Project Cost Forecasting in SAP Solution Overview

SAP Project management solu2ons in detail:

  Cost Planning & Forecas2ng

  Varia2on Management

This presenta2on…

•  This presenta,on presents end-‐to-‐end solu,ons to manage project cost planning, execu,on, monitoring, forecas,ng and varia,ons in SAP

•  The project data is managed in the integrated SAP ECC system enhanced by Noveco’s extended Project Management (ePM) add-‐on

Cost Planning and Forecas2ng solu2ons

Process overview

Step-‐by-‐step walkthrough

Project Management Business Process Map

PR PO GR

PR PO SES

Invoice

●  Rough cut Cost Estimation ●  Budget Preparation ●  Profitability Plan

●  Labour Internal External ●  Materials & Services ●  Overheads

●  Network scheduling ●  Cost Plan Distribution

●  Capacity planning ●  Manpower planning ●  Personnel Management

●  Project KPIs monitoring ●  Exception reporting ●  Detailed Reporting

●  Progress Assessment ●  Cost & Work to Complete ●  Estimated Costs at Completion

SAP

Stan

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N

ovec

o eP

M

●  Project Variation register ●  Cost Estimation ●  Cost integration with EAC/CTC

●  Quotation from project Cost Estimation ●  Pricing and Conditions ●  Link to Project

●  Billing: Lump-Sum, Cost Plus, Schedule of rate

●  Revenue Plan & Actual Integration

Project Lifecycle: Es2ma2ng and Planning

. . . .

Effective Project

Management

Execution

Monitoring Forecasting

  Reporting   Analysis   Settlement

  Estimating   Planning   Budgeting

Create Project Cost Plan

Option1: create directly in PS Option2: crate automatically from external estimate

Project Cost Planning in SAP

Type Resource Cost Element Quan2ty UOM Price Value

Material Cable 400000 100 m2 $50 $5,000

Variable Sub-‐Contract 417000 1 AU $7,500 $7,500

Labour Welder 603000 200 H $40 $8,000

Labour Proj.Manager 701000 50 H $80 $4,000

$24,500

Type Resource Cost Element Quan2ty UOM Price Value

Labour Design 400000 100 H $80 $8,000

Variable Engineering 415000 200 H $90 $18,000

$26,000

Project Easy Cost Planning

●  Plan costs on Network Ac,vity and/or WBS on the same screen ●  Plan mul,ple costs type and resources on the same project element (example above)

●  Instant review of your total planned costs ●  Integra,on with procurement

●  Integra,on with resource planning (with Noveco ePM enhancements) ●  Integra,on with Cost Forecas,ng (with Noveco ePM enhancements)

Easy Cost Planning highlights

Cost Es2ma2on can be created using cos2ng

template


. . . .

Effective Project

Management

Execution




Create Project Cost Plan

Option1: create directly in PS Option2: crate automatically from external estimate

●  Create Cost Quan,ty Structure in an Es,ma,ng system

●  Assign SAP Cost Elements ●  Map es,mate to project WBS or NWA

●  Generate Cost Es,mates in Easy Cost Planning on assigned project planning elements automa,cally

BAPI

Project Cost Es2ma2on generated automa2cally

Es2ma2ng soUware

Excel


. . . .

Effective Project

Management

Execution




Project Plan

Project Schedule Plan Cost distribution

Project Scheduling

●  Create Network Ac,vity Rela,onships ●  Schedule Network ●  System determines start and finish dates (earliest and latest) for each network

ac,vity and project


. . . .

Effective Project

Management

Execution




Project Plan

Project Schedule Plan Cost distribution

Distribu2on of Es2mated Costs

Noveco’s ePM: ●  Cost Es,mate Distributed along the WBS and NWA

start – finish dates

●  converts Cost Es,ma,on to Project Cost Forecasts ●  Forecast Costs are distributed along project ,me line ●  Generates Resource plan from Easy Cost Plan

Cost Estimate

Costs Estimate

t

t

$

$

Feb-10 Mar-10 Apr-10 May-10


Costs to Complete

t

$


Project Es2mated Cost are distributed as Cost Forecasts

●  Cost Forecasts are distributed along the project ,me frame.

●  Users can manually adjust distribu,on pacern (Noveco ePM Workbench)

Project Cos2ng: cos2ng layers

Project Costing layers C

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osts

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mitm

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Varia

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Project planning phase finished:

  Project structure created   Cost Estimate saved on project   Project start & finish date created   Initial Cost Forecast generated from Cost

Estimate   Plan costs are distributed

. .

Project Management: Execu2on

. .

Effective Project

Management

Execution




Project Execution

•  Time sheets (internal labour/external labour) •  Service, Materials and Equipment Procurement •  Invoices & Payments

Project Actual Costs Collec2on

Time sheets

Expenses &

other costs

Material Consump2on from stock

Sub-Contracted Services

Equipment & Materials Direct

Service and Material Procurement

materials

Services

  Procurement of Materials or sub-‐contacted services directly to project

  Automa,c adjustments of Cost to Complete from raising commitments or actual costs (ePM workbench)

Purchase Requisition

Purchase Order

Invoice

Good receipt or

Service Entry

EAC Actual Cost Commitments Cost To Complete

$1,000.0 $0.0 $0.0 $1000.0


$1,000.0 $0.0 $800.0 $200.0


$1,000.0 $500.0 $300.0 $200.0



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Project Execution phase:

  Time confirmations posted   Purchase Orders created   Good receipts posted   Service Entry sheets accepted   Invoices & payments   Cost Forecasts automatically recalculated

. . . .

Project Management: Cost Forecas2ng

Effective Project

Management

Execution




Monitoring & Forecasting

•  Auto reduction of Cost To Complete •  Compare Cost Estimate with Estimate At Completion •  Manually change remaining Cost and Work

Project Management Business Process Map

PR PO GR

PR PO SES

Invoice

●  Rough cut Cost Estimation ●  Budget Preparation ●  Profitability Plan

●  Labour Internal External ●  Materials & Services ●  Overheads

●  Network scheduling ●  Cost Plan Distribution

●  Capacity planning ●  Manpower planning ●  Personnel Management

●  Project KPIs monitoring ●  Exception reporting ●  Detailed Reporting

●  Progress Assessment ●  Cost & Work to Complete ●  Estimated Costs at Completion

SAP

Stan

dard

N

ovec

o eP

M

●  Project Variation register ●  Cost Estimation ●  Cost integration with EAC/CTC

●  Quotation from project Cost Estimation ●  Pricing and Conditions ●  Link to Project

●  Billing: Lump-Sum, Cost Plus, Schedule of rate

●  Revenue Plan & Actual Integration

ePM: Project Manager Workbench

Project Manager Workbench  Automatically reduces Cost To Complete

from posted actual costs and commitments  Recalculates project Estimated Cost at

Completion (EAC)

 Compares Project Plan vs EAC and presents exceptions in form of traffic lights

 Manual change of project work or cost to complete

 Drill down reports

  Forecast history   Period specific CTC/EAC  Etc.

Process overview


•  Cost Element based cost forecast •  Opera,on based cost forecast

Forecas2ng: Cost To Complete calcula2on Methods

Cost Element based CTC calculation

Cost Element EAC Actual Cost Actual Qty

Commitments Qty To Complete

UOM Cost To Complete

603000 -‐ Concrete work $3900.0 $3000.0 100.0 $0.0 30.0 m3 $900.0

610000 -‐ Electrical labour $4000.0 $1000.0 20.0 $1500.0 50.0 Hr $1500.0

415000 -‐Equipment installa,on $5500.0 $4500.0 90.0 $500.0 0.0 Hr $500.0

Total $13,400.0 $8,500.0 $2,000.0 $2,900.0

You can change work and/or cost to complete per cost element assigned to network ac,vity or WBS element

ePM Workbench: Automa2c Forecas2ng Ini2al

planning Time sheets PO

Commitment

Easy

Cos

t Pla

n C

ost F

orec

asts

Copy Cost Plan to Cost Forecast

Cost Forecas2ng

Current Budget is Cost Plan Initial CTC generated

from cost plan

Project Actual Costs Ini2al


Commitment Cost

Forecas2ng

Time sheets Person No. Ac2vity Type Actual Work Price/H Actual Costs

101234 7000 40 H $100 $4000.0

109243 7008 20 H $100 $2000.0

Project Monitoring & Forecas2ng Before time confirmation

After time confirmation

CTC automatically reduced

Before time confirmation



Commitment Cost

Forecas2ng

Purchase Order

40 H x $150.0 = $6000.0


Project Monitoring & Forecas2ng Before Purchase Order

After Purchase Order

Before PO created

After PO created - CTC automatically

reduced

ePM Workbench: Manual Forecas2ng Ini2al


Commitment Cost

Forecas2ng

Change Work and Cost To Complete manually

Project manger workbench: Excep2ons

Changed Cost Forecast produces exceptions: Budget Deficit = Budget – EAC = - $9000.0

Process overview


•  Cost Element based cost forecast •  Opera2on based cost forecast

Forecas2ng: Network Opera2on based

Operation based Cost Forecasting

Cost Element EAC Actual Cost

Actual Qty

Commitments Qty To Complete

UOM Cost To Complete

610000 -‐ Electrical labour $4500.0 $1500.0 30.0 $0.0 60.0 m3 $3000.0

62000 Plumbinglabour $300.0 $300.0 10.0 0.0 $0.0 Hr $0.0

65000 Project Manager $500.0 $500.0 10.0 0 $0.0 Hr $0.0

Total $5300.0 $2300.0 $0.0 $3000.0

Ac2vity Descrip2on Plan Qty

Actual Qty

EAC Qty

UOM Ac2vity Type Rate Cost Element

Qty To Complete

Cable Laying 100.0 50.0 110.0 Hr EL01 $50.0 610000 60.0

ePM Workbench: Automa2c Forecas2ng Ini2al


Commitment

Easy

Cos

t Pla

n C

ost F

orec

asts

Copy Cost Plan to Cost Forecast

Cost Forecas2ng

Initial CTC generated from cost plan



Commitment Cost

Forecas2ng

Time sheets Person No. Ac2vity Type Actual Work Price/H Actual Costs

101456 7010 20 H $120 $2400.0

109657 6110 20 H $123 $2460.0

Project Monitoring & Forecas2ng Before time confirmation

After time confirmation

Before time confirmation

Work and Cost To Complete

automatically reduced



Commitment Cost

Forecas2ng

Purchase Order

30 H x $150.0 = $4500.0


Project Monitoring & Forecas2ng Before Purchase Order

After Purchase Order

After PO created - CTC automatically

reduced

Before PO created

ePM Workbench: Manual Forecas2ng Ini2al


Commitment Cost

Forecas2ng

Change Work and Cost To Complete manually

Project manger workbench: Excep2ons

Changed Cost Forecast produces exceptions: Budget Deficit = Budget – EAC = - $14,540.0

. .

Project Management: Execu2on

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Effective Project

Management

Execution




ePM Cost Forecast Report (integra2on with PS Info system)

NovecoePM Project Cost Forecas2ng

•  Project Costs Forecasts integrated with ECC in real ,me

•  Automa,c reduc,on of Cost to Complete •  Automa,c recalcula,on of project Es,mated Cost at Comple,on

•  Manual adjustment of Cost or Work To Complete on Network Ac,vity and WBS elements

•  Cost Forecast distribu,on •  Workbench provides one central place for Project Manager to

review KPIs, perform forecasts, execute analy,cal and drill down reports

•  No modifica,ons to SAP standard applica,ons

•  No interfaces •  No “z-‐tables” to keep forecasts costs: all data read/wricen

from/to SAP ECC.

Project Varia2on Management solu2ons

Varia2on Management process

Varia2on 301006

Project CS-‐00123

Total $5,000.0

Accepted $0.0

Status PENDING

Cost Element Descrip2on Value

630000 Labour $1,000.0

415000 Plant hire $1,500.0

550000 Equipment $2,500.0

EAC

AC

CTC

BU

DG

ET

VAR

PEND

Variation

APPR EA

C

AC

CTC

BU

DG

ET

VAR

Variation

Automa,cally update project forecasts and

budget

Create varia,on

Es,mate varia,on costs

Assign to project elements (WBS, NWA)

Approve

Budget Varia2ons: Affect Budget and Forecas2ng

Status: CREATED

Bud

get

EAC CTC

Varia2on documents

Con

tinge

ncy

Varia

tion

EAC CTC

Bud

get

Status: APPROVED

Con

tinge

ncy

Varia

tion

Con2ngency Varia2ons: Affect Budget and Forecas2ng

Bud

get

EAC CTC

Varia2on documents

Con

tinge

ncy

Varia

tion

Status: CREATED

EAC CTC

Bud

get

Con

tinge

ncy

Varia

tion

Status: APPROVED

Varia2on

• Plan varia,on costs using Easy Cost Planning format

• Enter Revenue Varia,on • Assign varia,on cost line items to WBS or NWA (one varia,on can be assigned to many WBS or NWA within same project)

• Change status to “Pending” or “Approved”

Costs

Varia2ons integrated in Project Manager Workbench

Varia2on Drill down reports

ePM Cost Forecast Report (integra2on with PS Info system)



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Project Variations:

  Variation created and approved   Project Budgets updated automatically   Projects Cost forecasts updated

automatically   Original Cost Plan not changed

Varia

tions

& C

ontin

genc

y

ePM Varia2on Management Advantages

•  Varia,on Costs and Revenues are integrated with project planning, budge,ng and forecas,ng

•  Automa,c integra,on of varia,ons based on status change control

•  Enable repor,ng of: Original Cost Plan, Current Budget, Varia,ons and Con,ngency etc.

•  Varia,ons are Integrated with project manager workbench for easy tracking and repor,ng

•  Varia,on and Con,ngency values are reported in SAP standard PS info system

•  No modifica,ons to SAP standard core applica,ons

•  No “z-‐tables” to keep varia,on costs, all data read/wricen from/to SAP standard database.

Integrated Project Management

Costs &

Resource Forecas2ng

Project Manager

Workbench

Integrated Project Management in SAP

PS FI

HR

CO SD

PM

MM Varia2on Management

ePM Project Manager Workbench

ePM highlights: ●  ePM applica,on is fully integrated with

standard SAP ECC

●  ePM enhances SAP standard func,onality by providing comprehensive solu,ons for cost forecas,ng and project varia,on management

●  Cost Forecas,ng for Service and Maintenance Project are integrated with PM/CS order cos,ng

●  Enables Management of Project Es,mates, Budgets, Cost To Complete, Es,mated At Comple,on, Varia,ons of Costs and Revenue

●  Present informa,on in one easy to read screen for project managers to review their project KPIs, perform forecas,ng, execute drill down reports etc.

●  Provides data layout for project repor,ng and analysis

●  e-‐PM is an add-‐on that does not modify SAP standard core components and is fully integrated with BW, RPM for strategic planning and repor,ng.

Project Cost Forecasting in SAP Solution Overview

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