Project Profitability
Project and related activities are generally active for longer periods. While developments keep happening on the Project, various transactions are done against each project. While new developments keep happening on a project, it may lead to more investment in terms of time, money, and material. Hence, it becomes important to track the Profitability of a Project to ensure that you don't overspend.
In simple terms, Project Profitability is the difference between the revenue generated from a project versus the costs associated with it. It helps businesses measure return on investment and make informed decisions about resource allocation and project continuation.
Project in Sales Transactions
You can link a Project in all sales transactions like Sales Order, Delivery Note, Sales Invoice, and Payment. Linking your project with the sales transactions will help you track the income received against that Project.
In sales transactions, the Project field is generally available in the Accounting Dimension section.
Project in Purchase Transactions
You can also link your project to the purchase transactions like Purchase Order, Purchase Receipt, and Purchase Invoice.
In purchase transactions, the option to link a project is available in the Item table, because you could be procuring material for multiple projects from the same purchase entry.
You can also select Project from the Accounting Dimension, This would choose the project for all of the products that you are trying to purchase in single Purchase Order, Purchase Receipt and Purchase Invoice.
Budgeting against Project
You may create a Budget particular to a Project, setting spending limits against different cost heads. Anytime an expense claim or purchase is made under the project, ERPNext automatically checks it against the budget available. In case the expense is more than the spent limit, users are given a warning or blocked from entering the transaction, based on permission.
Series: In Project Budgeting, the Series field is utilized to give each budget entry posted against a project a distinct ID. This way, each budget record is traceable, auditable, and can be referred to in a report.
Cost Center: In Project Budgeting, the Cost Center field is critical to aligning the budgetary allocation with the accounting setup of the company. A cost center can be a department, business unit, branch, or location, and enables financial tracking and control at a detailed level.
ERPNext allows you to do periodic budgeting (e.g. monthly, quarterly) with the capacity to budget for future spend and forward-balance unspent funds. You can also see real-time budget usage charts through the Project and Budget reports.
Project Profitability
Project Profitability is determined by comparing all income and expense transactions assigned to a Project, providing you with an overall performance and margin insight.
To see this, go to:
In the report, you can use a Project filter to look at individual projects. The analysis has income (Sales Invoices, billed hours), cost (Timesheets, Purchase Invoices, Expenses), and offers metrics such as Gross Profit, Gross Margin %, and Year‑to‑Date vs. Budget indicators.
