All cost control in a project is broken down by either account or production code (prod. code). This is the foundation everything else rests on: every cost object — Change Order Sub, Counter Claim, contract, purchase and so on — is assigned an account or prod. code.
Account or production code
Account: you track costs in line with how you post to ledger accounts in the accounting system.
Production code: you add one new dimension. Posted costs still sit on ledger accounts, but are grouped under a prod. code. Final forecast follow-up then happens at prod. code level, not at pure ledger account level.
All costs on each individual prod. code or account are aggregated up into the project's total final forecast.
There is also an option called «Without prod. code». All costs that are not linked to a specific prod. code are automatically placed in this fallback code.
The final forecast is calculated in two phases
How the final forecast is calculated on a prod. code depends on where you are in the project.
1. The estimate phase
Before any purchases have been created on the prod. code, the budget makes up the final forecast. The budget is taken from the cost estimate for the account or prod. code.
2. The production phase
The moment you link a purchase to the prod. code for the first time, you move from estimate mode into production mode. The basis for the final forecast is no longer the budget, but the contract or purchase — along with related cost objects. The contract or purchase is adjusted with:
Change Order Sub
Counter Claim (deducted)
Index regulation (LPS – indexation for wage and price increases)
Expected Addition
Uncertainty
All of these elements are summed up and make up the final forecast for the prod. code once you are in the production phase. Read more in Change Order Sub and Uncertainty and Expected Addition.
This shift is worth understanding well. It explains why the final forecast can change when you create your first purchase on a production code — the basis for the calculation has been replaced.