Project Expenses at Quatation Phase

[kumar123]

I am currently working for a process where my client bids for projects and if for example if he bids for 5 projects in a year and we will perform the cost planning and revenue planning out of them 2 were successful and remaining 3 were dropped.

My question is how do i settle the cost and handle the expenses incurred for the failed projects.

Does it be an overhead for my overall project?  How do i settle them in period end closing?

I appreciate if you can provide me the detailed business process on this.

Regards

Naveen

[kenmelching · Accepted solution]

Here's one scenario:

Step 1:  Create an Operative Project with a single WBS element to capture the bid & proposal costs.

Step 2:  Create a Project Simulation to support the sell phase and calculate a quote for the final project structure.

Step 3a:  Don't get the job:  Settle the first WBS to a cost center.  Delete the simulation.

Step 3b:  Get the job:  Transfer the PS simulation to an operative project and add it to the first project.

Step 4:  Execute the project and settle the complete project to COPA.

[Former Member]

Hi Naveen,

During phase of the bidding/quotation, planning is normally carried in other planning version say version 1, not in version "0". Once when project get confirmed planned cost are moved to version 0 (depends again on business process).

So till project confirmed it has to be nill planning in version 0. in case if you want to consider or book actuals for the project for time spending on project, you can book actual cost, plan also with same amount. Run RA & settlement ( rule set according to business process)

After considering all above aspects, you can go ahead and carry TECO first and CLOSE the project.

Regards,

Pradeep

[Paulo_Vitoriano]

Hi Naveen,

It depends on the business reporting requirements.

From the GL perspective you can consider sales and bidding process as Practice development cost, same kind as employee trainings for example.

If you use COPA, then you can use many other characteristics, most obvious is the customer.

From the project perspective bidding is not an overhead, it is a direct project cost.  Whenever you are using categories like overhead or direct it always depends in relation to what you are talking about.

Regards,

Paulo