There are Ten Categories of Being: Substance, Quantity, Quality, Relative, Place, Time, Position, Having, Acting upon, Being affected.
Is that MECE?
~Literally every management consultant, ever.
“How many project categories do I need?” is a common D365 implementation question. Remembering the rules from our initial project categories post, a project category can be of only one transaction type – so you will need at least one project category group for each transaction type used and at least one project category within each project category group.
Below is a survey of places where project categories are used in D365 for Finance and Operations. The list is not exhaustive, and project categories are not the only drivers of the below (for instance, there are many attributes that can be used to drive sales prices), but the below can be a good starting point for thinking about how granularly an organization’s project categories ought to be defined.
Ledger Posting Setup
Project and category relationships are the two main drivers of both cost and revenue account posting profiles in the Project management and accounting module.
Hour, Expense, and Fee transaction types all have their own sales price tables. Sales prices for items are set through trade agreements. Project category is one of many attributes that can be used to drive sales prices.
While it is more common for cost prices to be driven at the resource or role level, specific cost prices can also be set at the project category level.
Line property defaults
Line property default behaviors are configured on the project/group line properties table. For some organizations, it makes sense to have billable and non-billable expense categories instead of having users directly select the line property on their expense report lines.
Expense category attributes
Different expense types have different attributes – for instance, an expense type of mileage requires a number of miles to be entered on the expense report, calculating a reimbursement amount, instead of allowing the user to directly enter their mileage expense reimbursement amount.
Different company expense policies can be applied specifically to project categories of certain expense types.
If using indirect costing, indirect cost components need to be associated to an indirect cost project category. Less frequently used, project categories can be used to drive whether indirect costs are applied through the Indirect cost component group assignment rules configuration.
Item sales tax groups
Different sales tax codes apply to different goods and services. In D365, this sales tax configuration is applied through the item sales tax group on the project category.
Posted transaction reporting
Whether viewing posted transactions in D365 or an external reporting solution, project category can be an important reporting dimension. In the image above, the hours transactions form is grouped by project category.
Project forecast reporting
As with posted transactions, project categories can be a useful dimension for project forecast reporting. Sometimes forecasting is done at a more general level of project category than those anticipated for posting. (For example, an “Expense forecast” project category may be used to estimate all the different expense postings anticipated on a project)
Project invoice document
Project categories display on the project invoice document – which makes sense especially if sales prices are being driven by project categories. That being the case, it is worth considering what customers would like to see related to the project categories displayed.
Do you see an important project category function missing from the list above? Call it out in the comments!