Customer projects

[sukhveer_singh2]

Dear All,

Till now i am working at investment projects now i am at customer projects.I am selling BTS towers to my customers.I've made structure for it but client need to go at WBS element level as the material is procured at WBSE level.

Tell me how can i get the whole actual cost of project.As the material is assigned to wbse level only.But how can i get other cost as services,wages and other if activities is only for scheduling or date monitering.

Regards.

Sukhveer

[Former Member · Accepted solution]

If you have to post costs to the project, you need to tick the 'Account Assignment Element' under the operative indicators in the WBS element. Please check for the same.

Also check if the network is 'Header assigned' or 'Activity Assigned' for cost integration.

Venu

[sukhveer_singh2 · Accepted solution]

Dear ,

Just want to know without activity costing how can i know the cost of projects at wbs element level.

Should i assign the service PO to WBSE? I think this is the correct way to see the cost of services at wbse level.

[Former Member · Accepted solution]

Using the WBS costing methods like Unit costing, Cost element costing etc you can plan the costs without Activities also. In this you directly plan the costs without network/ activity costing.

However to post costs either through material/ service/ etc the WBS needs to ba account assigned. The actual costs flow to the project on confirmation of the activities.

Hoep this clarifies

Venu

[ansar_shaikh2]

Recommendations in Customer Projects

In customer projects, the actual costs are settled, but accrued amounts (such as costs of sales or inventory from which revenue can be generated) are not. You carry out this settlement at billing element level.

For customer projects which you settle in full to Profitability Analysis, it is a good idea to generate the settlement rule using a strategy defined in the IMG. The standard system we deliver includes a strategy for automatically generated settlement rules for customer projects.

The system uses this strategy to generate the following:

u2022 For all billing elements:

o Results analysis key

o Settlement to profitability segment

o A settlement profile providing for settlement in full

u2022 For all other WBS elements

o No results analysis key

o A settlement profile providing for no settlement

If account assignment elements within a billing structure do not contribute to the cost of sales, you can change the settlement rule manually.

If you maintain the settlement rule manually, we recommend you proceed as follows:

u2022 Use a project profile with a settlement profile that forbids settlement. This initially prevents settlement for all the WBS elements in the project.

u2022 Change the settlement profile in the billing elements manually. Define a settlement profile that permits settlement.

u2022 If you want to settle account assignment elements (in whole or in part), you must change the settlement profile for account assignment elements manually.

You change the settlement profile in the settlement rule for the object by choosing Goto  Settlement parameters. There is a parameter in the settlement profile which you can use to define whether settlement is forbidden, allowed, or required.

Avoid making settlements within the project hierarchy. These can adversely affect system performance.

For more information on settling customer projects, refer to Settlement in Product Cost Controlling .

Regards,

ANSAR

[sukhveer_singh2]

Dear,

its very usefull comments for projects.giving u rewards points for that.

What is the procedure to sattel actual cost of project to profitibility segment and congig steps,

Is it is neccessesry to follow the procedure of result analysis for settel the project?

And whst is procedure for result analysis ang config steps.

regards.

[ansar_shaikh2]

Period-End Closing for a Customer Project

Usage

In this IDES process, you carry out a month-end closing. To do this, you first post all period-based data on the project. You then determine the data relevant to Profitability Analysis (CO-PA) for the given period, and settle this data to CO-PA. You can evaluate the data either in the project information system, or in Profitability Analysis.

Prerequisites

This IDES process is based on the data from the process Make-to-Order Production of Elevators. You should carry out this process before you start the period-end closing .

Procedure

You can find the data for this process under .

1. Actual overhead rates

The system calculates the overhead and updates them in the project.

See also Determining Overhead Rates and Evaluating Project Data by Cost Element

2. Settlement generation

Before you carry out results analysis and settlement, you first need to have correctly maintained the settlement rule and the PA transfer structure. The system generates the relevant entries automatically when it generates the settlement rule.

See Generating the Settlement Rule and Checking the Settlement Rule.

3. Results analysis

The system determines by period the data relevant to results analysis, such as, work-in-process and inventory costs.

See Executing Results Analysis

4. Settlement

You settle the data from results analysis to the profitability segment. This means that the project data is now available to Controlling.

See Executing Settlement and Displaying Line Items.

You can settle the costs of customer projects. You need to define the cost receivers in the settlement profile.

Generally costs for customer projects are settled to 'Profitability Segment'.

Results Analysis Methods - Use

Which resul ts analysis method you choose depends on your business requirements. A company will normally run different types of processing u2013 and therefore use different methods of results analysis u2013 simultaneously. Results analysis methods contain the rule for calculating the results analysis data.

Prerequisites

The standard system contains a number of different results analysis methods. Decide which results analysis method you want to use.

Choose a results analysis method in simplified Customizing for Product Cost by Sales Order under Period-End Closing  Results Analysis  Valuation Method.

Decision Criteria

Capitalized Costs, Revenue in Excess of Billings, and Reserves

Legal requirements in different countries stipulate that unrealized profits can be capitalized or that they cannot be capitalized. This situation requires different balancing methods in the different countries.

u2022 If you want to capitalize unrealized profits, use a results analysis method that can be used to create revenue in excess of billings.

u2022 If you want to capitalize unrealized profits, use a results analysis method that can be used to create capitalized costs.

Some methods of creating capitalized costs and creating revenue in excess of billings also allow automatic creation of reserves for unrealized costs or reserves for imminent losses.

Milestone Billing / Milestone Delivery

If you want to use milestone billing or milestone delivery, use a results analysis method that allows creation of new capitalized costs in each period.

Features

For the system to be able to place the costs and revenues in relation to each other, a calculated percentage of completion (POC) must be generated. The percentage of completion can be calculated on the basis of the following data:

u2022 R(p) planned revenues; C(p) planned costs; Q(p) planned quantity

u2022 R(a) actual revenues; C(a) actual costs; Q(a) actual quantity

The system can calculate results analysis data using the percentage of completion. This data includes:

u2022 C(z) capitalized costs (work in process)

u2022 C(r) reserves for unrealized costs

u2022 R(z) revenue in excess of billings

u2022 R(r) revenue surplus

u2022 R(PA) revenue affecting net income

u2022 C(PA) costs affecting net income (cost of sales)

This results in the following formulas:

R(PA) = POC * R(p)

C(PA) = COS * C(p)

This has the following consequences:

u2022 The revenue affecting net income is calculated by multiplying the percentage of completion by the planned revenue.

u2022 The cost of sales is calculated by multiplying the percentage of completion by the planned costs.

u2022 In the revenue-based results analysis method, the COS is calculated as follows:

u2022 POC = R(a) / R(p)

u2022 Therefore: R(PA) = R(a) / R(p) * R(p) = R(a)

u2022 C(PA) = R(a) / R(p) * C(p)

u2022 In the POC method, the COS is calculated as follows:

u2022 POC = C(a) / C(p)

u2022 Therefore: R(PA) = C(a) / C(p) * R(p)

u2022 C(PA) = C(a) / C(p) * C(p) = C(a)

The following formula always holds:

u2022 C(PA) < C(a) u2013-> C(z)

If the costs that affect net income are less than the actual costs, the system creates capitalized costs. The capitalized costs can be capitalized in the balance sheet through settlement to FI.

u2022 C(PA) > C(a) --> C(r)

If the costs affecting net income are greater than the actual costs, the system creates reserves for unrealized costs. The reserves can be shown as a liability in the balance sheet through settlement to FI.

u2022 R(PA) < R(a) --> R(r)

If the revenue affecting net income is less than the actual revenue, the system creates a revenue surplus. The revenue surplus is basically a reserve. The revenue surplus can be shown as a liability in the balance sheet through settlement to FI.

u2022 R(PA) > R(a) --> R(z)

If the revenue affecting net income is greater than the actual revenue, the system creates revenue in excess of billings. The revenue in excess of billings can be capitalized in the balance sheet through settlement to FI.

Activities

Choose a results analysis method in Customizing for Product Cost by Sales Order under Period-End Closing  Results Analysis  Define Valuation Method.

You can view the settings for the simplified results analysis methods in the Expert Mode of the valuation method.

Regards,

ANSAR

[sukhveer_singh2]

Dear ,

Thanks for this.

i need config steps for result analysis and i need know that if this is needed for settelment of customer projects?

Regards,

[ansar_shaikh2]

Overhead rate: Rate at which overhead is allocated to direct costs to charge cost objects with the proportion of the overhead costs attributable to them. Can be a lump sum, percentage, or quantity-based rate. An example of the use of overhead rates is to allocate overhead from material cost centers to orders by debiting the orders in proportion to the material withdrawals and crediting the material cost centers with the same amounts. Also used to allocate sales and administration overhead.

Calculating Overhead Rates:

Usage: Overhead rates are used to allocate the costs of a cost center that has no direct reference to the activity quantities received.

In this step, the system calculates the overhead rates on the basis of the direct costs posted on the project activities.

In the plan, the system determines the planned overhead rates of the project activities automatically as part of network costing. In the actual, you have to calculate and update the actual overhead rates explicitly.

Prerequisites: You must have defined a costing sheet in Customizing. The parameters for the overhead calculation are summarized in the costing sheet. In this demo, we use costing sheet 130000. The costing sheet must be assigned to the project objects.

Procedure: You can find the data for this process under.

1. Actual overhead rates

The system calculates the overhead and updates them in the project.

See also Determining Overhead Rates (CJ44) and Evaluating Project Data by Cost Element (S_ALR_87013543)

2. Settlement generation

Before you carry out results analysis and settlement, you first need to have correctly maintained the settlement rule and the PA transfer structure. The system generates the relevant entries automatically when it generates the settlement rule.

See Generating the Settlement Rule (CJB2) and Checking the Settlement Rule. (CJ02)

3. Results analysis

The system determines by period the data relevant to results analysis, such as, work-in-process and inventory costs.

See Executing Results Analysis (KKA2)

4. Settlement

You settle the data from results analysis to the profitability segment. This means that the project data is now available to Controlling.

See Executing Settlement (CJ88) and Displaying Line Items. (KE24)

Regards,

ANSAR

[Makal]

In case, you are not using CO-PA (check this with your FICO guy), then you'll have to settle it to cost center.

Best Regards

[sukhveer_singh2]

Dear ,

Thanks for reply .i've to use profibility segment settelment.

Regards.

Sukhveer.

[sukhveer_singh2]

Dear,

After RA profit is comming and when i wnat to settel the top WBS element and i've defined settelment rule .Nothing is comming as result of settelment.

What to do?

Sukhveer

[sukhveer_singh2]

Dear,

After RA profit is comming and when i wnat to settel the top WBS element and i've defined settelment rule .Nothing is comming as result of settelment.

What to do?

[sukhveer_singh2]

Done.