploit benefits from both production and project approaches together:
- Manufacturing firms taking more ownership of the customer lifecycle experience requires projects to regulate deeper engagement in marketing, sales, product definition, and after-delivery services such as support, service, and relationship engagement.
- Construction firms are being pulled from traditional project-only cycles into production and inventory philosophies by the modular trend in engineering, architecture, and mechanizing productive capacity.
Work paths and controls change constantly along with revenue models. Work breakdown structures must be articulate and transparent, but evolve to innovate from many influences.
Lastly, here is a handy list of what is considered a subproject, an activity, or both:
Want to Learn More About Managing Work Efficiently with Dynamics 365 Finance and Operations?
Get in touch with our team! Our experts are knowledgeable and can help you implement features and processes that will help you and your team work smarter.
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