Project costing in R&D projects

[Former Member]

Dear Experts,

This is a typical R&D project scenario.

The scenario is:

We have 2 plants 1 is R&D and 2nd one is commercial plants located in different states, we carry out the projects at R&D plant.

After certain duration of the project, the testing should take place at the plant level to verify the m/c capacities and performance. For that, the material is procured at plant level and can be done the desired things. But this is under project stage only. So the costing of that particular activities and procurements should capture to the project. Here at plant level there is no PS, they use process orders. So the material is issued against the process orders and the activities are controlled through process orders.

I'm proposing to use the Project instead of process orders for this purpose at plant level also. So that the cost will be captured against the project and we can arrive to the exact costing.

But my concern is in that case the system shows that the activities are carried at R&D plant not at commercial plant. What are pros and cons of the statutory things w.r.t the material movement. Ex: The materials are delivered and consumed at commercial plant, but in system it shows as R&D plant. How to over come this? And the cost is shown in the books of R&D plant not at commercial plant.

Please through some light on this.

Regards,

Praveen.

[Former Member]

thnx AP,

Closing this thread

Praveen

[Former Member]

hi

let them use the Process Order and after the product is produced book an FI entry for the cost incurred in the process order to the Project and settle the same.

if you use the Project

the Material will be procured against the Project

the Stocks will be against the Project

the Reservations will be created with reference to the Project (WBS)

the issues is against the WBS (Reservation).

the cost incurred will be captured against the project.

there won't be any Final Output produced from the Project.

Edited by: AP on Jul 28, 2009 11:05 AM

[Former Member]

Hi AP,

Thanks for the reply.

That is good idea of an FI entry after completion of the testing batch by using process orders.

the Material will be procured against the Project

the Stocks will be against the Project

the Reservations will be created with reference to the Project (WBS)

the issues is against the WBS (Reservation).

the cost incurred will be captured against the project.

there won't be any Final Output produced from the Project.

Since this is an testing batch the output can be created as intial stock for further usage like stability etc.. since the output is a new material.

But by the above things like project sotck.. I can have better control over the material, no one can use that material other than the specific project, so that the project can be completed in time. Here, at times at plant level they use the material for their production purpose for completing their targets.. and hence the project gets delayed.

Regards,

Praveen