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In accounting terms Workbench is a subsidiary Job Costing ledger to the General Ledger, with all Workbench Cost and Revenue codes mapping to General Ledger accounts.

The document explains the Workbench transactions and the resulting General Ledger entries. It is important to consider these as part of your Workbench implementation as they impact your General Ledger P&L and Balance Sheet Reporting.

It is intended that Workbench supports in detail the Gross Profit reporting in your company P&L so all Cost and Revenue transactions in Workbench should be mapped to the appropriate section of the GL. This is essential if you want the Job Profits reported in Workbench to agree to the P&L Gross Profit.

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Workbench Job Costing overview

In considering job costing Key Performance Indicators (KPI’s) Workbench focuses on the following:

·         Job Profitability (can the business complete jobs profitably)

·         Labour Productivity (has the business sufficient work to fully utilise the available Labour resource).

·         Plant Utilisation (has the business sufficient work to fully utilise the available Plant resource).

This is illustrated in the following P&L format and is achieved through the following month end Workbench Journals:

·         Progress Claim Accrual for claims not yet certified and therefore not yet posted to the GL.

·         Work In Progress (accrue or defer revenue to reflect profit earned to date)

·         Labour Journal (a reallocation of direct labour costs based on actual hours booked to jobs via Timesheets. This recovery rate may include Overhead Recovery).

·         Plant Recovery Journal (the internal charge for Plant used on Jobs based on actual time booked).

Integration of Source Transactions from Workbench to the Financials

Supplier Invoices/Credits

Debit      Project Material Costs

Debit       Input GST

Credit                                     Accounts Payable

Docket Accruals

Debit       Project Costs

Credit                                     Docket Accruals

AP Invoice offset against Docket Accrual

 Debit      Docket Accrual (any difference is posted to the source of the original accrual)

Debit       Input GST

Credit                                     Accounts Payable

Subcontractor Claims

Debit      Project Subcontractor Costs

Debit      Input GST

Credit                                     Retentions Payable

Credit                                     Accounts Payable

Subcontractor Retention Release

Debit       Retentions Payable

Debit       Input GST

Credit                                     Accounts Payable

Customer Billing

Debit       Accounts Receivable

Credit                                     Revenue

Credit                                     Output GST

Progress Claims

Debit       Accounts Receivable

Debit      Retentions Receivable

Credit                                     Project Revenue

Credit                                     Output GST

Retention Claims

Debit       Accounts Receivable

Credit                                     Retentions Receivable

Credit                                     Output GST

PO Receipts/Inwards Goods

Stock Management

The accrual of Stock Receipts/Inwards goods is necessary to establish a value for stock that is immediately available to be consumed by jobs before the Supplier invoice is received and processed.

In the extreme example, stock is received for the first time so there is currently no value against this item, we immediately consume some of this stock on a job and sell the job on an input basis, all before the Supplier invoice is processed. On this basis, the only practical approach is to accrue the cost on receipt and set the stock cost because it becomes totally impractical for the system to “back cost” as part of the Supplier invoice processing.

The accounting entries are explained below.

PO Inwards Goods:

                                                Debit      Stock

                                                Credit     Purchase Clearing

Supplier Invoice:

                                                Debit      Purchase Clearing

                                                Credit     Accounts Payable

Debit/Credit          Purchase Variance with any difference between the Accrual and AP Invoice (P&L Account)

As with any accrual process, we need to assume that PO values are relatively accurate, and any purchase variance is not significant in financial terms.

Month End Journals from Workbench to the Financials

 Progress Claims Accruals

Debit       Progress Claim Accruals

Credit                                     Project Revenue

Labour Journal

Debit       Project Labour Costs

Credit                                     Labour Recovered.

Plant Journal

Debit       Project Plant Costs

Credit                                     Plant Recovered

WIP Journal

Accrued Revenue

Debit       WIP

Credit                                     Accrued Revenue

Deferred Revenue

Debit       Revenue

Credit                                     WIP/Deferred Revenue

Work In Progress Methods

 Workbench has the following WIP Methods.

•  For Lump Sum type Projects we recommend recognising profit on a % complete of the Forecast Final Profit. The calculation is as follows:

 % Complete = Actual Costs to Date/Forecast Final Costs.

 Forecast Final Profit = Budget Revenue – Forecast Final Cost.

 Recognised Revenue = Actual Costs to Date + (Forecast Final Profit x % Complete)

 WIP Adjustment = Actual Billing – Recognised Revenue (accrue or defer revenue)

 Note – Billing is assumed to be Gross (before Retention).

• For Lump Sum type Projects where it is not practical to do a Workbench Forecast Costs to Complete we recommend recognising profit on a Budget Margin %. The calculation is as follows:

 Recognised Revenue = Actual Costs to Date x 1. Budget Margin %

WIP Adjustment = Actual Billing – Recognised Revenue (accrue or defer revenue)

• For Schedule Of Rates Projects

Accrue Revenue based on the value of unclaimed Outputs.

• For Cost Plus Jobs

Accrue Revenue based on unbilled Costs (valued at cost or chargeout)