What is the need and use of Settlement in Project system

[Former Member]

Hi Guru's

What is the need and use of settlement in Customer Project.

Understanding the fact that the costs are posted through various sources in the Project. And revenues are accrued in the billable WBS elements.

I just want to understand the CRUX or the concept in Principal..from accounting perspective.

Technically I know how to do it.

Thanks a Lot !

[Former Member · Accepted solution]

If you know the basic definition of "Project" that itself should answer all your queries about why settlement is done for a customer project or for that matter any kind of a project. The definiton itself says that a Project is a temporary endeavour with a defined start and finsh period. Since its a temporary endeavour all the objects/cost collectors in the project are meant for collecting these values temporarily.

Once the project ends/or is closed these values need to be transferred to a suitable receiver depending on what type of project it is. This is achieved by carrying out the Settlement of all the costs/revenues that accumulate on a project.

If this explanation does not suffice i would suggest you to also go through SAP help where this aspect is explained clearly.

[Former Member · Accepted solution]

Good explanation... So all the costs moves to a cost center/Profit center for an example.

So it can be used for PCA and posting to Balance sheet accounts...?

[Former Member · Accepted solution]

Yes, that is what settlement is primarily used for.

[kalpesh_agrawal · Accepted solution]

Hi Amlan,.

As per my understanding, if you do not settle customer projecte then also cost goes to balancsheet and P&L. Ther purpose of settlement is for analysis. For example, we generally settlle customer projects to COPA (if implemented), so that we can find out project wise profitability, If COPA is not implemented then there is no need to settle customer projects.

Capax projects are generally settled in to AUC and then AUC is settled in to Assets. Because after completing the project we can start depriciation on assets.

Hope this answers your query.

Regards,

Kalpesh Agrawal

[Former Member · Accepted solution]

Thanks was helpful information.