Project-Based ERP Systems for Modern Manufacturing

Project-based ERP systems are supposed to simplify complex operations, but for many manufacturers, they just add another layer of confusion. When your system doesn’t reflect how project manufacturing truly works, you’re stuck MacGyvering your way through spreadsheets and tribal knowledge.

At one site visit, I asked how they were tracking project phases. The plant manager pointed to a paper chart taped to the side of a filing cabinet and said, “It’s not perfect, but at least it doesn’t crash!”

That’s when I knew their ERP wasn’t the problem—it was the mismatch between what they needed and what the system could actually do.

Project-based ERP systems only deliver real value when they’re aligned with your business model. That’s where smart, targeted customization comes in.

Done right, it makes the system work for your team, not the other way around.

Why Project Manufacturing Is More Complex than Standard Manufacturing

Project manufacturing is anything but linear. Unlike high-volume, repeatable production, it involves shifting scopes, long lead times, milestone billing, and compliance tracking—often all in the same job. You’re managing phases, resources, and budgets—not just making products.

Unfortunately, most any ERP system for manufacturing is built for standard production environments. They’re not designed to flex with the nuances of project-based work. And when that happens... the system becomes a bottleneck instead of a support tool.

Cloud-based ERP for manufacturing has changed all that.

Which custom dashboards or KPIs are most useful for visibility into phase-based production workflows?

Dashboards showing phase progress, cost variance, and milestones offer meaningful visibility. These tools help operations and finance teams stay aligned in real time, without relying on a whiteboard and a prayer.

If you're unsure whether your ERP is holding you back, check out my earlier blog on 5 key questions to assess your current setup.

Aligning Business Central with Real-World Project Needs

Customization translates to clarity, not complexity. When you tailor Microsoft Dynamics 365 Business Central to reflect your actual workflows, you can stop wrestling with the system and start using it to make better decisions.

How can I customize Microsoft Dynamics 365 Business Central to handle job costing in project manufacturing?

With the right configuration, you can break out costs by task, labor, material, and overhead. You can also automate milestone billing based on production and progress, and streamline resource scheduling around job phases.

This kind of alignment is where ERP software for manufacturing becomes truly powerful—not through overengineering, but by mapping your ERP to how you really operate.

McKinsey notes that ERP delivers the most value when it’s modular, phased, and purpose-built.

Can an ERP system handle job‑to‑job transfers of costs, such as moving subassembly labor/materials from one job to another?

Yes. With the right workflows in place, Business Central can enable traceable transfers of materials and labor from one job to another, which is ideal for project environments where scopes evolve midstream.

One manufacturer I worked with needed to shift subassemblies weekly between jobs. With a simple approval workflow and cost-transfer logic, they maintained visibility and audit readiness without wrangling spreadsheets.

Tracking and Managing Project Costs in Real Time

One of the most critical functions of manufacturing ERP systems is cost tracking—not just after the fact, but while the work is in progress.

How do I track labor, materials, and overhead costs for each project phase in a job‑costing ERP system?

Start by using job cards and phase-specific cost buckets. Many of our clients also use Power Apps to log time and materials directly from the floor, feeding live data into the ERP.

How do I compare estimated vs. actual costs mid‑project and adjust allocations in real time?

With custom dashboards and variance reports, you can spot overruns early and reallocate resources before the budget goes sideways. Alerts can flag when actuals deviate from the baseline, helping teams course-correct in real time.

Is Business Central a Good Fit for Manufacturing and Project Management?

If you’re still asking, What IS ERP in manufacturing? - Business Central is a strong example of a system that bridges both worlds.

Is Dynamics 365 good for manufacturing?

Yes. Business Central includes native support for BOMs, routing, capacity planning, and shop floor control. It’s a solid foundation for discrete and project-based ERP system needs alike.

Can Dynamics 365 be used for project management?

Absolutely. With built-in features for task planning, resource allocation, project cards, and billing structures, and seamless integration with Microsoft 365, it's a highly flexible tool for managing complex, phase-based projects.

Understanding Costing in Project-Based ERP Systems

Whether you’re building a ship, a machine, or a facility—job costing in manufacturing is central to your ability to stay profitable.

How does Business Central calculate cost?

It supports FIFO, Average, Standard, and Specific costing methods. For project manufacturing, customization allows cost rollups at the job and phase level so you can see what’s really going on across materials, labor, and overhead.

Is job costing suitable for project manufacturing vs. process costing for batch production, and how do I choose?

If you’re running custom, multi-phase work, job costing is the better fit. If you’re running continuous, repeatable output, process costing may work better.

The real key is aligning your ERP to how your team builds, not just how software vendors think you should.

The Long-Term Payoff of a Tailored ERP

When you invest in ERP solutions for manufacturing that match your operational model, the benefits compound:

• Faster onboarding for new hires

• More accurate forecasting

• Less time spent reconciling data across systems

• Greater visibility across finance, operations, and supply chain

• Easier audit prep and compliance reporting

Suddenly, your ERP stops being the bottleneck and starts being the MVP.

Your ERP Should Work the Way You Do

Project-based ERP systems should simplify, not slow you down. They should help your team stay in control, even as project variables shift.

Key Partner Solutions helps project manufacturers align ERP systems to how they truly operate, providing structure, visibility, and long-term success through thoughtful customization.

Let’s talk about building an ERP that actually fits.

About Matt Keyes

Matt Keyes is a visionary leader, founder and CTO of Key Partner Solutions. With over two decades of experience in Microsoft Dynamics, he is passionate about driving digital transformation for businesses through innovative technology solutions.

His deep technical expertise, combined with a strategic approach to solving business challenges, makes him a sought-after thought leader in the industry.

Today, Matt is focused on empowering companies to unlock new levels of growth and efficiency through cutting-edge software development and consulting.

Connect with Matt on LinkedIn.