Project Accounting
Project accounting in Workday is not just a “Finance feature.” It is the thread that connects Projects, Worktags, Time Tracking, Expenses, Procurement and Billing into a single picture of project cost, margin and progress. When you design it intentionally, you can see exactly what each project costs, what to invoice, and how profitable it is—without extracting everything to spreadsheets.
This guide walks step by step from project setup to employee expenses, using Workday terminology throughout.
Step 1: Design your project Worktag model
In Workday, Project itself is a Worktag, usually a Driver Worktag. When added to a transaction line, it can auto-populate related Worktags such as Cost Center, Program, or Grant via Related Worktags.
Decisions to make up front:
- What types of projects will you track?
- Customer / billable projects (client work, external funding).
- Internal / administrative projects (internal initiatives, overhead).
- Capital projects (fixed asset construction, IT implementations).
- Which Worktags should be tied to Project?
Design patterns:
- Use a clear naming convention for Projects: prefix by project type or business line (e.g., “CUST‑1001 – Client A ERP”, “CAP‑2003 – HQ Renovation”).
- Configure Project Allowed Worktags so only valid Worktag combinations can be used with each Project (for example, only certain Cost Centers or Funds).
- Build project hierarchies where you need rollups (programs or portfolios) using Project Hierarchies and related structures.
A good Worktag design means you do not have to teach users every rule; Workday enforces a lot of it for you.
Step 2: Create projects with the right attributes
The Create Project process in Workday captures core data and determines how the project behaves in financials, expenses and billing.
Key fields and decisions:
- Project Type – Administrative, Customer, Capital, etc. This drives downstream behavior, including capitalization and billing options.
- Owning Company / Entity – which legal entity owns the project and will recognize revenue/cost.
- Worktags – Cost Center, Program, Customer (for customer projects), Location, and any Custom Worktags.
- Billable vs Non‑billable – indicates whether costs should be available for billing and margin analysis.
- Project Plan / Tasks – optional but powerful: break the project into tasks or work packages to track cost and progress at a more detailed level.
Best practices:
- Use template projects for common patterns (for example, standard professional services engagements) to default Worktags, billing settings and tasks.
- Capture Customer and Contract/Billing references at project setup for billable projects to avoid reconciling later.
- For capital projects, confirm how costs will later link to Assets and Capitalization processes.
Once created, the Project becomes the central Worktag used across time, expenses, procurement and journals.
Step 3: Capture time and expenses against projects
To see true project cost, you must push Time Tracking and Expenses through the project lens. Workday Projects ties into both modules.
Time:
- Configure Time Entry Templates and Time Entry Codes so workers can select a Project (and optionally Task) on their time entries.
- Use Work Type Rules to classify time (e.g., billable vs non‑billable, standard vs overtime) for project cost and revenue.
- Make sure time approvals align with project responsibility—line managers or project managers, depending on your operating model.
Expenses:
- Enable Project as a Worktag on Expense Reports so employees can charge travel, materials and other charges directly to projects.
- Configure Expense Item defaults to automatically set Spend Categories and some Worktags, leaving employees to choose only Project (and maybe a Task).
- Set up expense approval hierarchies that route project‑coded expenses to the right project or cost center owner.
By getting time and expenses to consistently carry the Project Worktag, you build a clean cost view without manual allocation journals later.
Step 4: Capture procurement and AP costs to projects
Project costs often come through procurement: purchase orders, supplier invoices and sometimes journals. Workday enables project tagging across these flows.
Patterns:
- On Purchase Requisitions and Purchase Orders, include Project and related Worktags on lines that are project-specific.
- For Supplier Invoices, either inherit the Project from the PO or allow AP to add Project Worktags directly on invoice lines where appropriate.
- Use Project Allowed Worktags rules to prevent invalid combinations (e.g., wrong Cost Center or Fund for that project).
Capital projects:
- Ensure procurement and AP spend for capital projects are coded to the capital project and appropriate Spend Categories (e.g., Capitalizable construction or equipment categories).
- Later, Workday can help create Project Assets and move costs from Construction-in-Progress (CIP) to fixed assets.
This approach keeps all project-related spend, not just internal time and expenses, visible at project level.
Step 5: Budgeting and tracking against plan
Project accounting becomes truly useful when you compare actuals to budget or plan.
Options:
- Use Project Budgets:
- Use Resource / Project Plans:
Reporting:
- Build reports and dashboards showing Budget vs Actual by Project, by Task, and by Worktag (e.g., by Spend Category, Cost Center, Customer).
- Include both labor (time, payroll allocations) and non‑labor (supplier, expenses) costs for a full project cost picture.
Good practice is to define who owns the project budget (Project Manager, PMO, Finance) and how often you review project financials—monthly is common for active projects.
Step 6: Billing and revenue for customer projects
For customer projects, project accounting feeds directly into Workday Project Billing and revenue.
Key elements:
- Billing Plans: define how and when you bill (time & materials, fixed fee, milestones, retainers).
- Billing Events and Invoice Generation: Workday converts billable project transactions into customer invoices according to your billing plan and rules.
- Revenue Recognition: revenue schedules and rules determine when revenue is recognized for project work, potentially decoupled from billing.
Make sure:
- Only appropriately tagged billable time and expenses hit billing, based on Work Types or billable flags.
- Contracts, Projects and Customers are linked correctly so invoices automatically reflect the right project, PO, and tax settings.
This ensures your project accounting supports both cost control and the top line.
Step 7: Governance and “project hygiene”
Project accounting can decay over time if governance is missing. Keep it healthy with:
- Project lifecycle rules
- Clear criteria for moving projects from Open → Active → Closed.
- Regular reviews to close dormant or completed projects to prevent miscoding.
- Worktag hygiene
- Regular checks for transactions posted to “wrong” or generic projects requiring reclass.
- Use reports to identify expenses and invoices without Projects where they should have one.
- Training and quick references
- Provide Project and Worktag cheat sheets per business area (which Projects to use, which are closed, etc.).
- Train project managers to use Workday reports and dashboards, not offline trackers, for financial views.
Treat project accounting as a shared responsibility between Finance, PMO and delivery teams.
When you design project accounting in Workday as an integrated process—from Project setup to Time & Expense capture, Procurement, Budgeting and Billing. You end up with a living, accurate view of project performance. Finance gets clean numbers, project managers get real insight, and leadership can see where work is truly profitable.
