Resource-Related BillingComplex Billing Environments

Susan Kopisch SAP Labs, LLC susan.kopisch@sap.com

Barbara Daves CRM2ERP Consulting, LLC daves@crm2erp.com

• What is Resource-Related Billing (RRB)?• The Power of Pricing• Cost Plus Billing Scenario• Fixed Price with Progress Payments Scenario• Conclusions• Questions

Agenda

Resource-Related Billing

Any company who bills their customers based on resources consumed

Industries include but not limited to:

Airline Operations Defense Contractors Engineering & Construction Service Industry Consulting Industry Public Sector

Contract Types with Complex Billings

Cost

Firm-fixed-price w/PP

Profit 0/100 Share

Cost-plus-fixed-fee

Estimated Cost

Fixed Fee

100/0 Share

Base Fee (0-3%)

Award Fee Pool

MaxFee

Base Fee

Estimated Cost

MultipleIncentive

TargetFee

Cost-plus-incentive-fee

Share Ratio

Target Cost

Max Fee

Min Fee

Fixed-price incentive w/PP

Target Cost

TargetProfit

CeilingPrice

Share Ratio

(PTA)

Billing Complexities

The amount to bill may depend on different calculations: Resource-Billing

Based on resources consumed Based on estimated resources to be consumed Based on labor hours consumed Disallowed costs Cost Funding Cost Withholds

Overheads G&A Material Production Cost of Money

Billing Complexities cont.

Fees Fixed

• Percentage of costs incurred given negotiated cost• Percentage of labor hours consumed• Fee Retention• Fee Funding

Award Incentive

Schedule Cost

How can we use SAP for RRB?

• The SAP R/3 system is a toolbox from which you can build and store many different things.

Our job is to build invoices and

store the data for future use

Resource-Related Billing Equation

Project System

Controlling/FI

Sales & Distribution

=

Invoice

Materials Management

Pricing ProcedurePricing Routines

Project Structures

Costing SheetsCost Tables

Material Master

Dynamic Item Processor

How does RRB Work?

Active Projectwith Postings

Proj

WBS-1 WBS-2

Resource-Related Billing is used when the amount to invoice the customer is based on the resources consumed by the project

Op60Op10

Op20

Op30

Op50

Op40

PM Order

PM Order

PP Order

PP Order

Sales Contract/Order

Line Item Qty10 Product A 1

WBS-1/DIP Profile20 Product B 1

WBS-2/DIP ProfileDynamicItemProcessor

Resource Bill

Data Flow for Cost Plus

Costs onProject A

CostingSheet

Working Area

Billed Overhead

Addl DMR Items

410000 $2,000420000 $3,000655901 $10655902 $10655801 $6,000655802 $3,000655803 $3,000

SourceSelection Criteria

Material Determination

Working Area

410000 $2,000420000 $3,000655901 $10655902 $10655801 $6,000655802 $3,000655803 $3,000

Pricing

Routines&

Requirements

Pricing

Pricing

Routines&

Requirements

DMR Items

POSNR MATNR XKWERT MATKL10 Labor $2,000.00 40120 Materials $3,000.00 40330 Overhead $12,000.00 40840 Award Fee $10.00 49650 Fixed Fee $10.00 497

DMR with Pricing

410000 $2,000420000 $3,000655901 $10,000655902 $6,000655801 $6,000655802 $3,000655803 $3,000

Pricing Requirements & Routines

Three types:

1. Routine to zero out EK01 cost for additional DMR items

3. Routine to calculate final values

2. Routine to store variables

Key Routines

Storing Costs & Revenues

Billing calculations use calculated values from prior billings (i.e. previously billed).

FI Doc forInvoice

cost object?

BSEG

No

Yes

COEP

End

Revenue Elements4600000 Sales4601000 Excess Funding4602000 Excess Fee4603000 Withhold4604000 Fees

Previously billed values areautomatically stored in the cost tables on revenue elements!

Storing Pricing Condition Values

Pricing calculates variables used in determining values to bill.

KONV

During pricing, the pricing conditions are automatically stored in the KONV table!

Fixed Price w/Progress Payments

Fixed Price contracts may be eligible for progress payments based on costs incurred.

SF1443

Fixed Price w/Progress Payments

Item 10ProgressPayment

Item 10ProgressPayment

HeaderHeader

Item 20 P/N12345

Item 20 P/N12345

Sales order

Dow

n

Dow

n P

ay R

eque

st

Pay

Req

uest

Send

DownPayment

$

Customer

Send

Bill

Bill

Deliver

Clear

RRB

Sales Order Setup

Item 10ProgressPayment

Item 10ProgressPayment

HeaderHeader

Item 20 P/N12345

Item 20 P/N12345

Sales order

Billing Profile& WBS Element

Sales order pricing

Resource Bill Item 10

Billing Profile Setup

Progress Payment Flow

Item 10ProgressPayment

Item 10ProgressPayment

HeaderHeader

Item 20 P/N12345

Item 20 P/N12345

Sales order

Dow

n

Dow

n P

ay R

eque

st

Pay

Req

uest

Send

DownPayment

$

Customer

SendRRB

The down payment request is a sales document from which thethe SF1443 output will be generated.

Progress Payment DMR Pricing

Item 10Labor

Item 10Labor

HeaderHeader

Item 20 MaterialItem 20

Material

Debit Memo Request

Item 30 ZZProg Pay

Item 30 ZZProg Pay

EK01 = $500 stat.

EK01 = $900 stat.

From SalesOrder

Net Value = Request for Down Payment

RRB

Progress Payment Calculation

…

…

Sample Progress Pay DMR

Fixed Price Item Flow

Item 10ProgressPayment

Item 10ProgressPayment

HeaderHeader

Item 20 P/N12345

Item 20 P/N12345

Sales order

Bill

Bill

Deliver

Clear

DownPayment

$

Invoice PricingB

illB

ill Price

Liquidation

LESS

=

The Real Power of RRB

• Realistic Real-Time Billing – No delay in resource expenditure to billed values– High confidence of billing due to direct project integration

• RRB Supports Different Contract Types– The billing profile is configured for each contract type

• Flexibility for Complex Calculations– Pricing enables complex calculations adjusting the bill costs

such as CIEF, FIEF, Withholds, Retention, Fees, etc to arrive at a net billing amount.

– Historical billings easily stored/retrieved from the revenue elements on a project.

– Billing overhead rates are applied using costing sheets which allows for re-adjustment of rates. All rate changes are retro-

active automatically.

Questions

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Session Code: 3204