Milestone Billing and Revenue Recognition
Define milestones once and track them across the entire lifecycle, from contract definition, to work planning, and ultimately to billing. Contract administrators can create milestones and their respective bill amounts in milestone-based fixed price contracts. When the contract is approved, milestones defined on the contract automatically appear in the project plan. Project managers can then manage the milestones in their project plan. Project managers create detailed plans, track deliverables, and monitor progress for milestone completion. When the milestone is achieved, the project manager submits it for stakeholder approval. Upon approval, the application automatically enables the associated billing event for invoicing and revenue recognition. This feature helps project managers gain greater control during project planning and execution, and enables billing specialists and project accountants to streamline the invoicing and revenue recognition processes for milestone-based contracts.
This feature is part of a focused investment to automate and accelerate business flows for the professional services industry. Our goal is to deliver a seamless experience across project and resource planning, cost collection, invoicing, and reporting, strengthening operational controls and optimizing cash flow. Watch for additional capabilities in upcoming updates.
What is a Milestone?
A Milestone is a significant, single point-in-time event which…
- May represent a contractual obligation with a client
- May be used in project plans for scheduling purposes
- May have associated deliverables
- May be used in project plans for initiating invoicing and/or revenue recognition
- Can't incur costs directly
- Has a status which easily tracks the completion progress
- May require a review and approval before completion
NOTE: Prior to this feature, any financial task could be marked as a milestone. Going forward, only milestones at the lowest-level in the project plan with zero duration will be recognized as milestones. Moreover, for milestone billing and revenue recognition, only milestones that are billable will be considered.
Milestone Billing and Revenue Recognition High-Level Process Flow
The following example illustrates at a high level the solution offered by this feature:
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The contract administrator creates the contract and contract lines. In this example, the total value of the contract is $1,000,000. As negotiated with the customer, billing is to be performed based on completion of each milestone, and the contract administrator enters the milestone details as below. Optionally, if milestones already exist in the associated project, they can be added to the contract line using the Add from Project Plan action. The Event Type chosen for a milestone determines whether the corresponding billing event is used for invoicing, revenue recognition, or both. The Eligible for invoicing and Recognize revenue indicators for the event type are available columns to display in the Milestones tab, but these are not shown in the below screenshot.
Milestones Tab on the Contract Line
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The contract administrator submits the contract for approval. Upon contract approval, the application automatically creates the milestones in the associated project plan, if they didn't already exist, and the corresponding billing events. With the Bill Transaction Creation on Billing Event Creation feature introduced in 23D, a bill transaction in On Hold status will also automatically be created upon creation of a milestone billing event, allowing you to perform real-time work-in-progress reporting for your milestones. You must opt into the Bill Transaction Creation on Cost Import 23C feature to use this functionality. Note that opting into this feature no longer requires a promotion code starting in release 24B.
View Milestones on the Project Plan Gantt Chart
View Milestones on the Manage Financial Project Plan Page
Billing Event Automatically Created for the Analysis Completion Milestone
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The project manager reviews these billing milestones and creates a detailed plan. The project manager can change the name, number, and parent of each billing milestone, provided that the changed parent is still within the hierarchy determined by the level of project association to the contract line. The project manager can also update the planned finish date of a billing milestone if milestone dates are not contractually controlled. The project manager can optionally plan deliverables to achieve a billing milestone.
Assign Deliverables to the Analysis Completion Milestone
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The project manager initiates milestone completion approval when a milestone is complete. Perform this action using the work plan or financial project plan.
On the Manage Financial Project Plan page, use the Change Milestone Status dialog window to update the milestone status and actual dates. On the Manage Project Plan page, specify the milestone actual dates directly in the Actual Start Date and Actual Finish Date columns and change the milestone status either by updating the actual dates or percent complete or Complete Milestone contextual action.
Initiate Milestone Completion Approval from the Manage Project Plan Page
Initiate Milestone Completion Approval from the Manage Financial Project Plan Page
- The approver reviews the milestone details and deliverables and approves the milestone completion.
Review Milestone Details and Approve from the Milestone Completion Approval Notification
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Upon milestone completion approval, the corresponding billing event is automatically enabled for invoicing or revenue recognition or both by removing the Milestone Incomplete hold statuses. In addition, the billing event's Completion Date is updated to the actual finish date of the milestone.
Milestone Incomplete Holds Removed on Billing Event Upon Milestone Completion Approval
Current Status of Milestones Displayed in the Milestones Tab on the Contract Line
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Project managers and project billing specialists can analyze the billing status of milestones using reports and dashboards in Oracle Transactional Business Intelligence. Report WIP in real-time using the new status attribute introduced in the Work-in-Progress by Billing Status Analysis Using OTBI feature also introduced in the 24B update.
Sample Milestone Billing Status Analysis Using the Project Billing - Bill Transactions Real Time Subject Area
The future enhancements planned for this feature are:
- Milestone maintenance using REST APIs
- Milestone maintenance using file-based data import
- Track and analyze the milestone lifecycle using Oracle Transactional Business Intelligence
The business benefits are:
- Increased productivity and efficiency through automation of milestone billing and revenue recognition processes.
- Better progress tracking and greater control through clear identification and definition of milestones across financial and project planning.
- Improved and predictable cash flow throughout the project lifecycle.
- Lower cost of ownership by removing the need for integrated milestone billing solutions.
Steps to Enable
You don't need to do anything to enable this feature.
Tips And Considerations
- A project plan milestone can be added to a contract line only if:
- It's not already associated with a contract line.
- It has a zero duration.
- It's a billable milestone.
- Its status is not Complete.
- Milestones can't be defined on an Intercompany contract.
- Milestone amounts can only be entered in contract currency.
- Event Types with the Allow Item option enabled can't be used for milestones.
- Project plan milestone and corresponding billing event maintenance is triggered automatically when a contract is submitted for approval and subsequently approved. As per the Contracts REST API documentation, do not pass the status attribute (StsCode) when patching a contract, as doing so will bypass contract approval.
- The Milestone Completion Approval workflow is initiated when requesting completion approval for all billable milestones, including those not associated with a contract line.
- The default approver for the Milestone Completion Approval workflow is the primary project manager. If the primary project manager submits the request for milestone completion approval, the milestone is automatically updated to the Complete status.
- Configure an auto-approval rule in the Milestone Completion Approval workflow if you don't require manual approvals for billable milestones.
- Use the Projects - Billing and Revenue Exceptions Real Time Oracle Transactional Business Intelligence subject area to report milestone or billing event creation exceptions across all contracts encountered during contract approval. These exceptions are identified by the Exception Process value of Maintain Project Plan Milestones and Events.
- After resolving the root causes for any exceptions raised, use the Maintain Project Plan Milestones and Events action in the Milestones tab on the contract line to re-initiate the maintenance of project plan milestones and events.
- You can also use this feature to perform deliverable-based billing by defining your deliverables as milestones.
- Review and replace your custom milestone billing integration solutions, if any, with this feature.
- You can define milestones for an award, however you can’t define them in the Grants Management work area in this release. After contract creation, define your award milestones using the Contract Management work area before submitting the contract for approval. Also, ensure that you review and update the milestone dates prior to adjusting the award dates, as updating the award dates does not automatically update any milestone dates.
- When canceling a draft contract, first delete any milestones that you’ve added from existing project plans if you want those milestones to be associated to a contract line on another contract.
- If you're using Microsoft Project integration with Project Financial Management, you can import a financial project with billing milestones into Microsoft Project. But, avoid updating and synchronizing these billing milestones updates from Microsoft Project to Project Financial Management because this integration has known issues and it is not currently fully supported.
Key Resources
- Related Help:
Access Requirements
No new access requirements.