A cornerstone of Oracle Projects Implementation Consideration is, “Are we a project-centric or GL-centric organization?” Companies sometimes believe they are project centric when they aren’t. The following is a guide to assist in this decision.
Key Characteristics of a Project-centric Company
Simply stated, a project-centric company requires EVERY exempt and non-exempt employee to enter time cards and expenses to a project and task. EVERY revenue, capital, and indirect (non-billable, non-capitalizable) costs flow through Projects.
Project-oriented companies like professional services or other service providers are the best fit to employ a project-centric organization.
Project-centric companies commonly implement a 4-4-5, 4-5-4, 5-4-4 fiscal calendar. This calendar ensures that each week ends on the same day every period. Thus allowing time entered into each period with no need for mid-week entry at end of month.
Transactions entered in a subledger or upstream application will require project and task. Subsequently the accounting created is based on the source of the transaction and transaction type.
In project centric organizations communications and conversations center on the project and task rather than account combination. i.e. cost center, department, etc.
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The ability to pool and allocate costs to other projects or accounts. One example is spreading overhead costs to billable projects so those projects bear the cost of back office support.
In a project centric environment you’re more likely to allocate from a project to another project. Not from or to an account combination.
Key Characteristics of a GL-centric Company
If any revenue, capital, or indirect (non-billable, non-capitalizable) transactions flow into the GL bypassing Projects the company is NOT project centric because transactions bypassed Projects.
The primary differentiator of a GL centric company is that the organization does not require time entry for all employees. Frequently, overhead personnel have no bearing on the billable and capital project costs because companies choose not to allocate these costs to these projects.
GL centric is a best fit for companies that want projects for specific purposes like CIP, Revenue/Billing or tracking non-billable expenditures. Additionally they don’t want time entered by all personnel.
GL/Project centric companies typically implement a monthly calendar. Time entered into each period will require mid-week entry at end of month.
Transactions entered in upstream modules will generate accounting combinations based on either project logic or other logic where the project does not require consideration.
In GL-centric organizations, conversations center on the account combination, i.e. cost center, department, rather than project and task. One must have a clear understanding when you’re talking about either a project or accounting related event.
Just like the project-centric scenario you still have the ability to pool and allocate costs to other projects or accounts. The main difference being in a GL-centric environment you’re as likely to allocate to an account combination as to another project.
The project-centric business decision is an important one. When adopted it will become a fundamental characteristic of the company operations, management and culture.