Resource-Related Billing Complex Billing Environments Susan Kopisch SAP Labs, LLC susan.kopisch@sap.com Barbara Daves CRM2ERP Consulting, LLC daves@crm2erp.com

Agenda What is Resource-Related Billing (RRB)? The Power of Pricing Cost Plus Billing Scenario Fixed Price with Progress Payments Scenario Conclusions Questions

Resource-Related Billing Any company who bills their customers based on resources consumed Industries include but not limited to: Airline Operations Defense Contractors Engineering & Construction Service Industry Consulting Industry Public Sector

Contract Types with Complex Billings Cost-plus-fixed-fee Cost-plus-incentive-fee Max Fee Max Fee Fixed Fee Award Fee Pool 100/0 Share Target Fee Share Ratio Min Fee Base Fee Base Fee (0-3%) Estimated Cost Target Cost Estimated Cost Firm-fixed-price w/PP Fixed-price incentive w/PP Difference types of contracts have been defined by the government to ensure they pay a fair price and can manage the program. These types can be quite extensive in calculation. Multiple Incentive Share Ratio Target Profit Profit (PTA) 0/100 Share Ceiling Price Cost Target Cost

Billing Complexities The amount to bill may depend on different calculations: Resource-Billing Based on resources consumed Based on estimated resources to be consumed Based on labor hours consumed Disallowed costs Cost Funding Cost Withholds Overheads G&A Material Production Cost of Money

Billing Complexities cont. Fees Fixed Percentage of costs incurred given negotiated cost Percentage of labor hours consumed Fee Retention Fee Funding Award Incentive Schedule Cost

Our job is to build invoices store the data for future use How can we use SAP for RRB? The SAP R/3 system is a toolbox from which you can build and store many different things. Our job is to build invoices and store the data for future use

Resource-Related Billing Equation Dynamic Item Processor Sales & Distribution Project System Pricing Procedure Pricing Routines Project Structures Controlling/FI = Costing Sheets Cost Tables Invoice Materials Management Material Master

How does RRB Work? Proj WBS-1 WBS-2 Resource-Related Billing is used when the amount to invoice the customer is based on the resources consumed by the project Sales Contract/Order Line Item Qty Proj Product A 1 WBS-1/DIP Profile Product B 1 WBS-2/DIP Profile Dynamic Item Processor Resource Bill WBS-1 WBS-2 Op20 Op50 Active Project with Postings Op10 Op60 Op30 Op40 PM Order PM Order PP Order PP Order

Data Flow for Cost Plus DIP Profile Working Area Source Costs on Project A Source Selection Criteria Addl DMR Items Billed Overhead Costing Sheet

Material Determination Debit Memo Request Working Area Labor Materials Award Fee Fixed Fee Pricing Overhead Routines & Requirements

Pricing DMR Items Pricing Routines & Requirements

DMR with Pricing Debit Memo Request Labor $2000 Materials $3000 Award Fee $10000 Fixed Fee $6000 Overhead $12000

Pricing Requirements & Routines Three types: 1. Routine to zero out EK01 cost for additional DMR items Key Routines 2. Routine to store variables 3. Routine to calculate final values

Storing Costs & Revenues Billing calculations use calculated values from prior billings (i.e. previously billed). BSEG FI Doc for Invoice Revenue Elements 4600000 Sales 4601000 Excess Funding 4602000 Excess Fee 4603000 Withhold 4604000 Fees No cost object ? End Yes Previously billed values are automatically stored in the cost tables on revenue elements! COEP

Storing Pricing Condition Values Pricing calculates variables used in determining values to bill. During pricing, the pricing conditions are automatically stored in the KONV table! KONV

Fixed Price w/Progress Payments Fixed Price contracts may be eligible for progress payments based on costs incurred. SF1443

Fixed Price w/Progress Payments Pay Request Down Customer Send Sales order Header RRB Send Item 10 Progress Payment Item 20 P/N12345 Down Payment $ Bill Deliver Clear

Sales Order Setup Sales order pricing Sales order Header Item 10 Progress Payment Item 20 P/N12345 Billing Profile & WBS Element Resource Bill Item 10

material determination Billing Profile Setup material determination costing sheet

Progress Payment Flow Pay Request Down Customer Send Sales order Send Header Send RRB Item 10 Progress Payment Item 20 P/N12345 Down Payment $ The down payment request is a sales document from which the the SF1443 output will be generated.

Progress Payment DMR Pricing RRB From Sales Order Debit Memo Request … Header EK01 = $500 stat. Item 10 Labor EK01 = $900 stat. Item 20 Material … Progress Payment Calculation Item 30 ZZProg Pay Net Value = Request for Down Payment

Sample Progress Pay DMR

Fixed Price Item Flow Bill Sales order Header Item 10 Progress Payment P/N12345 Down Payment $ Deliver Bill Clear

Invoice Pricing Bill Price = LESS Liquidation

The Real Power of RRB Realistic Real-Time Billing No delay in resource expenditure to billed values High confidence of billing due to direct project integration RRB Supports Different Contract Types The billing profile is configured for each contract type Flexibility for Complex Calculations Pricing enables complex calculations adjusting the bill costs such as CIEF, FIEF, Withholds, Retention, Fees, etc to arrive at a net billing amount. Historical billings easily stored/retrieved from the revenue elements on a project. Billing overhead rates are applied using costing sheets which allows for re-adjustment of rates. All rate changes are retro-active automatically.

Questions

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