day 2 - project planning [compatibility mode]

7/25/2019 Day 2 - Project Planning [Compatibility Mode]

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A project is subject to a range of factors:

Dates: Will the project be completed in time?

Resources: Will the resources assigned to the project be enough?

Costs: What will the project cost?

Payments: When will incoming payments be received and outgoing payments made?

Result: What is the relationship between costs and revenues?When are costs incurred, and when are revenues received?


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There are four sets of dates on all levels of a project (i.e. on WBS elements,networks and activities):

The Basic dates are planned manually but will act as constraints for networkscheduling.

Scheduled dates are determined by automated network scheduling and innetwork activities these are called earliest and latest dates.

Whereas Forecast dates are another set of dates, which are used as ongoingcomparisons throughout the project.

The actual dates are set in the project execution phase, e.g. by entering actualdates for WBS elements in the project planning board or by confirmation ofnetwork activities.


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The Project System offers various ways of planning dates.

1. Set of Dates: For planned dates, we can use Basic Dates and Forecast datesand Actual dates are also shown in this.

2. Check Dates: The dates in the project structure can be checked for their

consistency with/without taking activities into account.3. Inherit: The dates in the WBS element can be inherited by child WBS.

4. Extrapolate: This function can be used to calculate the dates for higher levelWBS elements.

5. Shift: All the planned dates or just the dates which come in the sub hierarchy canbe shifted.

6. Planning Different Calendars: A different factory calendar can be used for eachWBS element or Activity.

7. Scheduling: This function calculates the dates for Networks and Activities.

8. Planning Form: In the planning form, basic dates can be extrapolated from lowerto higher level WBS element, or inherited from higher to lower level WBS element


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Dates can be manually planned in WBS hierarchy which does not have networks.This can be done in project planning board by dragging the mouse for therespective WBS element.

Also, in structure planning, one can enter the dates in table.

The Basic dates flows in WBS hierarchy as top-down from higher levels to lowerlevels or extrapolated from lower levels to superior WBS element.

The basic dates consistency can be checked with in the WBS structure.

While executing the project, the actual dates can be set in project planning board orinformation system structure by dragging the respective WBS element bar andcompare the actual dates with basic dates.

There are several planning forms to plan basic dates on WBS element, like Topdown (Inherited from to top to down), Bottom up (extrapolated from bottom to toplevel), Free planning and Strict bottom up.

For assigning actual dates, which is Assigned during execution phase, by draggingmouse in project planning date, and one can compare actual and plan basic dates.


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In the case of projects with assigned networks, network scheduling functionalityautomatically derives the dates for activities and WBS elements.

This can be using project planning board where you can select WBS elements andassigned network activities.

Scheduling parameters determines the scheduling of networks i.e. forward orbackward scheduling (forward scheduling determines earliest dates and backwardscheduling determines latest dates).

The difference between two dates (earliest and latest dates) are called as Floatwhich can be negative or zero and signifies that the network path is (or activitiesfrom start of network to the end of the end of network) is critical.

The scheduled dates of the WBS elements are the wrap-up dates of the assignedactivities which are displayed as thin time bars in project planning board.

These scheduled dates can be copied in basic dates of the WBS elements andextrapolate them to the superior WBS elements in the project hierarchy.

Settings of scheduling parameters:Indicators network scheduling and adjust basic dates set.

Assignment of scheduling type in scheduling parameters.


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Scheduling can be used to derive dates for activities/WBS elements.

Networks are always scheduled forward and backwards.

The scheduling type determines the original direction in which scheduling takesplace. It can be carried out in two ways: Top-Down and Bottom-Up scenarios.

The dates schedule in WBS structure can be copied to the basic dates of the WBSelements for the purpose of extrapolating them up the project hierarchy.


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Scheduling uses the quantity structure of network activities to derive dates in anautomated way.

Single network schedules all activities of the network. If it is connected to othernetworks by relationships, their dates are treated like constraints.

In overall network scheduling, the system schedules all networks connected byrelationships.

WBS scheduling schedules all activities which are assigned to selected WBSelements.

Network can be scheduled:

Individually (Network Scheduling)

Overall (Scheduling of Overall network)

WBS scheduling

The activity data, activity relationships and date restrictions form the basis fordetermining the dates automatically.

In Projects with assigned networks, the dates of WBS Elements and Activities canbe derived by scheduling. Here, WBS Element transfers the date to higher level


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elements and Extrapolate it.

In WBS with assigned networks, the basic dates for the WBS element can beplanned in order to determine that certain part of the project has to be completedwithin a fixed period of time.


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Scheduling parameter: They determine scheduling. These are created for specificplants and network types.

1. Adjust basic dates: It determines that after the scheduling run, the scheduleddates are copied to the basic dates of the network header.

2. Scheduling Type: It determines the type of scheduling being carried out. For e.g.forward first and then backward scheduling.

3. Start in the past: It determines how much time back was the start date. If itsmore than the days mentioned, scheduling is done from current date.

4. Automatic Scheduling: Scheduling is carried out when saving is carried out.

5. Log Automatic: If log is generated, it is displayed automatically.

6. Break Spec. Scheduling: The exact time at which a break is scheduled.

7. Shift Order: During scheduling. It determines how the system deals with partiallycompleted activities.

8. Latest material dates: based on latest and earliest dates, the requirements datesfor a material is determined.

9. Reduction type: Either all activities or only those in the critical path are reduced.

10. Maximum reduction level: There are up to 6 levels in reduction strategy. Thehighest level is displayed.

11. Rescheduling: After scheduling run is done, it determines how the system is


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allocating work in Work Force planning(WFP)


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Scheduling Type: Determines type of scheduling being carried out.

1. Start in the past: It determines how much time back was the start date. If itsmore than the days mentioned, scheduling is done from current date.

2. Scheduling form: It specifies as in on what basis is the scheduling being carried

out WBS element or Network header.3. Adjust basic dates: It determines that after the scheduling run, the scheduled

dates are copied to the basic dates of the network header.

4. Log Automatic: If log is generated, it is displayed automatically.

5. Shift Order: During scheduling, it determines how the system deals with partiallycompleted activities.

6. Schedule when saving: Scheduling is done on saving.

7. Latest material dates: based on latest and earliest dates, the requirements datesfor a material is determined.

8. Maximum reduction level: There are up to 6 levels in reduction strategy. Thehighest level is displayed.

9. Reduction type: Either all activities or only those in the critical path are reduced.


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1. Every time a network is scheduled, forward and backward scheduling iscarried out by the system; and if activated it determines float and capacityrequirements for activities, reduction level used to schedule the network,earliest and latest dates for the relationship.

2. Forward scheduling determines the earliest dates.

3. Backward scheduling determines the latest dates.

4. Float: If earliest dates are not same as latest dates, then float occurs.

The Scheduling results are:

Scheduled start and finish for the network.

Earliest start and finish dates (earliest dates) and the latest start and finish dates(latest dates) for activities and earliest and latest dates for relationships.

Reduction levels used to reduce the network and float times (total and free float)

for activities. And capacity requirements for activities.


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Other influencing factors in scheduling:

Internal processing: the normal Duration maintained in the activity is used bythe system for scheduling internally processed activity.

External processing: Planned delivery time or normal Duration (explicitly to

be activated in control key) will be used by system for scheduling externallyprocessed activity.

General costs activity: Duration

Relationship: Time interval: Fixed or as a percentage.

The work centers can be maintained in internally or externally processed activityand in relationships, and work centers contains following information's:

1. Formulas for calculating duration of activities

2. Factory calendar and operating time for each workday.


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A network must and always scheduled forwards and backwards and scheduling typespecifies whether forward scheduling or backward scheduling is carried out first.

Forward scheduling calculates the earliest start and finish dates for all activities, andthe scheduled finish date of the network. A start activity is an activity in a networkthat does not have a predecessor.

Backward scheduling calculates the latest start and finish dates for an activity (latestdates) and the scheduled start date of the network. A target activity is an activity in anetwork that does not have a successor.

When forward scheduling is performed first, the date from which scheduling starts isthe basic start date in the network header. When forward scheduling is performedafter backwards scheduling the start date is calculated from backward scheduling.

When backward scheduling is performed first, the base date from which schedulingstarts is the basic start date in the network header. When backwards scheduling isperformed after forward scheduling the finish date is calculated from forward

scheduling.Start dates are at the beginning of the day (00:00).Finish dates are at the end of the day (24:00).


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Scheduling Assembly Networks:

Overall Network Scheduling can be performed for a sales order item.

This function schedules the network assigned to the sales order item and all othernetworks with relationships to it (total network scheduling).

The function leads to an update of all items in the sales order with assignments tothe total network.

Overall Network Scheduling with Selection Options:

This function is used along with selection criteria to specify which network/sub-network are to be taken into account as part of overall network scheduling.

A prerequisite for the use of the Overall network scheduling with selection optionsfunction is that suitable levels are defined beforehand for the project system andnetwork types and number intervals are assigned to it.


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Activity Element & PRT Dates

The system calculates dates for activity elements with reference to the start or finishdates of the activity. You maintain a time interval for the start and a time interval forthe finish.

Material Requirements DateThe system calculates the requirements date for components with reference to thestart or the finish date of the activity. With the network type you can control whetherthe earliest or latest start date is used as the requirements date in the network.

If the requirements date is before or after the start date of the activity, you can entera corresponding lead time offset.

You can set a manual requirements date for components.


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You can maintain constraints for the start and finish of activities and / or (offsetsfor) activity elements.

Constraints can be relevant for both the earliest and the latest dates.

You can maintain constraints for basic and forecast sets of dates.


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Legend:

ES = earliest startEF = earliest finishLS = latest startLF = latest finishTF = total floatFF = free float

Floats supply information about time reserves available for individual activities andone can use floats calculated in scheduling, for example in capacity leveling, to shiftactivities between their earliest and latest dates or to extend their duration.

Total float: The amount of time an activity can be shifted from its earliest dates intothe future without affecting the latest dates of its successor. (Total float: = LS-ES orLF-EF)

Free float: The amount of time an activity can be shifted from its earliest dates intothe future without affecting the earliest dates of its successor. (Free float = ESsuccessor EF activity)


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The slide describes the calculation of total floats and free floats:

The total float can be calculated as the difference between the earliest and lateststart of an activity.In the above example:Day 6 (0:00) - Day 5 (0:00) = 1 Day.

The free float of an activity can be calculated as the difference between the earlieststart of the successor and the earliest finish of the activity.In the above example:Day 9 (0:00) - Day 7 (24:00) = 1 Day.


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Reduction:

Reduction can be used when the time period within which activities are scheduled isnot enough for processing all the activities.

This reduces the scheduled duration of internally-processed activities and for which

reduction strategy has been maintained.Up to six reduction levels can be defined for each reduction strategy. Thepercentage reduction required can be entered for each reduction level.

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You can plan project costs in two different ways:

Manual cost planning in the WBS

Cost planning using activities (network costing)

Manual planning in the WBS involves:

1. Overall planning is a structure-oriented planning and is the most basic form. Inthis kind of cost planning you enter costs for each WBS element which will bebroken down by fiscal year if you want.

2. Cost element planning is a detailed planning of primary costs and activity inputswhich is cost element based and period based.

3. In Unit costing you use a profile to enter quantities like internal activities,materials, variable items and external services etc. for each WBS element. Unitcosting is cost element based.

4. From 4.6C release, you can use Easy Cost Planning which offers you an easy-to-use tool for planning costs by cost element in a quantity structure. And furtherone can use Execution Services to enter actual data and commitment for therelated planned costs.

The plan costs can be determined manually as mentioned above and also by creating


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activities for WBS elements, and using these activities to plan costs.

When using networks and activities, planned costs are automatically calculatedbased on the resource requirements identified for activities and operations.Resources provide a quantity structure that can be dynamically valued by the system.This method has the following advantages:

a. resulting plan can be copied to new projects

b. cost planning is shifted automatically along with the activities, if parts of theproject are shifted.

c. Planning using network activities is by cost element and period.

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You can plan project costs simply by creating activities for WBS elements (for example, in theproject planning board or structure planning transactions).

Planning in this case is by period and cost element.

This process has significant advantages over manual planning of primary costs or activityinputs:

Cost planning can be postponed easily, using a work package.

You can copy this type of cost planning to new projects.

Cost planning is integrated with time scheduling and resource planning.


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When you plan dates and resources in network activities, the system determines thecorresponding planned costs automatically.

Planned costs are determined for the following objects:

Activity inputs for internally-processed activities

Primary costs for externally-processed activities and services

Primary costs for general costs activities

Primary costs for material components

Activity elements are costed as if they were activities.

System automatically calculates the planned cost based on planned dates and resources innetwork activities.

Cost elements should be identified by cost relevant items. Identification in internal activities,external activities is as:

Internal activities/ services: Determination is by means of secondary cost element assigned inthe network type master data


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External activities/services :1) Non stock-It is identified by G/l account 2) Stock- It isdetermined by automatic account determination

Cost planning is integrated with time scheduling and resource planning

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Internally processed activities are used for the work which needs to be executed in owncompany and assist in planning work.

In the activity, you need to maintain the work data and based on same system calculate costsfor these activities.

Work is an input for machine or person to execute the activity. And work center is place wherethe work is carried out and work output is provided.

Work centers contains data such as scheduling and capacity, which assists in costing,scheduling and capacity planning of activities.

The costs can be distributed over the network duration for internally processed activities &cost activities and controlled via distribution key.

The distribution key is determined from the activity or from work center (only in internally-processed activities), if not maintained in activity. If distribution key is not maintained ordetermined, costs are distributed evenly (over the earliest dates) in the activity.

Example: An activity spread across periods 09 and 10, with a total work time of 250 hours.The dates and the distribution key used for the activity assign 100 hours to period 09 and 150


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hours to period 10. If the rate is 100 Euros per hour for period 09 and 80 Euros perhour for period 10 and valuation per period has been stipulated, the costs are 10000Euros for period 09 and 12000 Euros for period 10.

During execution phase, when you confirm the activities, you consume the capacityrequired by the activity and enter the actual date and costs.

You can distribute work among the employees by assigning persons to the activitiesfrom a project team which can be set up from HR organizational units, persons orpositions.

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When procuring services externally (outsourcing), you can create servicesor externally-processed activities.Example: You commission a freelance engineer to design and build a machine.

When creating a externally processed activity or service activity, a purchase requisition iscreated based on the settings and further processed in purchasing and the data can beaccessed from purchasing for external processing e.g. purchasing info record, which containsdata for the pricing and delivery times.

Externally-processed activities give rise to planned costs equivalent to the prices fromthe purchasing info record or the price in the activity. The valuation variant for thenetwork costing variant determines which price is used for the valuation. When thepurchase requisition is activated and converted to a purchase order, the activity isalso shown as a purchase requisition commitment or purchase order commitment.

The account assignment category in the purchase order determines whether thegoods/invoice receipt is valued - that is, whether it gives rise to actual costs. If thegoods receipt is valuated, actual costs are posted to the activity and the commitmentis reduced by the amount of the purchase order. This means that the invoice receipt


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may correct the actual costs.

Service activitiesare maintained for the purchase of services.Creating such an activity establishes the link to MM Services (MM-SRV). Unlikeexternally-processed activities, service activities contain a servicespecification containing planned activities and value limits for unplannedactivities.This service specification is copied to the purchase order where Purchasingcan then modify it. Service activities also give rise to planned costs orpurchase requisition/order commitments. Instead of goods receipts, servicesare later entered and accepted.

The service activities also initiates the purchasing process but contain the value limitsfor the unplanned services and hierarchy of planned services to be procured. Thegoods receipt process in Services activities involves following steps: service entryand service acceptance.

The externally processed activity and service activities are differentiated by Controlkeys.

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We can assign a work center and planned work to an externally processed activity.This allows to carry out capacity planning for vendors

Changes in network dates/quantity will trigger workflow for a PO change:

If changes are made in the network to dates or quantities for material componentsor external activities for which PO has already been created .system triggers aworkflow automatically. The only prerequisite is that this workflow has beenactivated in the parameters for the network type table

The person responsible in purchasing will receive an information on the requiredchanges.

If only PR is created, changes in the network to dates/quantities will update thechange in PR automatically

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The Internal processed activity, external processed activity and service activities aredifferentiated by Control keys.

We can generate Purchase requisition (PR) for externally processed activities fromProject System. The PR is converted to a Purchase order (PO) in purchasing. A

goods receipt and invoice receipt can then be posted for the purchase order

We can assign a work center and planned work to an externally processed activity.This allows to carry out capacity planning for vendors

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You can use general costs activities to plan all other costs that cannot be mapped viainternally-processed activities or externally-processed/service activities.

In the general costs activity, you can enter a description, the amount and currency, a costelement, a duration and a distribution key for distributing costs.

The costs are distributed using the network duration for general costs activities.Distribution is controlled by means of the distribution key for the activity. If no distributionkey is maintained, the costs are distributed evenly over the earliest dates in the activity.

You can create a unit cost plan for the general costs activity.

This means that detailed costing is possible even at an early stage of the project (forexample, for sales pricing).

The activities which cannot be tracked though internal/externat activities/services can betracked through general cost activities to plan costs

Eg travel expense for meeting.Genral cost activity is assigned to cost object

Costs are distributed as per scheduled duration which is controlled by distribution key


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.There are cases where distributionkey has not been maintained,in those cases evendistribution of cost is done based on the earliest dates in the activity

Detaled costing can be done like during sales pricing phase that is at beggining

phase of project

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You can create invoicing plans directly for network activities (external, service, or generalcosts) or components procured externally.

This means that it is possible to plan costs and outgoing payments on the basis of datesentered in the invoicing plan. Costs are not simply distributed, but are calculated precisely atthe times specified in the invoicing plan.

You can create an invoicing plan by copying a reference invoicing plan.The reference invoicing plan fixes cost and payment times relative to a start date.

Alternatively, you can copy billing milestones as dates to the invoicing plan of the activity. If

you copy the milestones rather than creating them manually, they can be postponed alongwith the dates in the invoicing plan if the activities are rescheduled.

You cannot create invoicing plans in combination with unit costings (for general costsactivities or material components).


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On the basis of days, periods or fiscal years one can plan payment flows i.e. revenues and

expenditure.

In WBS elements, manual planning of revenues and expenditure is by period. Atcommitment item level (Project Cash Management master data) planning takes place.

The quantity structure in the network and the billing plans in the WBS or SD document arevaluated in the automatic planning of financial data.

Automatic planning will be done by day. Planned line items will be written.

Based on assignment to G/L accounts commitment items will be determined. Unlikerevenue and costs calculation, payment date calculation takes account of the customerand vendor payment terms respectively.

Note: The credit side payment plan of the network is determined using the asynchronousnetwork costing only.

The dates and the payment terms are used in the PS billing plan for planning incomingpayments. Sales order items will also be used in assigning the billing plan data andpayment terms(of the dates or sales order item).The delivery date including the paymentconditions is used if there is no billing plan for the sales order item.


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In the case of activities processed externally and externally procured components,invoicing plan including payment conditions are used or, the delivery dates includingpayment conditions are used where there is no invoicing plan

If an invoicing plan has been maintained, payment data is only planned for generalcosts activities

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Planned revenues and incoming payments is relevant in billing plan.

Dates for Down payments are relevant only for payments (not revenues).

Milestone billing dates appear as planned incoming payments and planned revenues. Twothings are important for dates and amounts i.e. payment terms and payment target (example:payment 1 week after invoice issue, with 2% discount)

Once the project is executed, invoice billing will be generated and appear in the project asactual revenues and customer payment obligations. With respect to dawn payment date,

down payment requests will be generated by the billing program which are recorded in thepayment data for the project.

Billing plan can be created for a sales order, a sales order item or for a billing element in theWBS.

Planned costs and planned outgoing payments are relevant during the Invoicing plan.


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Depending on the transaction, you can calculate costs for one network (example: networkmaintenance) or a range of networks (example: all networks for selected WBS elements instructure planning or the project planning board).

You can calculate network costs asynchronously. The advantage of this is that you can selectand cost broader ranges (example: A to Z) and carry out costing in the background.


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Costing variant controls calculation of planned and actual cost. Costing variant isassigned to order type. Networks are of order category 20.

The valuation procedure is defined by valuation variant which is a component ofcosting variant. Based on valuation variant prices are determined by the system tovalue componenets material, activity type, processes, subcontracting and externalactivities. Valuation variant searches for prices in sequence from the price sources.Price entered first is selected first

Materials:Price is selected either from purchasing date or material master record

Activity type & Processes: Price is selected either from activity based costing orcost center accounting

Externallly processed activity:price is selected either from the activity or frompurchasing information record

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The costing variant contains the basic control information needed to carry out costing.

The valuation variant contains all the information which controls the valuation of:

Material components

Internal activities

External activities

This information also controls how overheads are applied.

Valuation can be determined plant by plant.

The "By period" indicator enables you to calculate costs for internally-processed activitiesperiod by period.

The costing type contains further detailed information for controlling costing.


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You can classify the resources in broadly 2 categories from the networks point ofview: Internal and external activities.

Internally processed activities: These activities / work are carried out bymachines and / or persons of own company. You can schedule the activities asper requirement, distribute the work among persons.

Externally processed activities: these activities are executed / processed by othercompanies. These are carried out by purchasing department. The serviceactivities are also procured externally however different from externallyprocessed activity that you need to define service specification and the limit forthe unplanned activities which is provided by the service provider.

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Business scenario

To execute a project, materials are required whichcan be procured externally (purchasing) ormanufactured in own company (Production). These

materials are managed in project-specific stock.

As the project controller, you are interested in:

The values in the project, at the different stages of purchasing or production (projectcontrolling)

Stocks of raw materials, semi-finished and finished products used for your project


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(stock controlling)

Materials provide linkage between many other SAP functional modules like MaterialsManagement (Purchasing and Inventory Management), Sales and Distribution, plant

maintenance and Production Planning and Control.

The materials are assigned to activities which helps in material requirement andplanning in a project.

The product which is manufactured in your project is in turn made up ofa variety of material components.

The first step is to plan the procurement and consumption of the requiredcomponents in your project.

Projects are linked to Materials management, Sales and Distribution andProduction Planning via materials.

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In order to plan the material requirements of a project, materials can be assigned to activities.On the basis of stock, the materials are classified as stock or non-stock items.

The item category stock items (L) are for such materials which are stored in stock e.g. projectstock, sales order stock or warehouse stock and reservations can be created for suchmaterials. Based on the quantity required in the project, the requirement planning can beinitiated. The procurement element for external procurement is a purchase requisition and forrequirement planning is planned order.

For productions of assembled material, material BOM is exploded and the requirementplanning is executed for all the materials mentioned in BOM.

Non-stock items (N) are for materials which are to be procured directly for the network whichis not using MRP (i.e. not procured via project stock, sales order stock or warehouse stock).For non-stock items, Purchase requisitions are created which are passed on directly toPurchasing.


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The item category "stock item" (L) is used for materials kept in stock. When you save yourdata, the system creates a reservation for the required material. A purchase requisition -which is passed on to Purchasing - can also be created for components procuredexternally.

The main function of material requirements planning is to ensure material availability (inother words, to procure the required quantities in time - both in-house and for sales anddistribution). This includes monitoring stocks and, above all, creating procurementproposals for purchasing and production.

Independent requirements - that is, requirements for finished products, assemblies or raw

materials - trigger requirements planning. In order to cover the requirements, orderquantities and dates have to be determined, and the corresponding procurement elementsscheduled. The procurement element for requirements planning is a planned order and, forexternal procurement, a purchase requisition. Furthermore, the dependent requirementsfor materials produced in-house (in other words, the quantity of components required tomanufacture a finished product or assembly) are determined by exploding the bill ofmaterial. Planned orders are created at each BOM level to cover requirements when amaterial shortage occurs.


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Once quantities and dates have been planned in requirements planning, theseplanned procurement elements are converted to "exact" procurement elements: forproduction, this is the production order and, for external procurement, the purchaseorder. When the order or purchase order is being processed, the production order isdelivered or a goods receipt is posted to stock (plant stock or project/sales order

stock).

The goods issue that takes place as a result of this activity reduces the stock andposts actual costs to the "consuming" network activity.

Item Category L (stock item) is used for components kept in stock .

Ensuring material availability is the main function of MRP which includes monitoringstocks and creating procurement proposals for purchasing and production .

Requirement for finished products, saleable assemblies and spare parts triggerrequirement planning.

Order quantities and dates have to be determined in order to cover the requirements .

For requirement planning the procurement element is the planned order and forexternal procurement it is purchase requisition .

Planned procurement elements are converted into exact procurement elements oncethe quantities and dates are planned.

It is Production order for production and purchase order for external procurement.

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The item category "non-stock item" (N) is used for components that are not procured byway of warehouse stock or project/sales order stock, but are procured directly by anetwork activity instead.Purchase requisitions are created for these components. These requisitions are passed ondirectly to Purchasing. When the goods are received, they are not placed into stock, butposted to the activity.

Non-stock items cannot be managed as project stock or sales order stock.

Non Stock Item (N) :These are the items which are procured directly by network activity and not throughwarehouse stock, project stock or sale order stock .

Purchase requisitions are created first and then passed directly to purchasing.

When the goods are received they are directly posted to activity .

Non stock items cannot be managed as project stock or sale order stock .

There are two procurement types for direct procurement with item category N :


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Purchase Requisition for the network

Third party requisition for the network

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Changes in network dates/quantity will trigger workflow for a PO change:

If changes are made in the network to dates or quantities for material componentsor external activities for which PO has already been created .system triggers aworkflow automatically. The only prerequisite is that this workflow has beenactivated in the parameters for the network type table

The person responsible in purchasing will receive an information on the requiredchanges.

If only PR is created, changes in the network to dates/quantities will update thechange in PR automatically

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The account assignment category of the salesorder determines whether sales order can bebuilt up

A setting within the BOM can be specified todetermine whether the components can beprocured independently of the material mastersettings.

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The BOM transfer functionality in SAP PS helps you to assign the material from BOM to thenetwork activities based on the reference point field which is assigned to the material andnetwork activities.

WBS BOMs can be assigned to Project BOMs using the BOM Transfer transaction . Thecorresponding selection parameters must be chosen to perform the same.

Advantage of BOM transfer functionality is that the changes in the BOM during the course ofthe project will change in the activities (you need to run BOM-transfer again every time youmake changes in BOM).

You can also manually assign materials to network activities without reference point fields.


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Instead of managing the material either in a plant stock or for each individual WBSelement and having no control at all over procurement or being fully responsible wecan go for requirement grouping. Through requirement grouping we can determinethe degree of control ourselves.

Prerequisites for using requirement grouping :

Valuated group stock

Grouping WBS elements

MRP Groups that allow requirement grouping

Assigned components should have periodic lot sizes.

The most basic scenario involves grouping the requirement of all the WBS elementsin the project into one WBS element.

Or we can create projects which are only meant for grouping requirement of otherprojects.

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You can use the "appended" indicator to specify, per order category, whether anorder is appended - that is, whether the planned values for the order are included inthe planned value of the corresponding WBS element:

1. If the "appended" indicator is set, the order planned value increases theWBS element planned value. The information system shows the total asthe project plan. When cost planning is taken over as the budget, thevalues from appended orders also contribute to the budget.

2. If the "appended" indicator is not set, the order planned value is notadded to the WBS planned value. In budgeting, the plan total for suchorders must be added manually so that these orders can use funds later.

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You can use the "appended" indicator to specify, per order category, whether anorder is appended - that is, whether the planned values for the order are included inthe planned value of the corresponding WBS element:

Once released, all orders are apportioned - this means that their plan, commitment,and actual values are funds assignments against the funds in the project. The ordervalue table contains an indicator which you can use to make orders "apportioned"earlier, at the "created" stage.

You can set appended and apportioned indicator based on the order category,ordertype, and controlling area

An exception to apportionment at release is in the case of networks for preliminaryplanning.In Project System customizing,you can specify network types to be usedfor preliminary planning.Preliminary planning networks are never apportioned.Their

related plan values do no increase the assigned value for the relevant WBS element

In the case of networks (order category 20), you can use the network typeparameters to determine whether the network is:

Header-assigned or activity-assigned - that is, whether costs are managed inthe network activities or collected in the header

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A preliminary planning network whose plan, commitment, and actual valuesare not apportioned - meaning that they do not appear as assigned values inthe project.

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Activity account assignment is a special feature of networks. All other order types areheader-assigned. Activity account assignment is controlled via the appropriateindicator in the table "Parameters for network type".

Header assigned networks should be used when networks are assigned to salesorders without WBS.Header assigned networks can also be used when the enitrenetwork is assigned to a single WBS element

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SD document item assignment is controlled via the account assignment category.The account assignment category is controlled via SD requirements typedetermination.Important factors that affect account assignment are the strategy group, the MRPtype and item category group from the material master of the product as well as the

document type of the SD document.

The system defaults the item category when you create an order. You can acceptthe default or overwrite it. Permitted item categories are defined in Customizing.

The permitted planning strategies are assigned to the material using the planningstrategy group. This is necessary so that you can find the correct requirements typein independent requirements management and sales order management.

The default requirements type is the main strategy in the planning strategy group.

If no planning strategy group is defined in the material master, the system uses theitem category group (sales and distribution screen in the material master) and, if

necessary, the MRP characteristic to search for the requirements type for the salesorder.

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The account assignment category determines the CO object to which document quantitiesand values are assigned. You use it to determine the following:

Using the special stock indicator (SSI above), that goods movements in Logistics useplant stock, sales order stock or project stock.

Using the consumption posting indicator (Cons. above), the CO object to which thevalues of a material document are assigned.

Settings:F = Collective stock, consumption posting to the consumer (order, activity)

The account assignment category is important for procuring components directly.E = Quantities and values managed in the sales order itemThis account assignment category is important for make-to-order production without

WBS.D = Quantities managed using sales order item, values managed in projects

This account assignment category is important for non-valuated project stock,with WBS and sales order item

Q = Quantities and values managed in projectsThis account assignment category is important for project stock


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In Activity-Based Costing, processes are the controlling objects. Prices can be eithermaintained manually or using activity and cost input planning in the case of costcenters and activity types. Through activity based costing, processes are debited tocost objects or profitability segments.

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Overheads calculation is used to allocate overhead costs to cost objects such as activities

and WBS elements. Calculations are done based on the Costing sheet entered in

the cost object and the overhead key entered on the WBS element,network header or network activity. Overheads can be calculated forplanned, commitment and actual values. Overhead calculations are doneusing the quantity based or percentage allocation rates.

The following postings get generated through overheads allocation:

Debits to cost object (WBS element, Network header or Networkactivity )

Credits to cost center ( overhead order or process )


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Unit costing is done to calculate cost plan per WBS element. Here we use plannedquantities instead of cost.

It is not period dependent

At cost element level, plan values are displayed

Input information related to sources of supply, quantities and prices mark the use ofunit costing to generate cost plan per WBS element

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Structure Oriented Planning:

Simplest type of planning is structure based planning. Plan values are displayed inhierarchy

The total cost planned is aggregate

It is neither by cost element nor is period specificVarious views are used to display the different values in structure-oriented planning

Planned total View-this shows total aggregate at superior WBS element (Level 1WBS element)

The distributable or distributed view-This view is used to check distribution ofbudget among child WBS element

Cumulative or remainder view-This view is used to check distribution of budgetacross years

Order/network view-This displays the planned cost od appended orders/networks

assigned to WBS element

When more detailed information is required, cost element planning is done. It isindependent of project scheduling

Manual reschedule of cost planning becomes mandatory if a project or individual

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Planning profile is contains the settings for overall planning, detailed planning andunit costing

Details for each field can be checked using F1

Important field details are as:

Total Value: Defines overall planning without any reference to fiscal year

Annual Planning: Defines overall planning with reference to fiscal year

Bottom up Planning: Overall planning values are extrapolated after saving

Exchange rate type: Determines which exchange rate is to be used for currencyconversion of overall values

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Transaction OKKT to edit costing and valuation variant

Costing variant is mostly used for unit costing ,easy cost planning and also used forcosting networks. The field costing type determines for which WBS element (costingobject) costing is done

Valuation variant determines the prices and rates. In the above mentioned slide,system will first check for Planned price 1 if it fails, system will check for standardprice and again if it fails it will check for moving average price from materialmaster. If system now fails, it will trigger an error message during cost determination

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distributed to the periods based on the distribution key maintained in the activity

Case 3:Invoicing plan not maintained and distribution key not maintained:The costsare distributed evenly over the earliest dates in the activity

If an invoicing plan has been maintained, the values in the periods are set asspecified in the invoicing plan.Otherwise, the activity value is distributed to the periods using the distribution key inthe activity. If no distribution key is maintained in the activity, the costs are distributedevenly over the earliest dates in the activity.

Service activities or externally-processed activities:

Case 1:Invoice plan maintained:the values in periods are as per the valuesmentioned in invoicing plan

Case 2:Invoicing plan not maintained:The activity value is set in the period of thelatest activity start date.Also the system determines the price from the purchasing inforecord or the activity value.

Invoicing plan has priority for the values

If an invoicing plan has been maintained, the values in the periods are set asspecified in the invoicing plan.

Otherwise, the activity value is set in the period of the latest activity start date.The invoicing plan has priority for the values. If no invoicing plan has beenmaintained, the system determines the price from the purchasing info record or theactivity value.

Material components:

Case 1:Invoice plan maintained:the periods and ,in some cases,values are takenfrom invoicing plan

Case 2:Invoicing plan not maintained:The system determines the price from thepurchasing info record or the price is taken from material master as per valuationvariant.Here material requirement date determines the period

If an invoicing plan has been maintained, the periods and, in some cases, the valuesare taken from the invoicing plan. If no invoicing plan has been maintained, thevalues are taken from the purchasing info record or the price is taken from the

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In SAP where project is a controlling object:

Sales order created and after structuring of project sales order will account assigned toWBS. Then revenue planned in sales order.

Once Work completed in project, actual cost captured in WBS and Final product will bedelivered to Client.

Billing will be completed and actual revenue generated. Actual Revenue will betransferred to WBS.

While Result analysis performed for project the Actual Revenue and Cost will settled tothe profitability segment.

Sale document structure Sales Document type represents the type of business transaction and functions and the

flow of document with in sale order. Processing.

Item Categories are assigned to sales document category. While creation of Sales orderit will default the item category but user can change it as per requirement.

Schedule line category is assigned to Item Category. While creation of documentsystem will default the scheduled line category but it can changed according torequirement.


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(1) Represents a process of make-to-order production without a work breakdown structure.In this case, the sales order item is the contolling instrument. Account assignment category Especifies that the sales order item forms a separate CO object.Costs and revenues of the sales order item are usually settled to the profitability segment.

(2) Using assembly processing, you can generate a network when you create the sales order.When you save your data, the system creates a WBS and assigns the sales order item to aWBS element in this WBS. In this case, the sales order depicts the sales view, the project isthe controlling instrument, and logistical processing is represented by the network.Account assignment categories D or Q (Cons. = P in each case) specify that revenues are

assigned to the billing WBS element of the project.(3) As an alternative to assembly processing, you can assign a sales order item to a WBSelement in a project. Controlling takes place in the project. You can assign orders ordocuments to the project. Value assignment to the project is controlled via accountassignment categories G, D and Q. These differ from each other in the way that they managequantities.


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Methods for plan revenue in a project are:

a. Manual revenue planning: this can be based on structure or revenue elementwhere the later is a cost element and period based.

b. PS billing plan: this is cost element and period based planning.

c. SD document: this is part of integration with SD module where sales order itemor quotation items are used as revenue planning. This kind of planning is costelement and period based.

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Revenues can be planned in projects using the following methods:

Manual planning in billing elements in the project structure.This type of planning can follow the same procedure as cost planning, or can be byrevenue element.

Sales orders (all SD documents assigned).Sales order items are assigned to WBS elements. In Customizing, you can stipulate,for a combination of sales document category (quotation, order, and so on), salesdocument type, controlling area, and system status, whether the billing data (forexample, in a billing plan) from a sales order should update the revenue plan for an

assigned WBS element. The dates and planned revenues concerned originate eitherfrom the billing plan for the sales order items or (if there is no billing plan) from the netvalue and apportionment data for the item. The revenue element originates from G/Laccount determination in SD.

Billing plan in project billing elements.The revenue element is defined in Customizing.


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The term "Version" is used in the project system in different contexts. Differenttypes of versions include simulation versions, project versions and CO planningversions are available in SAP Project System which are discussed below.

Project versions, are snapshots of a project at a specific point in time, and areused for documenting the progress of a project over time. Both quantities andvalues are stored in versions and it can be created either manually, orautomatically when a status changes. In the case of status change, the projectprofile contains a reference to a version profile which specifies the name of theproject version to be created when a particular user or system status is set.

Simulation versions: In the Project System, these are versions that you canchange. You might, for example, create simulation versions in the followingsituations:

In the quotation phase: generally speaking, at this stage there is not yetan operative project.

To draw up alternative planning scenarios for existing operative projectsor parts of these.

CO plan versions are used to plan revenues and costs. You can copy valuesfrom one version to another. You can change planned values manually in everyversion and cost values are retained.


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When you transfer data from operative projects to simulation versions (or viceversa), the following objects are copied:

Work breakdown structure

Network with activities, activity elements, relationships, and subnetworks

Milestones Materials for the activity

Documents, PS texts and long texts (depending on the simulation profileused)

Capacity requirements

Invoicing plan for the network, and billing plan for the WBS element (asof Release 4.5A)

The following objects are not copied:

Other orders (e.g. no production orders)

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Project versions enable you to record a snapshot of a project at a specificmoment in time - this can be used for future comparison with the operativeproject.

You can create a project version automatically (i.e. triggered by a system or userstatus).

You can also create a project version manually:

While changing the WBS

While changing the network

In the Structure/Dates information system for one or more projects

Data transfer when Version profile settings are used while using these transactions:

1. Status dependent project versions.

2. TC network maintenance CN22 or WBS element maintenance CJ02

Data transfer which is Independent of version profile and dependent on databaseprofile:

1. TC CN71 and CN72

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The version profile is maintained in the PS customization and assigned to Projectprofile or network profile.

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Project planning board is a tool in SAP PS which helps and enable you to process /edit the entire project structure which are WBS element, activities, relationships,milestones, material components, PS texts, documents and assigned objects tothem.

It is similar to Gantt chart based on interactive SAP environment.

This comprises of hierarchy structure of your project and the corresponding datesituation.

You can custom made the display in project planning board to suite yourrequirement.

Project planning board can also be useful for planning dates and resources i.e.work, external processing, for planning costs using activities.

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Project planning board profile contains default values for the appearance ofplanning board.

The settings in this project planning board profile is valid for both, simulationversions and operative projects.

The graphical display can be changed and adapt as per user needs in theplanning board and customization using project planning board assistant.

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Project planning board is a graphical interface based on Gantt chart which can beused for creating and maintaining data like project definition, WBS element,activities, relationships, milestones, documents and PS texts.

Useful for Scheduling and monitoring.

You can view date view, and other overviews of project at the bottom of Ganttchart like capacity overview.

You can view logs, hierarchal graphic of WBS element and Networks andnetwork activities.

This is the only transaction where we can change simulation versions forreleases earlier than SAP R34.6C, i.e. create of change of WBS elements insimulation version based on the user specific options.

The entire period in the project planning board screen is called as Evaluationperiod which consists of Pre-evaluation period, Planning period and Post-evaluation period. These are defined by time settings and determined by 3

profiles which are created in customizing and assigned to project planning boardprofile.

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Assembly processing will be helpful while one is planning and producing orservicing same product for several times with similar constellations. Which meansthe basic structure will be same while data like duration, dates, quantities etc. will bechanging. In assembling processing, a network and WBS element & Project (ifrequired) is automatically created based on the customization, while a sales

document is created and saved. The project number is derived from Salesdocument and this process generates assignment between sales document &project. This incurs that the same information will be shared by sales and projectteam. If the data is changed in Project will update Sales document (and vice versa)which helps in delays and disagreement between sales and project department.

Process flow:

If a sales order is created for a material which has strategy group for assemblyprocessing has been assigned, the assembly processing will start.

The MRP processing is omitted in the assembly processing and creates a operativeorder (network in case of PS) directly from sales order.

Assembly processing is carried out statically in PS which means only one networkfor one sales document item.

Based on the customer requirements date, backward scheduling is carried out andavailability check is done for required material components. Which enables to informcustomer about feasibility of required date or else system will propose new date.

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Also, the calculated cost will be transferred from network the sales order.

While saving the sales document, WBS element structure & project definition will becreated which is identified by sales order number.

Since the sales document and the project is directly connected, any changes one

object will update / reflect in other automatically.

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The requirement class which is assigned with the sales order while creating it willstart assembly processing, one assembly order automatically created by systemand start assembly processing in the back ground. By this method MRP is ignoredand an operational order created directly from Sales Order.

Below is the list of Assembly order which can be created:-

Network, Production Order, planned order, Plant maintenance or Service order andProcess Order.

Assembly Processing contains all the date of Sales order and assembly order. So ifthere is any change done later to any document it will reflects in both document.

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