How to configure Project Foreseeable Losses in Microsoft Dynamics AX 2012

The awareness of a project's losses in a preliminary stage is vital for project-based companies. When executing million dollars projects, it is imperative to arrange the finances so as to ensure projects are on track for long-term profitability and success.

For companies managing their project-based activities in Microsoft Dynamics AX 2012, the right configuration can give management visibility into any foreseeable loss. When the estimates of total project costs and revenues indicate a loss, then the provision of foreseeable loss is accounted on the project irrespective of percentage of work completion or the project accounting method followed (Percentage of work completion or completed contract).

In AX 2012, the amount of foreseeable losses provision is usually determined regardless of:

1. Whether or not work has commenced on the project, and
2. The percentage of work completion.

System setup and configuration for Foreseeable Losses

I am using the "USSI" Demo Company in Dynamics AX to configure Foreseeable Losses process for this article.  The steps below explain how to setup and configure the system for this process.

1. Create Accrued loss category by performing the steps below.

a. Create Category group for project accrued losses with transaction type "Expense".

Project management and accounting > Setup > Categories > Category groups

b. Create shared category for accrued losses and select the option "Can be used in Project".

Project management and accounting > Setup > ...