This article is relevant if NetSuite’s concept for Projects does not closely fit your business model.

Background

During a recent NetSuite implementation for an oil industry waste treatment organization, proper inventory and costing concepts were significantly more complex to model, track and report. In early discussions with the client, it became immediately clear that NetSiute’s project concept was not modeled even close to the information elements we would need to track.   In this one client alone, three different types of projects came forth, none of which fit NetSuite’s way of doing things.

However, because we could leverage NetSuite’s extensibility platform, we knew that if we could understand our client’s requirements, we could search for pre-built or design applications to complete the job.  Hence, this article represents the foundation for future articles where I discuss different specific project implementation models.

NetSuite’s Project Concept Also Known as Jobs

It’s important to baseline NetSuite’s concept of the Project.  There are effectively two major Project concepts with another to drive costing that are close to each other but distinguished:

1. Basic Projects: all core NetSuite accounts have a project concept, a child structure of a customer record showing costs and revenues for a particular tracked effort. The underlying record is called “job” and is best conceptualized as a sub-customer. In this model, one works with the customer hierarchy concept but can distinguish a sub-customer from a project.  Projects effectively are simplified customer records that do not affect matters such as credit limits.  Use them if they work for you.
2. Project Accounting and Management: Track additional information about jobs and, if desired, keep them separate from customers. The module works very well in the Prolecto Resources services business, where we track our time and use it for project billing when we create projects under a customer record.  With the capacity to create project tasks/milestones and assign timekeeping resources, we have a robust environment for project billing. The feature can be used for project management — yet we advise our clients to carefully review requirements before considering the use of the module for day-to-day project management practices.
3. Job Costing: Calculate costs for labor based on tracked time, and account for those costs in the general ledger. The module allows you to create project-specific budgets for expenses and labor. This feature is to help time entries affect the general ledger and helps gather more cost structures.

NetSuite’s primary project concept is more closely aligned with services organizations that use labor via timesheets. NetSuite generally uses the term Services Resource Planning (SRP) to help distinguish it from ERP to drive the concepts between conventional hard items, such as inventory, and labor-oriented matters. Since 2008 when our firm first started working with NetSuite, we have seen significant improvements. The most significant has been the Charge-Based projects which open up the flexibility for introducing other kinds of charges to the model and naturally link to Advanced Revenue Management (ARM) — most significant when needing to run long fixed bid projects.  At the end of the day, these new charge structures aim to help produce revenue and project-based billing.

Model Other Project Concepts in NetSuite

With NetSuite’s baseline brought forth, our firm often sees other project concepts that do not fit well.  Here are some important ones our firm has solved, including those in our one oil industry client:

• Enhanced Project Profitability: for organizations that are selling and delivering long projects that may address multiple parties, and who wish to understand profitability based on costs that originate from conventional purchase orders and other expenses or accruals, yet who may not have any timesheet-based service components, we address this through the use of a custom project record. The custom project record is then transactionally linked to both header and line elements giving us the control to tag transactions and shape the project accounting requirements. If desired, the concept can be linked to a custom financial segment. This approach is discussed in my 2021 article, Learn How To Measure NetSuite Project Margin and has been recurrently used to drive enhanced reporting and commissions/royalty accounting.
• Capitalization Projects: in these types of projects, the business embarks on the constitution of future fixed assets. These projects may run for a very long period (multiple fiscal years), and we need a way to gather costs, analyze, and effectively place them on the balance sheet as “Construction-in-Progress”.  Consider the work to produce a new building or plant. The major idea here is to allow the accounting staff to code costs (via conventional descriptive general ledger accounts such as utilities, labor, materials, tools, and professional services).  This allows for the full richness of the general ledger and related dimensions to be expressed, thus driving quality reporting.  See my 2022 article, Best Practices for Modeling the General Ledger in NetSuite. However, reversing-style journal entries can be crafted at each closing period end to reclassify all costs to the balance sheet for proper financial treatment. Finally, once the asset is placed into service, a final entry reclassifies all gathered costs so a fixed asset can be constituted on the ledger. Stay tuned for a future article.
• Process / Job Cost Projects: In the most ambitious models, we can use the concept of a custom project record to build out applications for complex costing situations. While naturally, NetSuite’s manufacturing model should be carefully reviewed as a very real option, in the case of our oil industry client, chemical mixtures were placed into large tanks for composition inspection and analysis to determine how to act with the mixture to ultimately produce marketable product inventory and other less valuable byproducts.  An interesting challenge is to consider negative costs where parties pay our client to take waste — this does not fit well with conventional purchase order-based cost inputs. However, we still need to receive the materials we are paid to take; yet how do you cost negative on an item receipt?  We solved that.  Complex costs, quantity and non-quantity oriented are added to the mix producing a unique mixture of graded finished goods that ultimately end up as inventory.  In this model, each major tank represented a continuous costing system. Using conventional and custom transactions, we could model the business according to physical operations and build a ledger capacity that allowed for cost reporting, control and audit. Stay tuned for a future detailed article.

With each of these concepts, it becomes straightforward to add unique simple or elaborate project attributes to help track and build out a world that is meaningful to the organization.

Drive Projects Your Way In NetSuite

In the above section, I described the simple idea of creating a custom database record that can be referenced (tagged) from the header (main) and/or detail (line) of detail transactions to open up a world for modeling project concepts that are unique to each organization. A strong fundamental understanding of what NetSuite offers natively and a strong business operations understanding allow talented individuals to craft tailored solutions.  Because the platform is so customizable, we can say we are never stuck.   Let’s never forget that a manager’s fundamental purpose with software is to create greater revenue while lowering costs to ultimately generate more profit which can be used to ensure we keep promises and invest in a better future.

In related articles, I will illustrate these concepts to help inspire possible courses of action. Naturally, all our clients are able to use our existing algorithms without a license charge to kickstart an implementation effort. In our minds, software without people only represents capacity — real substance is in the human phenomenon that develops with the shaping of software-driven patterns and practices. With this orientation, our firm, acting as a premier NetSuite Systems Integrator, has recurrently produced client success.

If you found this article relevant, feel free to sign up for notifications to new articles as I post them. If you have a challenging project concept to model in NetSuite, let’s have a conversation.

Marty Zigman

Holding all three official certifications, Marty is regarded as the top NetSuite expert and leads a team of senior professionals at Prolecto Resources, Inc. He is a former Deloitte & Touche CPA and has held CTO roles. For over 30 years, Marty has produced leadership in ERP, CRM and eCommerce business systems. Contact Marty to set up a conversation.

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