Welcome to Project System(PS) Overview

Welcome to Project System(PS) Overview
SAP PS Overview Welcome to Project System(PS) Overview

PS01 – Financial Project Management
Project Definition Project Numbering & Coding Masks Numbering Project Definition Settings Field Requirements Project Profile Common abbreviations in R/3: WBS (work breakdown structure) WBS element (work breakdown structure element) A work breakdown structure comprises work breakdown structure elements and their hierarchical structure. The project definition contains default values and profile data for the WBS elements, for example assignments to particular organizational units in the R/3 system. The basic dates for the entire project and the planning parameters for costs and dates are stored at the project definition level. The project definition thus forms a frame round the project. Note: A project definition is not an account assignment object (that is, no costs can be post to it). The WBS elements form the operative basis of a work breakdown structure. Planning data and actual data is recorded and aggregated at the WBS element level. Responsibilities Organisational Data Dates PS01

What are Work Breakdown Structures used for?
PS01 – Financial Project Management What are Work Breakdown Structures used for? Planning: Dates: Planned Costs Basic Dates Scheduled Dates Actual Dates Periodic Processing: Overheads Settlement Earned Value Analysis Budget: “WBS Structure” Original Budget Budget Updates Release Budgets Availability Control Execution: Actual Costs The work breakdown structure forms the basis for all subsequent planning tasks in the project. The emphasis here is on planning, analysis, description, control, and monitoring of costs, basic dates, and the budget. Dates, costs, and outgoing payments are often planned using activities which are assigned to WBS elements. Commitments: Purchase Requisition Purchase Order PS01

Work Breakdown Structure
PS01 – Financial Project Management Work Breakdown Structure Organisation & Responsibilities Work Breakdown Structures Operative Indicators Structure Objects Common abbreviations in R/3: WBS (work breakdown structure) WBS element (work breakdown structure element) A work breakdown structure comprises work breakdown structure elements and their hierarchical structure / components. The project definition contains default values and profile data for the WBS elements, for example assignments to particular organizational units in the R/3 system. The basic dates for the entire project and the planning parameters for costs and dates are stored at the project definition level. The WBS elements form the operative basis of a work breakdown structure. Planning data and actual data is recorded and aggregated at the WBS element level. Documentation PS01

Operative Indicators and Attributes
PS01 – Financial Project Management Operative Indicators and Attributes WBS 1 WBS 1.2 WBS 1.3 WBS 1.4 Partially Rel Released Partially Rel WBS 1.2.1 WBS 1.2.2 WBS 1.4.1 WBS 1.4.2 Released Released Released Released We use operative indicators to define the characteristics of a WBS element, and to specify what tasks the WBS element will assume during project execution: WBS elements for which users want to plan costs are flagged as planning elements. WBS elements to which they want to post actual costs are flagged as account assignment elements. WBS elements for which they want to plan or post revenues are flagged as billing elements. Other indicators for WBS element functions during project execution are: Statistical and grouping element The "Statistical" indicator specifies whether a WBS element is used only for statistical purposes, or whether it works with real costs. We can only specify that a WBS element is statistical if it is an accounting element or a billing element. We use grouping WBS elements to group the material requirements from several WBS elements for components kept in project stock in one or more projects on one WBS element. Key Planning Element For planning costs Plan/actual cost comparison Account assignment element For posting actual costs Network / Maintenance Order assignments PS01

Activities and Networks - Functions
PS01 – Financial Project Management Activities and Networks - Functions Internal Activity Internal Work Dates, Capacities Costs External Activity / Service: Milestones: Dec 12 Milestone Trend Analysis Dates Costs Commitments Material: Costs Activity: “Network” Dates Costs Commitments Dates Costs We use the activities in the network to plan the labor, capacities, materials, tools, and services required, to carry out various tasks in the project. Important: We cannot allocate a budget to a network - we can only allocate budgets to WBS elements. An activity uses the budget of the WBS element to which it is assigned. Periodic Processing: Overheads Settlement Mar April PS01

System Status and User Status control
PS01 – Financial Project Management System Status and User Status control What is Status control used for? To allow or forbid certain business transactions. Which elements? Project definition and WBS elements are affected. The statuses determine which business transactions are permitted and which are prohibited in the system. The system statuses have been set up by SAP and cannot be changed. They control the main business transactions. We can, however, define specific user statuses to attain a greater level of detail. User statuses are defined in Customizing. They are used to define which business transactions are permitted or prohibited by each change in status. We can also specify the sequence in which user statuses should occur. The user status can be set or deleted manually for several WBS elements at the same time. Individual status profiles can be defined for a project definition and WBS elements. If a status profile has not yet been defined in the project profile, one can still specify, in the application, which status profile should be used for the first time. How? Status are activated manually or automatically by the system. Why system and user status? User status adds detail to the system Status. PS01

System Status The following status are set by the system/user as the project goes through Its different stages: CRTD Created (Automatic) REL Released (Manual) LKD Locked (Manual) UNLK Unlock (Manual) BUDG Project Budgeted (Automatic) AVAC Availability Control Activated (Automatic) TECO (Manual) System Status Definitions include: CRTD: Project has been created. REL: Status “released” creates an AUC (Asset Under Construction) asset and allows making financial postings in MM or FI functions against the project. LKD: Prevents any changes to postings being made. UNLK: (UNLOCK) Reverses the lock transaction. BUDG: Project has been budgeted. AVAC: Availability Control Active, this checks the budget availability at 95% & 110% of the total budget. Setting limits is also possible. SETC: Settlement Rule Created. TECO: (Technically Complete) Prevents further commitment postings but allows settlements and adjustments from the FI function. CLSD: Project (Closed) status will activate when all activities have been completed. Prevents any further postings transactions. SETC: Settlement Rule Active PS01 51

Planning versus Budgeting
PS01 – Financial Project Management Planning versus Budgeting Planning Budgeting  Externally Financed Projects  Internally Financed Projects  Cost - oriented ( cost elements , Funds - oriented (original, plan versions, period values) supplements , returns , annual values)  Easily changed ; line items  Binding values ; line items for created if desired each change  No availability check  Availability check: For eg. Warning at 95% Error message at 110% From the viewpoint of Project planning, plan values (from CO) represent the funds that the person responsible for a Project requests for the implementation of the WBS. Budget values, in contrast, represent the funds that this person actually receives from higher management. Note: Plan versions are available on WBS. You can constantly monitor how the available funds compare to the budget values. Normally the plan is the basis for the budget. In Project System, you can copy the plan values to the budget (possibly while making a percentage reduction in the plan values). è "FUNDS REQUESTED" è "APPROVED FUNDS" PS01

Cost Planning in Projects
PS01 – Financial Project Management Cost Planning in Projects WBS 1 WBS 1.1 WBS 1.2 WBS 1.3 Cost Element Planning Activity / Network Costing You can plan project costs in two different ways: Manual cost planning in the WBS Cost planning using activities (network costing) Manual planning in the WBS involves: Overall planning (structure-oriented planning) in its most basic form, where you enter costs for each WBS element. You can break down your figures by fiscal year if you want (see Appendix). Detailed planning of primary costs and activity inputs (cost element planning). This type of planning is cost element based and period based. Unit costing, where you use a profile to enter quantities (materials, internal activities, external services, variable items, and so on) for each WBS element. This type of planning is cost element based. Easy Cost Planning from Release 4.6C. Easy Cost Planning offers you an easy-to-use tool for planning costs by cost element in a quantity structure. You can then use Execution Services to enter commitment and actual data for the planned costs. In addition to manual planning in the WBS, you also have the option of creating activities for WBS elements, and using these activities to plan costs. This method has the following advantages: The resulting plan can be copied to new projects If parts of the project are shifted, cost planning is shifted automatically along with the activities Planning using network activities is by cost element and period. Easy Cost Planning PS01

Internal Processing Work: 500hrs Output provided to complete activities 1200 Organisational unit Where an activity is carried out or work output is provided. Work Center Scheduling Data Capacity Available You must maintain work data for an activity so that the system can calculate costs for internal activities. You need to specify the amount of work involved and the work center that is to perform the work. Work centers contain data for costing activities. Work centers also contain the scheduling and capacity data necessary for scheduling and capacity planning. The costs of internally-processed activities and general costs activities can be distributed as required over the network duration. Distribution is controlled via a distribution key which can you store in the activity. If a distribution key is not maintained in the activity, the system uses (in the case of internally-processed activities) the key from the work center (capacity view). If no distribution key is maintained in the work center either, the costs are distributed evenly over the earliest dates in the activity. Cost Center Responsible Persons Cost Center Data PS01

External Processing Work Performed by a third party (Vendor) 1300 PR Committments Purchase Requisition Description Invoice Verfication Bid Invitation Material Group Actual Costs Purchasing Group Good Receipt / Service Receipt Quotation Entry Quantity & Unit Entry of Services performed Price per Unit Vendor Selection PO Processing Vendor When procuring services externally (outsourcing), you can create services or externally-processed activities. Example: You commission a freelance engineer to design and build a machine. When you create such an activity, a purchase requisition is also created, and processed further in Purchasing. You can access data from Purchasing for external processing (a purchasing info record, for example, which contains prices and delivery times for external processing). Externally-processed activities give rise to planned costs equivalent to the prices from the purchasing info record or the price in the activity. The valuation variant for the network costing variant determines which price is used for the valuation. When the purchase requisition is activated and converted to a purchase order, the activity is also shown as a purchase requisition commitment or purchase order commitment. The account assignment category in the purchase order determines whether the goods/invoice receipt is valued - that is, whether it gives rise to actual costs. If the goods receipt is valuated, actual costs are posted to the activity and the commitment is reduced by the amount of the purchase order. This means that the invoice receipt may correct the actual costs. Service activities are maintained for the purchase of services. Creating such an activity establishes the link to MM Services (MM-SRV). Unlike externally-processed activities, service activities contain a service specification containing planned activities and value limits for unplanned activities. This service specification is copied to the purchase order where Purchasing can then modify it. Service activities also give rise to planned costs or purchase requisition/order commitments. Instead of goods receipts, services are later entered and accepted. Purchase Order PO Committments PS01

Network Activities External Processing: Internal Processing: Purchasing of work / services Work / Services performed inhouse A network is made up of a series of activities. These can be linked and sequenced. Activities are like tasks (things to be done) and they are also resources (people and materials) required on the project. You can create relationships between them in order to schedule the activities in sequence or in parallel. Different types of activities include: Internally processed activities contain a work center at which the work is to be carried out. They contain the working time and the duration of the activity. The assignment of the work center to a cost center provides an activity type and a rate so that planned costs can be calculated for the activity. External activities are used for procuring activities or services that are not procured within your company. Purchase requisitions are generated that are processed in Purchasing. General cost activities allow you to plan cost that cannot be assigned to neither internal nor external activities, for example expenses or insurance premiums. Costs Activity: Services: Planning of additional primary costs Purchasing of services with service specifications PS01

Activities and Activity Elements
PS01 – Financial Project Management Activities and Activity Elements Four Types of Activities Internal Processing External Processing Costs, services General Cost Activities Internal External Reference Dates from Activity Start or Finish Activity Elements Work External Costs Service Activity elements allow you to map network activities in greater detail. For example, it is possible to complement an internal processing activity, which describes the transportation of a material, with a cost element, which describes the insurance for that transportation process. Activity elements have almost the same functionality as activities. Types of activity elements include: internal processing elements, external processing elements, and general costs elements. All activity elements have a date reference to the activity to which they are assigned. The activity elements themselves do not affect scheduling. For this reason, they do not have any relationships or durations. Materials and relationships are assigned to the superior activity. Example: several departments in your company work on the same activity. You use activity elements to enable each department to plan independently while at the same time being bound to the scheduling data defined for the higher-level activity. General Costs Service PS01

Activity Assignment to WBS
PS01 – Financial Project Management Activity Assignment to WBS WBS 1 Date Planning Cost Planning Generating Settlement rules Activity Elements WBS 1.3 WBS 1.4 WBS 1.5 WBS 1.3.1 WBS 1.3.2 WBS 1.5.1 WBS 1.5.2 1100 1000 5000 Network There are several reasons why activities are assigned to WBS elements. First, this means that dates can be exchanged between activities and WBS elements during scheduling. Second, this assignment is used for cost planning purposes. Third, it is possible to define a settlement rule automatically for the activities. For example, you might define a rule whereby settlement is made to the corresponding WBS element, or you might specify that the settlement rule of the corresponding WBS element should be used. Activity elements are also assigned to WBS elements. The assignment has the same functionality as in the case of the activities, but has no influence on time scheduling of WBS elements. 1200 PS01

Relationships Logical Sequence Time Sequence FS Relationship SS Relationship FF Relationship Relationships determine the chronological sequence of the individual activities in a network (or standard network). You can enter additional data (such as a time interval or factory calendar) on the detail screen of each relationship. In the network structure graphic, you can display relationships "time dependently", in order to illustrate the logical sequence of events. By default, all relationships are displayed as FS relationships in the network structure graphic. SF Relationship PS01

Integration with MM Definition Material required for performing an activity or for manufacturing a product. 2000 3000 1000 6000 4000 5000 Item Category “Project Stock” “Plant Stock” “Non Stock” Materials Materials Materials Stock Item “L” Stock Item “L” Non-Stock Item “N” By assigning materials to activities, you can plan the necessary material requirements for a project. The system differentiates between stock items and non-stock items. Stock items (L) are entered for materials that are kept in stock (warehouse, or project stock). Reservations are created for stock items. Non-stock items (N) are entered if materials are to be procured directly for the network (which is not using MRP). Purchase requisitions are created for non-stock items. These requisitions are passed on directly to Purchasing. Purchase Req. Reservation Purchase Req. MM PS01

Services 2000 3000 Services Allows you to define services to be procured. Individual service specifications can be created for each planned procurement in the Purchasing document. 1000 6000 4000 5000 Services “Service Number” Description Material Group Planned Services Unplanned Services Purchasing Group Service Specifications Service Master Or text / value Value Limit Vendor 1000 As well as externally processed activities, you can create service activities or service activity elements for services to be provided externally. A service activity triggers a purchasing process similar to the kind triggered by an externally processed activity, but can also contain a hierarchy of planned services to be purchased from the vendor and value limits for unplanned services. The "goods receipt" of services involves two steps: Entry of services performed Acceptance of services performed. For service activities, you can maintain service specifications for various services to be provided by the service provider (planned services). You can use value limits to restrict services that the service provider has not planned. You can create the link to the MM Service component (MM-SRV) by means of service activities. Purchase Order Purchase Requisition Value Check PS01

External Services Management
PS01 – Financial Project Management External Services Management 2000 3000 1000 6000 PR Commitments 4000 5000 Actual Costs Purchase Requisition Invoice Verification Bid Invitation Services Services Finally Complete Item Category “D” Quotation Entry Service Entry Sheet Vendor Selection PO Processing Component MM-SRV supports the entire cycle of bid invitation, award of contract, and entry and acceptance of services. Unlike external activities, the "goods receipt" is divided into two steps: Entry of services performed Acceptance of services performed. PO Commitments PS01

Project Dates Project Definitions Project Definition BASIC DATES WBS Elements BASIC DATES FORECAST DATES Scheduled Dates Actual Dates Network Header BASIC DATES Scheduled Dates Actual Dates Network Header Network Activity CONSTRAINTS Earliest scheduled dates Latest scheduled dates Actual Dates You define different dates at every level of the project (project definition, network, activities, and activity elements). You can adjust these dates in the project hierarchy using either top-down or bottom-up planning. The following types of dates are available in the system, and occur at all levels: Basic dates are defined manually, and are often binding for lower-level objects. Activities can be fixed by means of time constraints. Scheduled dates (or earliest and latest dates for activities) are determined automatically when network activities are scheduled. Scheduled dates are determined for WBS elements by summarizing the scheduling data of the corresponding activities. In the realization phase of the project, actual dates are set by entering actual dates for WBS elements, or by confirming activities. Forecast dates are a means of storing a specific scheduling scenario for information purposes. Activity Element Earliest scheduled dates Latest scheduled dates Actual Dates BOLD – Manual Planning Dates Italics – Automatic Dates PS01

Bottom-Up planning Project planning board P P1 P2 30 70 50 80 WBS 10 20 60 40 P P Extrapolate Dates Automatically P1 P1 P2 P2 10 20 30 40 Network Network 2 In projects with networks, you can use network scheduling to derive the dates of activities and WBS elements automatically. Using the project planning board, you can select WBS elements, and schedule the activities assigned to them. The scheduling parameters determine how the activities are scheduled. Networks are always scheduled forwards. The system determines the earliest dates of the activities by means of forward scheduling., and the latest dates by means of backward pass. The differences between the earliest and latest dates of an activity are referred to as floats. If these are less than or equal to zero, the activity is termed "critical". The dates of the assigned activities are summarized to give the scheduled dates of the WBS elements (thin time bars in the project planning board). The dates scheduled in the WBS structure can be copied to the basic dates of the WBS elements, for the purpose of extrapolating them up the project hierarchy. 50 60 70 80 Basic dates in project definition Basic dates in project definition PS01

Example of scheduling 20 20 6 D 6 D 3 3 8 8 3 3 3 8 8 8 10 2 D 50 3 D 9 11 10 2 D 1 1 2 2 1 1 1 2 2 2 30 30 2 D 2 D 40 40 3 D 3 D 3 3 4 4 5 5 7 7 4 4 4 5 5 5 6 6 6 8 8 8 Earliest Start Date Earliest Finish Date 10 20 10 10 2 D 2 D A network is always scheduled forward and backward. The scheduling type specifies whether forward scheduling or backward scheduling is carried out first. Forward scheduling calculates the earliest start and finish dates for the activities (earliest dates). A start activity is a network activity that does not have a predecessor. The start date is the start date in the network header or the start date determined from backward scheduling. Backward scheduling calculates the latest start and finish dates for all the activities (latest dates). A target activity is a network activity that does not have a successor. The start date is the finish date in the network header or the finish date determined from forward scheduling. In the example above, the start dates are set to the beginning of the day (07:30) and the finish dates set to the end of the day (04:30). If work centers are specified for the activities, the start and finish dates are within the operating time of the work centers affected. 1 1 2 2 30 1 1 1 2 2 2 40 Latest Start Date Latest Finish Date 50 1 2 3 4 5 6 7 8 9 10 11 12 13 Days Legend PS01

Time Constraints 1 2 Start Start Finish Before Before After After You can maintain constraints for the start and finish of activities and / or activity elements. Constraints can be relevant for both the earliest and the latest dates. You can maintain constraints for basic and forecast sets of dates. For activities, time constraints set 1. An exact start / finish ( = must) 2. The earliest value limit ( = not before) PS01

Cost Planning and Budgeting Approval
PS01 – Financial Project Management Cost Planning and Budgeting Approval Budget Approved applied for budget 2001 2001 2000 2000 Cost Budgeting Cost Planning Total Total 1 IT - - 1399 1399 O P D ... Annual plan value 2 IT - - 1399 1399 - - 1 1 R L I Budget ... 3 IT - - 1399 1399 - - 1 1 - - 1 1 I N S 3 IT - - 1399 1399 - - 1 1 - - 2 2 G D T ... 2 IT - - 1399 1399 - - 2 2 I R While you must estimate your project costs as accurately as possible during cost planning, it is in the approval phase that funds are assigned in the form of a budget. The budget differs from the cost plan in that it is binding. It is the device by which management approves the anticipated development of project costs over a given period of time. . . N T B ... Bottom - up . . A O T Top - down . . L T extrapolation A distribution L PS01

Budgeting Overview Budget Updates Budget Values Availability Control: Against Current Budget Against Budget Releases Budget Carryforward Release Budget You use the Maintain Original Budget transaction to assign funds for the project and its parts. You can prevent users from maintaining the overall budget for a project by assigning appropriate user statuses. If you lock (freeze) the original budget in this way, you can only change it by defining supplements, returns, and transfers (referred to collectively as budget updates). You can use the budget release function to make funds available at various points within a fiscal year. You can use the budget carry forward function to transfer any funds not used up in the previous fiscal year to the budget of the new fiscal year. 2002 2003 PS01

Commitment Management
PS01 – Financial Project Management Commitment Management MM Purchase Requisition WBS Element DS : Server C/Elem Committed Actual Assigned Purchase Order WBS Element DS : Server C/Elem Committed Actual Assigned Goods Receipt Commitments for costs to be incurred in the future are initiated in the Purchasing function of the Materials Management component as follows: A purchase requisition is an internal communication of a procurement requirement (from the requestor to the buyer). A purchase requisition represents a provisional commitment, which can be changed at any time. You are not required to assign a CO object on a purchase requisition line; but if you do not, no commitment will be reflected in CO. A purchase order is a contractual agreement to purchase goods or services from a vendor according to agreed conditions. A purchase order represents a firm commitment since it is based on a contractual obligation. For a purchase order item charged to a cost element, you are required to specify a controlling object; therefore, a commitment will be reflected in CO. When you create a purchase order with reference to a purchase requisition, the commitment will be reclassified in CO. Processing goods receipts against the purchase order reduces the commitment, and actual costs are posted to the controlling object. This process continues until the purchase order is closed and the commitment is reduced to zero. Commitment management allows you an early recording and analysis of such commitments for their cost and financial effects. PS01

Availability Control No more Funds available!! WBS 1.1.1 Business Events Budget Comm Actual Invoice Total 50 10 40 25 2003 30 5 2004 20 5 15 Availability check Checks overall funds available Purchase order Purchase As a project is executed, business events are recorded which call upon the available funds. These events result in the posting of actual costs and commitments to the project. Commitments represent obligations that will lead to actual costs through subsequent business events. A purchase order, for example, may result in a CO commitment. Actual costs and commitments are types of funds commitments. Funds commitments for a project are checked against the budget by availability control. Certain tolerance limits are pre-defined in SAP that allow expenditure up-to a certain level. Once 95% of the budget has been consumed, a warning message is posted telling the user that upto 95% of the budget has been spent. Once 110% of the budget is consumed, an error message is posted preventing further postings. Requisition PS01

Availability Control Animation
PS01 – Financial Project Management Availability Control Animation Budget Budget Budget Actual Assigned Commitments 25 000 Activities 76 000 Assigned At 110% budget completion, An error message is Posted by the system and mail Sent to the responsible person. Actual costs 80,000 At 95% budget completion, A warning message is Posted by the system. NOTE: Percentages differ across project processes Commitments (purchase order, purchase requisition, funds reservation) 25,000 CO MM PM PS Networks / Orders 76,000 Items within budget are Successfully posted. When a project is being executed, the available funds are committed to various places. These "commitments" are created, and actual costs are incurred. Together with the costs of apportioned orders, both these forms of fund commitment result in what are referred to as "assigned funds". The funds overview can be regarded as "passive availability control". However, the Project System also supports "active availability control". The corresponding assigned funds are calculated, and checked against the budget. The assigned funds can be found in the budget-bearing WBS element and in the lower-level assignable WBS elements. If certain tolerance limits are violated (shortfall in budget, budget exceeded), this can trigger various system responses (a warning, for example, or an error message). In Customizing for the tolerance limits, you can specify which response is to be triggered and when. Once activated, availability control is run for each subsequent posting in the project. During availability control: The budget-bearing WBS elements (called controlling elements) are determined. The corresponding assigned funds are determined. The assigned funds are checked against the budgets of the controlling elements. The assigned funds can be found in the budget-bearing WBS element itself, and in the lower-level assignable WBS elements (account assignment elements). PS01

Deriving Settlement Rules
PS01 – Financial Project Management Deriving Settlement Rules Settlement Strategies 2 Manually for Assets and Cost Centers 1 Proposed by default rule To assigned WBS The activity’s settlement rule is automatically determined by the assigned WBS element. The WBS settlement rule is automatically determined or Manually maintained for final assets and cost centers, G/L Account etc as the requirement. PS01

Periodic Settlement Processing
PS01 – Financial Project Management Periodic Settlement Processing 1 Periodic Settlement to AUC Final Settlement to Fixed Assets 2 Final Asset Asset Under Construction PS01

Project Closing Case Flow Diagram
PS01 – Financial Project Management Project Closing Case Flow Diagram Final Settlement from AUC to Assets Reduce released budget Return Original Budget Delete unused WBS Elements Clear Project Stock Update all WBS Elements to TECO Close project definition Perform Budget Return check PS01

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Welcome to Project System(PS) Overview

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