Creating Projects in Dynamics 365 Business Central

Creating projects in Microsoft Dynamics 365 ERP & Integration Services Partner can feel overwhelming when you’re new to the system, especially during or right after implementation. This guide walks you through the complete setup for both Time and Materials and Milestone-based projects so you can track work, post usage, and invoice customers with confidence. You’ll learn the essential setup steps, how to structure tasks, how to use project journals, and the best practices that keep your reporting clean and accurate.

This guide provides step-by-step process for creating two types of projects in Dynamics 365 Business Central: Time & Materials and Milestone-based projects. It is designed for users learning Business Central during or immediately after implementation.

Section 1: Pre-Requisites and Setup

Before creating any project, ensure the following:

Configure Posting Groups: Go to Finance → Setup → Posting Groups. Set up General Posting Setup and Project Posting Groups for revenue and cost accounts.
Define Resources and Items: Create Resources (employees, contractors) and Items (materials) with appropriate details.
Set Up Dimensions: Navigate to Finance → Dimensions and assign dimensions for reporting (e.g., Department, Project Code).

Section 2: Creating a Time & Materials Project

This type bills based on actual hours and materials used.

Step 1: Create a Project

Path: Projects → New. Fill in Project No., Description, Bill-to Customer, Project Posting Group, and set Status to Planning.

Step 2: Define Project Tasks

In Project Card → Tasks: Create tasks for each phase (e.g., Discovery, Development). Assign Task No., Description, and Budgeted Cost and Price.

Step 3: Set Up Project Planning Lines

For each task: Type (Resource/Item), Resource No., Quantity (Estimated hours), Unit Price (Hourly rate).

Step 4: Post Usage

Navigate to Project Journal → New. Enter Project No., Project Task No., Type, Quantity. Post journal to update WIP and ledger.

Back on our Project, we now see actuals on our lines.

Step 5: Invoice Customer

Path: Project → Create Sales Invoice. System pulls billable lines based on actual usage. Review and post invoice.

Section 3: Creating a Milestone-Based Project

This type bills based on predefined milestones.

Step 1: Create a Project

Same as T&M, but description: Milestone Project – Client XYZ.

Step 2: Define Project Tasks as Milestones

Example: Task 1000: Design Complete, Task 2000: Development Complete, Task 3000: Go-Live.

Step 3: Set Up Fixed Price

In Project Planning Lines: Type = G/L Account or Resource, Quantity = 1, Unit Price = Milestone amount.

Step 5: Invoice by Milestone

When milestone is reached: Navigate to Project → Create Sales Invoice. Select completed milestone task and post invoice.

To see the Invoice(s):

Example Table: Milestone Setup

Milestone Task No.	Description	Fixed Price Amount
1000	Design Complete	$10,000
2000	Development Complete	$25,000
3000	Go-Live	$15,000

Section 4: Best Practices

Use Project WIP Methods: T&M → Cost Value or Sales Value; Milestone → Completed Contract or Percentage of Completion.
Automate Approvals for time entries.
Leverage Dimensions for reporting profitability.
Schedule monthly WIP adjustments.

Section 5: Common Issues

Incorrect Posting Groups → Leads to wrong G/L entries.
Missing Dimensions → Reporting gaps.
Not Posting Project Journals → WIP and invoicing errors.

Conclusion: Build Confidently in Business Central

Creating projects in Dynamics 365 Business Central becomes much easier once you understand how setup, tasks, planning lines, and invoicing fit together. Whether you’re managing Time and Materials work or delivering milestone-based projects, following a consistent structure helps you keep costs accurate, track progress clearly, and invoice clients on time. As your team gains experience, use dimensions, WIP methods, and approvals to strengthen reporting and streamline day-to-day work. With the right foundation, Business Central gives you a reliable and scalable way to manage every project from kickoff to completion.