Allocating Internal Labor Costs Using Projects and Shop Floor Insight

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Allocating Internal Labor Costs Using Projects and Shop Floor Insight

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Overview

When tracking internal or non-productive work (e.g., cleaning, training, maintenance) on the shop floor, businesses must choose between two tracking methodologies:

  • Non-Productive Activity Codes: Use only when you want to track time without creating direct financial G/L cost allocations outside of payroll solutions, or you do want to capture costs but those costs are captured by your payroll system.

  • Internal Projects & Project Tasks: Use when you want to allocate financial labor costs to specific G/L accounts (e.g., Routing cleaning hours to a specific G/L account).

This should not be used for payroll. Typically payroll costs are handled by payroll software, and time can be exported from Shop Floor Insight grouped by Employee and Payroll code.  The payroll code can be configured on the Shop Floor Insight Activity Code, will default in to the time card line when the employee clocks in, and then the rolled up time can be exported to the payroll software.  If capturing costing on non-productive activities are important consider an alternative approach of importing costing information from the payroll software after payroll is run.

If you are looking for information on how to export time to payroll systems refer to:

This article outlines how to configure base Microsoft Dynamics 365 Business Central (BC) and Shop Floor Insight (SFI) to capture and allocate costs for internal tasks out-of-the-box as time is posted, using Projects and Project Tasks (Jobs and Job Tasks in older versions of Business Central/NAV)

If you do not need to capture costing for internal tasks *or* if you have a payroll solution that performs that functionality then the simplest approach is to just use non-productive activity codes.

It’s important to consider with this approach:

  • This is cost allocation, not payroll.  Payroll should be handled with payroll software.
  • Costing is defined on the resource using Business Central’s costing configuration, this is outside of Shop Floor Insight configuration
  • Resource costing is visible in Business Central, and consequently if resources have high visibility to staff you may be inadvertently exposing private or confidential information.  Ensure access to the Business Central Resource records, projects, and project tasks are sufficiently configured.
  • This approach is effectively base Business Central configuration, the connection with Shop Floor Insight would be that Shop Floor Insight would post time to the Project and Project Task using the supplied associated Resource, however the actual costing is configured with Business Central itself.

When to Use Each Method

Scenario Typical Approach
Production order labour Use production order routing/capacity posting
Service ticket labour tied to a project Use the related project/project task
Cleaning, training, meetings, maintenance, or other internal work where cost should be captured and cost is not already imported via a payroll system. Use an internal project/project task
Non-productive time that does not need financial cost allocation Use Shop Floor Activities (non-productive activity codes)
Payroll calculation or payroll system transactions Use payroll software or a payroll integration

Business Central projects are designed to track costs such as employee hours, machine hours, items, and other usage against projects. Microsoft’s project management documentation describes projects as a way to schedule resources and track costs associated with those resources.

Base Business Central Setup Guidance

This is general guidance on base Business Central setup.  Refer to your reseller documentation or Microsoft documentation for complete steps on how to configure base Business Central resources and projects.

Configure Project Posting Groups

  1. Search for Project Posting Groups (formerly Job Posting Groups).

  2. Create a group specifically for internal labor (e.g., INTERNAL).

  3. Map the Invoiced Resource Expense Acc. (or Job Costs G/L Account) to your desired target G/L account (e.g., Salaries – Other, Non-allowed Time, or Maintenance Expense).

Refer to: https://learn.microsoft.com/en-ca/dynamics365/business-central/projects-how-setup-jobs?tabs=current-experience#to-set-up-project-posting-groups

Set up Resources

Create or review the Business Central resources that represent employees or labour groups.

  1. Search for Resources.
  2. Create or open the resource for the employee or labour group.
  3. Confirm the resource has the correct:
    • Resource type
    • Direct unit cost
    • Unit Cost
    • Unit of measure
      • This should be a unit of measure that represents hours.
    • Gen. Product Posting Group
    • VAT/Product Tax setup, if applicable
    • Other costing setup required by your accounting process
  4. Ensure every Shop Floor Employee that you intend is configured as a Resource.
    1. If your Shop Floor Employees’s are connected to Business Central Employee records, then make sure the Business Central Employee record is correctly associated with a Business Central resource record.

Business Central uses resources for project labour usage and project costing. Microsoft describes resource usage as a way to track project costs, prices, and work types.

Additional Information:

Create the Internal Project and Tasks

  1. Create a new Project card marked specifically for internal tracking (e.g., Project No.: INTERNAL).

  2. Assign the Project Posting Group created in Step 1.

  3. Define your Project Task Lines for each internal activity:

    • Task 1000: Cleaning

    • Task 2000: Training

    • Task 3000: Maintenance

Additional information:

Verify Base Business Central Setup

Verify your base Business Central setup first before proceeding with the Shop Floor Insight setup.

  1. Navigate to a Project/Job journal.
  2. Create a project/job journal line for that resource.
  3. Post the job journal line and ensure that the costing is posting as expected before proceeding with the Shop Floor Insight setup.

Base Shop Floor Insight Setup

Once Business Central is configured to receive the costs, Shop Floor Insight must be configured to allow users to register time against these Project Tasks.

Important: Do not proceed with these steps until you have finished the setup and configuration of base Business Central Resources, Projects, Project Tasks, and have confirmed by testing with the Project/Job journal that time is posted without errors in the standard Business Central Project/Job journal.

Define the Batch Used For Posting Time to Jobs/Projects

  1. Navigate to the Shop Floor Setup page.
  2. In the “General” section will be either “Projects” or “Jobs”.
  3. In the “Projects”/”Jobs” section will be a Project Journal Batch or Job Journal Batch, use this to define your job journal.
    1. Important: this batch must be a batch that is empty, and only used for Shop Floor Insight to post project/job time.  This batch must not be used for other purposes, including consumption.

Confirm Employees Are Mapped to Resources

Each Shop Floor Insight employee who will post project time must be linked to the correct Business Central resource.

  1. Open the Shop Floor Employee setup page.
  2. Confirm the employee is mapped to a Business Central resource.
    1. If your configuration maps Shop Floor Employees through a related Business Central Employee card, then confirm that the related employee is mapped to the correct resource within Business Central.
  3. Confirm the resource has the correct cost setup in Business Central.

Additional Information:

Print Barcodes

  1. Navigate to “Shop Floor Project Traveler” (or “Shop Floor Insight Job Traveler” depending on your version of Business Central and Shop Floor Insight).
  2. Run and print the barcodes.

Additional Information:

(Optional) Configure Job Task filters for the Job Task dispatch list

If you are using the Project/Job dispatch list, then you can also configure the appropriate Job Task filters on your Shop Floor Client Configuration Page.

Process Flow: How it Works

Once all of the configuration is complete, the end to end process would be as follows:

  1. Employee Clocks into Project Task via the Shop Floor barcode scanning interface.  This will create a time card line and time card if missing.
    1. The Project No. will be the ‘Document No.’
    2. The Project Task will be the “Task No.”.
    3. The Document Type will say “Job” or “Project”.
  2. Employee Clocks off the Project Task, and at some point ends their day.  The project/job time is not yet posted, nor is it recorded in a job journal, at this point it still only remains on the Time Card.
  3. The Shop Floor Time card is approved.
  4. The Shop Floor Time card is posted.
    1. When posting Time Cards to Projects/Job this will create job journal entries using the mapped resource, and then post the entries.
    2. The job journal batch used is configured on the Shop Floor Setup page.
    3. The resource used will be the resource associated with the Shop Floor Employee.
  5. As Business Central posts the time using the Project/Job Journal.
    1. Any errors during this point typically are base Business Central setup.
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