project cost forecasting in sap solution overview
DESCRIPTION
Project Cost forecastingTRANSCRIPT
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
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
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
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
● 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
Project Lifecycle: Es2ma2ng and Planning
. . . .
Effective Project
Management
Execution
Monitoring Forecasting
Reporting Analysis Settlement
Estimating Planning Budgeting
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
Project Lifecycle: Es2ma2ng and Planning
. . . .
Effective Project
Management
Execution
Monitoring Forecasting
Reporting Analysis Settlement
Estimating Planning Budgeting
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
Feb-10 Mar-10 Apr-10 May-10
Costs to Complete
t
$
Feb-10 Mar-10 Apr-10 May-10
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
ost E
stim
ate
Cos
t To
Com
plet
e
Act
ual C
osts
Com
mitm
ents
Varia
tions
Con
tinge
ncy
Cos
t Est
imat
e
Cos
t To
Com
plet
e
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
Monitoring Forecasting
Reporting Analysis Settlement
Estimating Planning Budgeting
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
EAC Actual Cost Commitments Cost To Complete
$1,000.0 $0.0 $800.0 $200.0
EAC Actual Cost Commitments Cost To Complete
$1,000.0 $500.0 $300.0 $200.0
Project Cos2ng: cos2ng layers
Project Costing layers C
ost E
stim
ate
Cos
t To
Com
plet
e
Act
ual C
osts
Com
mitm
ents
Varia
tions
Con
tinge
ncy
Cos
t Est
imat
e
Cos
t To
Com
plet
e A
ctua
l Cos
ts &
Com
mitm
ents
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
Reporting Analysis Settlement
Estimating Planning Budgeting
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
Step-‐by-‐step walkthrough
• 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
planning Time sheets PO
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
Project Actual Costs Ini2al
planning Time sheets PO
Commitment Cost
Forecas2ng
Purchase Order
40 H x $150.0 = $6000.0
Sub-Contracted Services
Project Monitoring & Forecas2ng Before Purchase Order
After Purchase Order
Before PO created
After PO created - CTC automatically
reduced
ePM Workbench: Manual Forecas2ng Ini2al
planning Time sheets PO
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
Step-‐by-‐step walkthrough
• 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
planning Time sheets PO
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
Project Actual Costs Ini2al
planning Time sheets PO
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
Project Actual Costs Ini2al
planning Time sheets PO
Commitment Cost
Forecas2ng
Purchase Order
30 H x $150.0 = $4500.0
Sub-Contracted Services
Project Monitoring & Forecas2ng Before Purchase Order
After Purchase Order
After PO created - CTC automatically
reduced
Before PO created
ePM Workbench: Manual Forecas2ng Ini2al
planning Time sheets PO
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
. .
Effective Project
Management
Execution
Monitoring Forecasting
Reporting Analysis Settlement
Estimating Planning Budgeting
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)
Project Cos2ng: cos2ng layers
Project Costing layers C
ost E
stim
ate
Cos
t To
Com
plet
e
Act
ual C
osts
Com
mitm
ents
Varia
tions
Con
tinge
ncy
Cos
t Est
imat
e
Cos
t To
Com
plet
e A
ctua
l Cos
ts &
Com
mitm
ents
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.