PM514 – Time Projects: Tracking Employee Time for Non-Billable Activities in D365 Finance

Introduction

In many organizations, employees spend time on non-billable activities such as research, internal projects, training, and process improvements. While these activities do not generate direct revenue, they play a crucial role in business growth and operational efficiency. In Dynamics 365 Finance, Time Projects allow companies to track employee work hours for internal planning and resource allocation without impacting financial reporting.

A Car Part Distribution Company is investing in product development research to explore innovative materials and optimize manufacturing processes. Since this research does not directly generate revenue, it is managed under a Time Project, ensuring that employee hours spent on these activities are logged, analyzed, and used for internal decision-making.

Since Time Projects do not involve customer billing, recorded hours are posted to internal tracking accounts, allowing managers to evaluate resource utilization and effort distribution. These insights help in capacity planning, productivity analysis, and optimizing workforce efficiency.

Journal Posting for Time Projects in D365 Finance

By utilizing Hours Journals, D365 Finance enables organizations to accurately track and analyze non-billable time investments, providing insights into workforce utilization without affecting the General Ledger.

No nominal accounts are used within the Project group; instead, nominal accounts are defined in the Ledger Posting setup.

PROJECT GROUP

Scenario to Focus

A Car Part Distribution Company is researching new materials and production techniques to improve durability and efficiency in car part manufacturing. The R&D team spends significant hours analyzing industry trends, experimenting with materials, and developing prototypes. Since this is an internal initiative, it is classified under a Time Project to track workforce engagement and research time effectively.

Business Need:

• Measure employee time spent on research activities to assess productivity.
• Identify workforce distribution trends for better resource planning.
• Ensure non-billable activities are tracked without impacting financial reports.

Project lifecycle

Initiate Project

Create, Send and Confirm Quotation

• Not Required

Create Project Contract

• Not Required

Create Project and WBS

• Create Project and Create or Import WBS template

PROJECT:

• Assign Project Responsible (Optional)

WBS:

• Import WBS from Template or Add WBS lines manually.

• Publish WBS (Modify WBS if required)

Create Project Forecasts and Budget

Setup Forecast

• Navigate to Project > Action tab: Plan > Forecast > All forecast > Maintain: Transfer from WBS
• Not required

Setup Budget

• Turn on Budget control manually or default from Project management and accounting Parameters
• Plan > Budget > Project Budget
• Action Pane Import > Import to Project Budget > Source Type: WBS Estimate > Select Forecast model > OK
• WBS budget Submit to workflow

• Budget status changed to ‘Approved’ after workflow approval

• Budget Balanced are added: Action Tab: Budget > Related Information > Project Budget Balances

Note – I have revised approved budget and included Expense cost

Assign Worker and Category

Note: I am skipping this step. The following content is from a previous article. Since investment projects require collaboration among individuals with diverse skills, booking resource availability ensures that the project remains on track.

Assign Resources

• Assign Resources allows you to allocate specific resources (such as employees or equipment) to a project. By assigning resources, you ensure that the necessary personnel and tools are available to complete the project tasks. This step is crucial for resource planning and management, ensuring that the right resources are assigned to the right tasks at the right time

Assign Categories

• Assign Categories is used to assign project categories to various transactions within the project. Project categories help in classifying and managing different types of project costs and revenues, such as labor, materials, and expenses. Proper categorization is essential for accurate project accounting and reporting

Execute Project

Manage WBS

• Manage WBS (Work Breakdown Structure) stage under the Execution stage of the project lifecycle refers to the process of overseeing and updating the detailed breakdown of the project’s tasks and activities during the execution phase.

It involves:

1. TASK MANAGEMENT

• Ensuring that all tasks outlined in the WBS are being executed as planned. This includes tracking progress, updating task statuses, and making adjustments as necessary
• Go to Project > Action tab: Plan > Activities: Work Breakdown structure

2. RESOURCE ALLOCATION (Optional)

• Managing the assignment of resources to various tasks within the WBS. This ensures that the right resources are available and utilized efficiently
• I am skipping this part. Follow Previous article

3. MONITORING AND CONTROL

• Continuously monitoring the progress of tasks against the project plan. This involves identifying any deviations from the plan and implementing corrective actions to keep the project on track
• Cost and Time Tracking: Keeping track of the time and costs associated with each task in the WBS. This helps in maintaining budget control and ensuring that the project stays within its financial constraints.
• Go to Project > Action tab: Plan > Activities: Work Breakdown structure > Action pane: Tracking View

EFFORT TRACKING

COST TRACKING

4. COMMUNICATION AND REPORTING

• Regularly communicating the status of the WBS to stakeholders and providing updates on the project’s progress. This helps in maintaining transparency and ensuring that everyone is informed about the project’s status

Record Work

• Set Project stage to In Progress

RECORD HOURS (Via Timesheet and or Via Journal)

• Action Tab: Journals > Hours (Note – other journal types are disable for Time project)
• Click +New to create hour Journal Header and Go to Lines
• Add appropriate line details > Post

• Posted transactions are available on posted transaction screen (Project > Action tab: Manage > Related information: Posted transactions)

• Voucher transactions are not generated for non-financial transactions.

Manage Project Budget and Forecast

Manage Budget

• Track Budget balance – Go to Project > Action Tab: Plan > Budget: Project Budget > Action Tab: Budget > Related Information: Project budget balance

COST

• New Revision: This button allows you to create a new budget revision. When you need to update or adjust the project budget due to changes in project scope, costs, or other factors, you can use this button to initiate a new revision process. Not available in my scenario.

• Revisions: This button provides access to a list of all previous budget revisions. It allows you to review the history of changes made to the project budget, ensuring transparency and traceability of budget adjustments. Not available in my scenario.

Manage Forecast

• Manage Forecast stage is essential for updating and overseeing financial projections as the project progresses. This involves adjusting forecasts based on actual performance, monitoring costs and revenues, ensuring efficient resource allocation, conducting variance analysis to identify and address discrepancies, and communicating updated financial information to stakeholders. By managing forecasts effectively, project managers can maintain financial control and ensure the project remains on track. Not available in my scenario. Check Previous Article.

Procure Product and Services

• Not available for Time projects.

Process Project Invoices

• Not available for Time projects.

Recognize Revenue & Capitalize costs

Revenue Recognition:

• Not Required for this project

Capitalization of Costs:

• Not Required for this project

Close

The Close step of the project execution stage serves several important purposes:

1. Finalization of Transactions: It ensures that all transactions related to the project, such as time entries, expenses, and invoices, are recorded and finalized

CHANGE PROJECT STATUS TO FINISHED.

2. Read-Only Status: Once the project is closed, it is set to a read-only status, preventing any further modifications or additions. This helps maintain the integrity of the project data

3. Financial Reconciliation: The close step allows for the reconciliation of all financial aspects of the project, ensuring that all costs and revenues are accurately accounted for

4. Reporting and Analysis: Closing the project enables the generation of final reports and

Analyze Project

Analyze Cash Flow

• This stage involves examining the cash inflows and outflows associated with the project. It helps in understanding the project’s financial health, ensuring there is enough liquidity to cover expenses, and identifying any potential cash flow issues.
• Project > Action Pane: Control > Statement > Cash Flow

Check Previous article to know purpose of each field on this report.

Review Costs

• This stage focuses on evaluating all costs incurred during the project. It ensures that the project stays within budget and helps identify any areas where costs can be optimized or reduced
• Project > Action Pane: Control > Control > Cost Control
• Not available for Time project

Check Previous article to know purpose of each field on this report.

Analyze Performance

• This stage involves measuring various project metrics to determine if the project is meeting its objectives. It includes tracking key performance indicators (KPIs) such as schedule adherence, budget compliance, and overall project progress
• Project > Action Pane: Control > Statement > Project Statement
• Not available for Time Project.

Check Previous article to know purpose of each field on this report.

Review Invoices

• This stage ensures that all invoices related to the project are accurate and have been processed correctly. It helps in verifying that all billable work has been invoiced and that there are no discrepancies
• Not available for Time Project.

Analyze Utilization

• This stage examines how effectively project resources, such as personnel and equipment, have been utilized. It helps in identifying any underutilization or overutilization of resources, ensuring optimal productivity and efficiency

HOUR UTILIZATION

• This button provides a detailed view of how many hours each resource has worked compared to their available hours. It helps in tracking the actual hours logged by team members against their allocated hours, allowing project managers to monitor workload distribution and identify any over- or under-utilization of resources
• Project > Action Pane: Control > Utilization >Hour Utilization

RESOURCE UTILIZATION

• Resource Reservations: It allows you to view and manage the reservations of resources for various tasks and projects. It helps ensure that resources are allocated efficiently and are available when needed

• Resource Reservation Analysis – Resource: This analysis focuses on individual resources, providing insights into how each resource is being utilized. It helps in identifying any underutilization or overutilization of specific resources, allowing for better resource management

• Resource Reservation Analysis – Project: This analysis provides a project-level view of resource utilization. It helps in understanding how resources are allocated across different projects, ensuring that resources are used effectively to meet project goals

• Resource Reservation Analysis – Role: This analysis focuses on the utilization of resources based on their roles. It helps in assessing whether specific roles are being effectively utilized and can assist in planning future resource needs based on role requirements

Conclusion

Time Projects in D365 Finance provide a structured way to track non-billable employee work hours, enabling businesses to evaluate resource allocation, measure research efforts, and optimize workforce planning. Since these projects do not involve customer billing, all recorded hours are posted to internal tracking accounts for analysis without affecting the general ledger.

Accurate time logging ensures better decision-making in future projects, improves efficiency in resource distribution, and helps managers assess employee productivity trends. By utilizing Hours Journals for tracking research time, review efforts, and internal meetings, companies can enhance strategic workforce planning and long-term business innovation.

By implementing Time Projects, organizations can monitor operational efforts more effectively, ensuring that every hour spent contributes to business growth and efficiency.

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