Project Payment in SAP PS

[Former Member]

Hello Experts,

I would be requiring your help on one issue :

Scenario : Construction work is going on for a project which is outsourced to a third party contractor and terms of conditions mentioned in the tendering and then contract are as below mentioned where Vendor has provide a detailed list of activities along with Costs involved at each stage and activities.

Example :

Budget	5,754,040.00
Payment Slabs	Work Completion %	Vendor Consumed Amount	Payment Slab 1	Payment Amount
First	30%	1,726,212.00	20%	1,150,808.00
Second	20%	2,877,020.00	20%	1,150,808.00
Third	20%	4,027,828.00	20%	1,150,808.00
Fourth	30%	5,754,040.00	30%	1,726,212.00
Fifth	Post Maintenance	10%	575,404.00
Total :	5,754,040.00

Note : Vendor Consumed amount is actually as vendor is progressing his work and incurring expenses for a particular stage is getting added up and when reaching 30% of the sum invested for the project raises bill for 20% of the total amount to be paid to him.

Please let me know on how we can map this in SAP PS

Thanks

Ashutosh

[siddheshwar_pise]

For your requirement, the concept of RA bill concept used in construction industry would be more useful where Billing is done as per Measurement Book or Daily progress report.

Regards,

Sid

[Former Member]

Hi Sid,

Please elaborate.

[siddheshwar_pise]

You can even use the concept of Invoice plan (milestone based). You need to take help for MM consultant for this as there are relevant settings required from defining Billing plan type, document type, billing plan, etc.

[kenmelching]

This is more of a MM question since the vehicle you will use to pay the vendor is a Purchase Order.  There are several ways to structure the purchase order to achieve what you want.

The most obvious way is to create a Service Item PO.  Refer to SAP Help in Service PO's and how to enter services.  When indicating work performed you (or the vendor) will enter it on a Service Entry Sheet which goes through an approval process to pay them.

[Former Member]

Thanks Ken for the response...

I think its not just a MM Service PO scenario, reason being that there is complete set of WBS and Network and activities involved in this case.

There will be WBS elements like Excavation, Procurement, Construction, Furnishings...etc in which there will be lot of steps involved in between which has a defined cost involved to a particular step. As and when the subcontractor performs the steps and incurs cost attached to the structure, if he has incurred 30% of the cost of the total cost of project, he can present a bill for 20% of the amount of the total project cost and likewise as per the table provided earlier.

Now the next question is why do we need to have all those steps and details in our Project structure when it is an outsourced project? The answer is that to monitor the development going on for the project.

I hope i have clarified my requirement.. Anyways thanks for your response.

Warm regards,

Ashutosh

[kenmelching]

You can structure the project however the client sees fit.  But since it an outsourced project the only way actual costs will be posting to the project will be through the PO to the subcontractor when you post GR.

Since the subk gets paid based on total costs and not individual steps you will be writing only one PO and not a PO per WBS or step.  The PO will be account assigned to the highest level WBS.  You could structure the PO with multiple line items, each representing one of these milestone payments, but I would think that they would all be account assigned to the same WBS.

The difficulty will be in deciding how to monitor the subcontractors progress without posting costs.  You can post confirmations without costs.