Order Engineering Process

[Former Member]

Hi Everyone

The scenario is described as below.

The order engineering process is something like keep changing until the moment of delivery. The customer places an order for a product for certain quantity. But at the time of order placement neither of them knows how exactly the product is going to be built. Based on the available specifications, product engineer designs the products and provides the cost budget and projected sales cost to the finance team. But during the execution of the order, the product design is subjected to various iterations and version. So there is huge difference in final product built when compare to the initial design on which the cost budgeting and planned sales cost are given. Because of this variation lot of components are coming in and going out on the final product and this causes a cost budgeting variations for more than 30% from the projection.

The question here is, how to overcome this cost budget variation. What could be the best way to implement this scenario through PS. Is there any option other than PS.

Regards,

Chinna.

[former_member195427]

Hi,

As you have historical data available ( 30% variation from the actual projection), you can review your earlier estimates and prepare a rough cut planning data of the resources used in manufacturing the finished product. This planning data you can use for your upcoming orders.

Also, project manager should allocate budget to project with some mark up value (15-20%) for avoiding any process delay in project execution due to budget overrun.

Above all, the process can be improved with a "Proper and Accurate Planning" of work objects (WBS) and its resources.

I am willing to know of what difficulties project engineers are facing in doing thorough  planning of work packages (WBS,activities,resources etc.)?

Regards

Saurabh

[sanjeevc]

Hello,

what you are facing this kind of scenario is coming in every product base company like order is making for specific customer but at the time of delivery product goes to other customer in same industry.

this is due to uncertainty of the business.

but any way you can control like plan and budget kind of activity then you can go for PS.

PS having this kind of functionality to control in sap.

you can also track by reporting of PS's reporting part.

above is my view to represent to PS and wait for other expert comments:

Regards,

Sanjeev

[sammar81]

Hi Chinna,

As you said the process is very dynamic so to avoid the cost/budget overrun to the tune of 30%. I would recommend  the following:

1. Defining some baselines based on the previous history of product developments.

2. Creating multiple cost estimates before starting up the project. And use the one which you feel is the most accurate to go ahead with..

3. Try to find out what is the most critical factor in cost overruns. Is it the wrong estimation of materials, or ever changing scope from client.

4.  Check you project timelines and Monitor progress on a weekly or a monthly basis..

PS can provide you a lot of help in achieving all this.. So my suggestion would be to use PS to its optimal efficiency..

Cheers

Sammar