In this Article:

  • Accounting for construction-in-progress
  • Encumbering funds
  • Inventory for construction-in-progress

After the award of a contract following a strategic sourcing event, it is important to know that construction-in-progress Projects will not be captured in the Fixed Asset Module until they are substantially complete. Construction-in-progress will be saved in project costing and then pushed over into asset management when the department is ready to capitalize. A journal entry will need to be processed, either manually or through an allocation by identifying construction-in-progress project costs, to book construction-in-progress costs into a construction-in-progress Account for financial reporting purposes.

Regarding time and material contracts, departments will have flexibility to over/under encumber funds, but this will require manually going into the system to recognize such changes which would cause a match failure.

If capital project funds are used to purchase inventory for a specific construction project, these items are not added to the inventory module. The industry standard business process for construction project items does not send items purchased for construction projects to inventory. Items purchased and charged to a specific project are usually delivered to the project site. A separate item number is required in the system for such construction items. When a requisition is keyed for the items needed to complete the project, the new system allows each line of a requisition/purchase order to have different accounting treatments and be associated with different ChartFields. Since the project ID is a ChartField, this will be associated with the requisition/purchase order for the item. Therefore, a separate item number will not be set up based off of the funding sources used to purchase them.

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Category: Asset Management

Tags: Construction in Progress, capitalized costs, Asset Management, Project costing, capital project funds, inventory