PM513 – Internal Projects: Managing Internal Training Projects in D365 Finance

Introduction

In any growing organization, continuous improvement is key to maintaining operational efficiency. Internal Projects in Dynamics 365 Finance allow businesses to track and manage non-revenue-generating initiatives, such as employee training, process enhancements, and workflow improvements. These projects do not involve customer billing but require careful cost tracking to ensure alignment with organizational budgets.

A Car Part Distribution Company is implementing a new Inventory Management System in its warehouses. To ensure smooth adoption, the company has organized training sessions for warehouse staff. This initiative involves trainer and trainee hours, printed materials, software licenses, and venue costs, all of which must be accurately recorded under an Internal Project in D365 Finance.

Since this training program is not billable, all expenses are posted directly to internal accounts, and costs are later reallocated to specific departments as part of operational budgeting. This ensures transparency in resource utilization and prevents overspending.

Journal Posting for Internal Training Project in D365 Finance

By using these journals, D365 Finance enables the company to effectively track internal project costs, allocate expenses correctly, and maintain financial control.

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 has recently adopted a new Inventory Management System to optimize warehouse operations. To ensure smooth implementation, all warehouse employees must undergo training sessions on the system’s functionalities, including inventory tracking, stock reconciliation, and automated ordering.

Business Need:
The company must track the time trainers and trainees spend in sessions, along with the cost of training materials, venue bookings, and software licenses. Since this is an internal initiative with no customer billing, all costs need to be properly categorized and reported under the Internal Project module in D365 Finance.

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

• Action Tab: Journals > Hours
• Click +New to create hour Journal Header and Go to Lines
• Add appropriate line details > Post

RECORD EXPENSES

• Action Tab: Journals > Expense
• Click +New to create hour Journal Header and Go to Lines
• Add appropriate line details > Post

RECORD ITEMS

• Action Tab: Journals > Item
• Click +New to create hour Journal Header and Go to Lines
• Add appropriate line details > Complete Picking Line > Post

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

• Verify Voucher 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.

• 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. Revision Entry

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. Check Previous Article.

Procure Product and Services

• I posted Item journal

Process Project Invoices

• This step is not required for this project type.

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

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

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 applicable for INTERNAL project type.

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

Internal Projects in D365 Finance provide a structured way to track training programs, process improvements, and other operational initiatives without affecting revenue accounts. By recording trainer and trainee hours, categorizing expenses, and reallocating costs, organizations can gain visibility into resource utilization while ensuring financial accountability.

Since no billing occurs in internal projects, all costs are immediately expensed to profit and loss accounts, making accurate departmental cost allocation critical for budget adherence. Using hours, expense, and item journals, companies can ensure every training-related cost is captured, analyzed, and used for future optimization.

By leveraging D365 Finance, businesses can enhance employee training, improve workflows, and maintain cost control—all while keeping financial reporting transparent and structured.

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