Fixed fee projects present several accounting and system issues. Revenue recognition is the primary accounting issue. Systems integration is the primary system issue.
Revenue recognition for a fixed fee project can easily become complex. Almost from the first day of any project there will be differences in the amount invoiced, the amount of expenses, the amount of effort expended, and the amount of recognized revenue. On a typical P&L statement and balance sheet there will be numerous accounts to correctly account for a fixed fee project. It can be a real chore just to keep everything straight, and easily prepare sound financial statements.
A fully integrated project accounting system can make this all a lot easier. A good project accounting system will automatically analyze project budgets and activity to determine the proper accounting entries, e.g. deferred revenue, WIP, unbilled revenue, overbilled revenue, etc. Doing this on an Excel spreadsheet is a pain.
Dynamics GP has a very good integrated project accounting module that can easily handle fixed fee projects, cost plus projects, and time and expense projects. It can utilize various accounting methods, e.g. completed contract, % of completion, recognize revenue when expenses are incurred, etc.
This video shows how to use Project Accounting in Dynamics GP to set up a simple Fixed Fee project, enter timesheet information, recognize revenue, and create invoices using a batch process: http://youtu.be/hM482mHpz1M