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SAP Best Practices for Engineering, Construction and Operations for China V1.606

SAP Best Practices

2013 SAP AG. All rights reserved.*

General InformationSAP Best Practices for Engineering, Construction and Operations was developed for small and midsize manufacturers to implement a solution quickly and easily.

By means of an entry-level offering for construction companies, you gain built-in support for the best business practices in the industry.

FunctionalitiesThe SAP Best Practices for Engineering, Construction and Operations solution supports your business in the following areas:

Project managementEquipment & Tools ManagementProcurementContract Billing AccountingCross FunctionsAnalytics


SAP BP for Engineering, Construction and Operations Solution ScopeProject ManagementProcurementAccountingAnalyticsCross FunctionsEquipment and Tool Mgmt.Contact Billing

Project Setup for Engineering and ConstructionProject Budgeting for Engineering and ConstructionProject Planning for Engineering and ConstructionProject Forecasting & Earned Value ManagementRevenue Recognition for ProjectsTime Entry for ConstructionTender Process for Engineering and ConstructionEngineering Change Management for Engineering and ConstructionCommissioning and Handover for Engineering and Construction

Consumable PurchasingProcurement ContractRFQs for Project-based ProcurementPurchase Orders for Project-based Procurement

General LedgerAccounts ReceivableAccounts PayableCash ManagementAsset AccountingCost of Sales AccountingSegment ReportingPeriod End Closing Financial AccountingActivate Document Splitting for EC&O

SAP ERP Reports for AccountingProject Reporting for Engineering and Construction

Travel ManagementPeriod End Closing Activities

Equipment & Tools Management for Construction

Contract Billing for Engineering and Construction


Industry-Specific Scenarios (1 of 2)SAP Best Practices for Engineering, Construction and Operations provides the following industry-specific scenarios:

439: Project Setup for Engineering and Construction440: Project Budgeting for Engineering and Construction441: Project Planning for Engineering and Construction442: RFQs for Project-based Procurement443: Purchase Orders for Project-based Procurement444: Equipment & Tools Management for Construction445: Project Forecasting & Earned Value Management446: Revenue Recognition for Projects447: Contract Billing for Engineering and Construction


Industry-Specific Scenarios (2 of 2)SAP Best Practices for Engineering, Construction and Operations provides the following industry-specific scenarios:

448: Project Reporting for Engineering and Construction449: Time Entry for Construction756: Tender Process for Engineering and Construction428: Engineering Change Management for Engineering and Construction430: Commissioning and Handover for Engineering and Construction366: Activate Document Splitting for EC&O


Project Setup for Engineering and Construction (439)Purpose and Benefits:

Purpose A project structure can be a set of work packages with reference to the physical object and construction disciplines into which the contractor organizes the work to perform, mostly for accounting and time control purposes, and is designed for project control and execution. It connects with the project owner needs reflected in a quote or awarded contract. It provides cost and resources spread in a time perspective.Benefits The project structure provides an organized view into manageable sections and disciplines, which makes it possible to control all dimensions of a project, such as costs, milestones, dates, resources. Key process flows coveredTake the needs of the client from the quote or awarded contractTake the original estimate for an assessment on the scope of servicesDevise a project framework following a Work Breakdown Structure approachDevise tasks and milestones just enough to represent the relevant project steps


Project Budgeting for Engineering and Construction (440)Purpose and Benefits:

Purpose The project estimated, calculated when preparing the quote to the client, is essential to create the preliminary project budget and major timelines. It has now to be embedded into the project structure, having in mind the need of connecting the client needs with the construction view. Estimates are typically performed in a third-party solution or spread sheets. The preliminary budget provides the cost view and equally quantifies the scope of work (physical output or production) and the necessary resources to be consumed in performing such productionBenefits The project structure provides an organized view into manageable sections and disciplines, which makes it possible to control all dimensions of a project, such as costs, milestones, dates, resources.The preliminary budget structure can be built mirroring the originating external estimate, which makes it easier for planning engineers to achieve the task of connecting the client world to the construction world in a first step.Estimators and engineers work together, resulting in teamwork delivering a reconcilable, reliable preliminary budget. Key process flows coveredCreate and assign a cost version to be used as the preliminary budget (version YE0)Import or re-key an external estimate master data into a project cost versionDeploy the items from the estimate within the project structure (WBS and network), for resources (material, labor, equipment, lump sum items) for each line item with their respective unit costs


Project Planning for Engineering and Construction (441)Purpose and Benefits:

Purpose A detailed project plan is put in place to commit resources, funding and the corporate staff, with the ultimate goal of delivering the project.The project plan can be comprised of schedule, work plan (hours), construction equipment, purchase plan (construction material, equipment), budget (cost plan) and the production plan (construction physical output).Benefits A project plan is a solid, detailed management framework. It brings in elements to control execution and forecasting, enabling the contractor to steer the project, thus creating conditions to deliver on-time and on-budget.Numerous mechanisms to plan, simulate, execute, control, and forecast resources, costs and time can be applied to the project plan, bringing superior ability to maneuver the project to be delivered on budget and on time Key process flows coveredDevise the project scheduleDevise the construction production plan (Physical output)Determine purchase requirements and create the purchase planAssign costs to the schedule and purchase plansCompare preliminary budget to the new budget, adjust, release the project plan


RFQs for Project-based Procurement (442)Purpose and Benefits:

Purpose This scenario describes the typical processes used In the Engineering, Construction & Operations industry to solicit, obtain, and compare supplier pricing information to select the appropriate supplier for the material or subcontracted service to be procured. Benefits Standardizing RFQ process Transparent selection of the right supplierEasy collaboration with suppliersKey process flows coveredDisplaying project oriented purchase requisitionsCreating request for quotationMaintaining quotationPrice comparisonGenerating rejection noticeConverting quotation into purchase order


Purchase Orders for Project-based Procurement (443)Purpose and Benefits:

Purpose This scenario describes the typical processes used in the Engineering, Construction & Operations industry to generate and process purchase orders (POs). These POs are used to procure materials, subcontracted services with retentions and bulk equipment with invoice plan. Benefits Transparent view of created orders, commitments and deliveryStandardized invoice handling by using retentionsProgress tracking option based on POs for equipments Key process flows coveredMonitor project oriented purchase requisitionsConvert purchase requisitions to purchase ordersCreate purchase order manually for materials without master record and blanket purchase orderBulk equipment purchase processProcurement process with down payment chainVendor evaluation


Equipment & Tools Management for Construction (444)Purpose and Benefits:

Purpose Addresses the unique requirements of self performing construction companies, building contractors and equipment distributors by handling the industry-specific business processes such as equipment planning, processing, settlement and evaluation of resources (equipment and materials) including performance measurement. Benefits Improve the availability and tracking of equipmentManage the increasing administrative workload Reduce handling and administration costIntroduce most flexible prices and account determination Optimize equipment utilizationImprove the visibility of profitability, TCO and return on asset and equipmentKey process flows coveredTime-based Equipment Process Time-based Equipment Process including 3rd Party Rental Equipment Performance-based Equipment ProcessETM Non-Consumable Material ProcessETM Consumable Material Process


Project Forecasting & Earned Value Management (445)Purpose and Benefits:

Purpose Project Forecast is used to evaluate based on the past performance of the project the future course of the project. It provides insights how current productivity, for example, will impact the projects final results and is used to indicate areas of concerns.Earned Value Management is used to evaluate current project performance. Earned value management is a method to accurately determine a projects health in terms of cost and schedule progress against the plan. Benefits Both processes provide project insights which are essential for the management to control the future course of the project. Key process flows coveredDetermine the planned and actual POC, based on defined rules and POCs estimated manually or automaticallyDetermine Earned Value and other KPIs like productivity, cost performance index, and scheduling performance indexProject Forecasting


Revenue Recognition for Projects (446)Purpose and Benefits:

Purpose In industries such as engineering and construction, it can take months or years to finish an entire project. Therefore, it is essential to recognize revenue against the time spent, cost incurred, or milestones achieved.Benefits Results Analysis (RA) is a sophisticated tool within the Controlling module that computes the cost of sales, WIP inventory and the reserves for unrealized revenue or surplus revenue. Settlement transfers results analysis data to financial accounting.Key process flows coveredExecute Results Analysis Perform SettlementProject Reporting for revenue posting and related KPIs


Contract Billing for Engineering and Construction (447)Purpose and Benefits:

Purpose This scenario covers the three primary contract billing processes used by the engineering construction and operations industries, the first is Lump-Sum Contract with Milestone Billing, the second is Bill of Services Unit Price Contract with Service Entry Sheet and third is Cost Plus and Time and Material Billing (RRB)Benefits Provide fast implementation templates. Users can choose the most suitable methods from the three contract billing processes used by EC&O according to their requirements.Better control customers payment.Key process flows coveredLump-Sum Contract with Milestone Billing Bill of Services Unit Price Contract with Service Entry SheetCost Plus and Time and Material Billing (RRB)


Project Reporting for Engineering and Construction (448)Purpose and Benefits:

Purpose Show basic reports for a project manager / project controller in a construction environmentCustom reports developed using Report Painter toolStandard delivered project financial reportsBenefits View of cost, revenue, earned value, installed quantities, recognized revenue, project forecast, budget as out of the box reporting capabilitiesKey process flows coveredProject Budget (Project Overview) Report Preliminary Budget, Changes, Current Budget, Actual Cost, Commitment, Forecast as main KPIProject Progress & Productivity Report PoC, EVA, Budgeted and Installed Quantities, Productivity, Actual Cost as main KPI


Time Entry for Construction (449)Purpose and Benefits:

Purpose Record working hours for employees, installed quantitiesTransfer hours and derived cost to projectMaintain employee information as new hires come onboard or employees leave the companyMaintain the company organization structure maintain organizational units, jobs and positions.

Benefits Hours and quantities (as statistical key figures) can be entered in an easy-to-use UIHours and quantities can be transferred to the project as base for cost, productivity and progress reporting

Key process flows coveredEntry of time and quantities installed for one person Time sheet approval process Time and Material Project - Transfer to Costing Object (Projects, HR, CO) Displaying working timesMaintenance of employee mini master recordsMaintenance of the company organizational structure


Tender Process for Engineering and Construction (756)Purpose and Benefits:

Purpose This scenario describes the tender processing in a standard EC&O environment. SAP functionalities of Sales & Distribution (SD) and of Project System (PS) are used to control the complete process, from customer inquiry to the handover to project construction (described in the scenario 447, Contract Billing).

Benefits Deep integration to the project structuring and calculation allows for a consistent controlling of all steps and valuesCopy functionalities e.g. from inquiry to quotation are facilitating compliance with the process rulesDocument management feasibility study document, drawings are linked to WBS elementEasy cost planning and base planning object are used to estimate project cost roughly for quotationKey process flows coveredCreation of inquiry with linkage to projectEasy Cost Planning and base planning objectCreation of quotation with reference to the inquiryIntegration to the project system including calculation costing and scheduling functionalitiesAssignment of technical documents


Engineering Change Management for Engineering and Construction (428)Purpose and Benefits:

Purpose This scenario is used to track and manage project issues, anticipate and adjust variables to limit impact to schedule and cost.Benefits An internal order will be created automatically to collect the related costs when saving the ECM claim which will be used to control the task of changing. After that, the project manager can use report to view cost change of the project.Key process flows coveredCreate ECM Claim an internal order will be created at the same time to collect cost. Document change change of project document Cost increase additional internal training


Commissioning and Handover for Engineering and Construction (430)Purpose and Benefits:

Purpose The scenario happens after project tasks (e.g. equipment installation) have been done. The project team organizes commissioning and is ready to handover what they have done to the related parties. Benefits The Integration between PM and QM helps write recording results automatically into measuring documents for functional location. Clear cost settlement support enterprise cost saving and budget planning. Provides Best Practices solution and fast implementation template. Key process flows coveredCreating Notification Creating Order with reference to NotificationRecording Results and Confirming Labor HoursUsage Decision Settling the OrderConfirming Network ActivitiesHandover of Functional Location


Activate Document Splitting for EC&O (366)Purpose and Benefits:

Purpose The Activate Document Splitting is provided with the new General Ledger Accounting. Documents are enhanced with additional account assignment objects, or additional postings are done which split the original postings into lines referring to the account assignment objects. Account assignment objects can be defined according to selected dimensions. In SAP Best Practices the dimensions are profit centers and segments.Benefits The postings are done in real time (online).It is possible to draw up complete financial statements for the selected dimensions at any time (segment reporting).Key process flows coveredThe Activate Document Splitting is provided with the new General Ledger Accounting. The Activate Document Splitting is based on segments.The Activate Document Splitting must be activated before the start of postings in the client. Postings done before can cause subsequent Activate Document Splitting errors (see also note 891144).

2013 SAP AG. All rights reserved.* 2013 SAP AG. All rights reserved.No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice.Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors.National product specifications may vary.These materials are provided by SAP AG and its affiliated companies ("SAP Group") for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty. SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries. Please see http://www.sap.com/corporate-en/legal/copyright/index.epx#trademark for additional trademark information and notices.

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