Assignment of Results Analysis Methods to Objects

Assignment of Results Analysis Methods to Objects This section tells you which results analysis methods you can use for which objects: Method

Results Analysis Method

Sales Order

Project

Internal Order

01

Revenue-Based Method with Profit Realization

Yes

Yes

Yes

02

Revenue-Based Method Without Profit Realization if Actual Revenue < Planned Costs

Yes

Yes

Yes

03

Cost-Based POC Method

Yes

Yes

Yes

04

Quantity-based method

Yes

Yes*

Yes

05

Quantity-Based POC Method

Yes

Yes

Yes

06

POC Method on Basis of Revenue Planned by Period

Yes**

Yes

Yes

07

POC Method on Basis of Project Progress Value Determination

No

Yes

No

08

Derive Cost of Sales from "Old" Resource-Related Billing of CO Line Items

Yes

Yes

Yes

09

Completed Contract Method

Yes

Yes

Yes

10

Inventory Determination, Without Planned Costs, Without Milestone Billing

Yes

Yes

Yes

11

Inventory Determination, Without Planned Costs, with Milestone Billing

Yes

Yes

Yes

12

Inventory Determination, Reserves for Follow-Up Costs, Without Milestone Billing

Yes

Yes

Yes

13

Inventory Determination "WIP at Actual Costs" for Objects Not Carrying Revenue

No

Yes

Yes

14

Derive Cost of Sales from Resource-Related Billing of Dynamic Items

Yes

Yes

Yes

15

Derive Revenue from Resource-Related Billing and Simulation of Dynamic Items

Yes

Yes

Yes

*If you use the Quantity-Based Method, you should change the setting of the Base quantity field quantity field in the Expert Mode of the valuation method. In the standard system, the system uses the billed quantity. **If you use the POC Method on Basis of Revenue Planned by Period, you must use a billing plan to plan the period costs. Otherwise the system cannot calculate meaningful values.

For sales orders, choose the results analysis method in Customizing for Product Cost by Sales Order under Order under Period-End Period-End Closing  Results Analysis  Define Valuation Methods for Results Analysis in the simplified maintenance of the valuation methods. For projects, choose the results analysis method in Customizing for the Project System under Revenues under Revenues and Earnings



Automatic and Periodic Allocations



Results Analysis



Edit Results Analysis Keys

and Version  Define Valuation Methods for Results Analysis in the simplified maintenance of the valuation methods.

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For sales orders, choose the results analysis method in Customizing for Product Cost by Sales Order under Order under Period-End Period-End Closing  Results Analysis  Define Valuation Methods for Results Analysis in the simplified maintenance of the valuation methods. For projects, choose the results analysis method in Customizing for the Project System under Revenues under Revenues and Earnings



Automatic and Periodic Allocations



Results Analysis



Edit Results Analysis Keys

and Version  Define Valuation Methods for Results Analysis in the simplified maintenance of the valuation methods.

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Results Analysis and Deferred Revenue Moderators: thx4allthefish thx4allthefish,, Snowy Post a reply

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Results Analysis and Deferred Revenue

by sap_in_dallas » Thu Aug 23, 2007 11:19 am

We are using RA in what should be a simple way. While the project is REL all costs should go to WIP and any and all revenues should go to Deferred Revenue. Once a project is TECO, all WIP should go to COGS and all Def'd Rev should go to REV.

I am using the POC method and have not made many changes to the SAP delivered.

WIP is working fine, costs go to WIP using RA Category WIPR and back out once TECO. RA calculates correctly and settlement wo rks fine.

Revenue is beating me down... RA correctly calculates all REV as Revenue Surplus using RA Category POCS. BUT, settlement ignores POCS and does not move the revenue to Def'd Rev.

I added a posting rule (OKG8) for VLRV and when TECO the REV is moved out of Def'd Rev to Rev... but the original entry for Def'd Rev was never made so the account is out of balance.

I am confused as the RA Line item reports shows only POCS being calculated for Revenue postings. Is there another RA Category that I need to use to make the original posting to Def'd Rev??

Thanks in advance,

Ron

sap_in_dallas

Posts: 14

Joined: Wed Aug 22, 2007 3:11 pm T o p

by charan1 » Thu Aug 23, 2007 1:35 pm

I am trying to understand your proble m.

1) You are using Revenue based results analysis - method 01-Expert mode.

2) When you run RA , it calculates the following correctly.

POC = Ra / Rp

COS, Cc = POC * Cp

WIP = Ca - Cc

3) When you do settlement , WIP is settled to FI properly.

4) But when it comes to COS , you have a problem in settling to FI ?

Does this correctly describe your problem ? May be you would like to add details with an example to describe your problem.

Regards, Manohar charan1

Posts: 85 Joined: Wed May 23, 2007 2:57 am 

T o p

by sap_in_dallas » Thu Aug 23, 2007 2:03 pm

Using completed contract method. RA Type: E (Revenue Based RA) and Profit Indicator: C (Completed Contract).

not using/worrying about planned values at all.

Want 100% of any revenue posted when in REL status to be posted to Def'd Liability account (Revenue Surplus). 100% of costs posted to be posted to WIP.

When in REL, RA correctly calculates Rev Surplus and WIP. POCS has 100% of revenue... WIPR has 100% of cost.

Settlement ignores POCS (Rev) and does nothing with it. Settlement correctly posts WIPR to WIP account.

When in TECO RA correctly calculates 100% R EV to Revenue and 100 Costs to COGS. Settlement correctly uses VLRV to post FROM Def'd Rev to Rev (thus Def'd Rev is now out of balance). Also correctly posts from WIP to COGS.

I get the idea that I need to add a different RA Category to the Posting Rules (OKG8). sap_in_dallas

Posts: 14 Joined: Wed Aug 22, 2007 3:11 pm T o p

by charan1 » Thu Aug 23, 2007 2:53 pm

You are using RA method -09 - completed contract method.

How are your settlement distribution rules defined? Do you use source structure in the rules?

Are the line Ids for results analysis defined and assignment for line IDs defined ?

In RA posting rules for settlement to financial accounting , which RA category have you used ? POCS or POCI ?

regards, Manohar charan1


T o p


First, thank you for your reply, here are the answers to your questions and then a comment that may help to solve (or create more questions)

In settlement (Allocation Structure) I have two Assignements (one for Revenue and a second for Expenses). I am NOT using Source Structures, but for each Assignment I have an individual source defined. One specifying revenue accounts and the second expense accounts. The two do NOT overlap.

Line IDs are created and assigned. As mentioned RA is calculating Rev Surplus and WIP correctly.

In RA Posting rules I have actually set up both POCS and POCI, both are ignored.

Now the comment which leads to a question...

In WIP RA the account I have defined in "Update of WIP Calculation and Results Analysis" (OKG4) is being used to calculate WIP and is being settled. These are set up as Category K in OKG4.

Yet for Revenue (Category E) line items the account defined in OKG4 is NOT being used, but the account from the Results Analysis Version (OKG2), called Technical RA Cost Element is being used.

Yes, I have tried to include the OKG2 account in the source of the settlement assignement and it does NOT work. Yet when I replace the account that is defined in OKG2 with the account from OKG4 (both are type 31 Ra accounts) the settlement actually works!

Here is the rub, in OKG4 I have 6 different line item IDs defined as the Def'd Rev has to be broken into 6 different 'receiving' accounts so that the income statement nets correctly.

My new question form all of this is why won't RA use the OKG2 account for the type E (revenue) when it does use such accounts for the type K (expense)?? sap_in_dallas



OK, further research yields more questions. Reading some about the RA Version SAP tells me that the accoutns there (OKG2) are used for items that are not allocated to Line Item IDs and specifically lists: "Data for the POC method, such as calculated revevnue and revenue in excess of billings". Which is exactly what I am calculating.

I reviewed the RA line item reports and sure enough POCS is coming through WITHOUT a Line Item ID!!! Therefore it is picking up the OKG2 account.

This seems to tell me two things:

1- to use POC (Completed Contract) SAP wants to stuff all of the revenu e into a single account (Won't work for me)...

2- Maybe I need to use a different Profit Indicator in the Valuation Method (OKG3) where I have indicated C for Completed Contract.

My business scenario surely seems to be a Completed Contract (POC) scenario, but if SAP forces me to send all o f my Def'd Revenue to a single account that cannot be used.

Does Anyone have any experience using other 'Profit Indicators" so that Revenue Accounts used in RA come from OKG4?? sap_in_dallas


by charan1 » Fri Aug 24, 2007 4:12 am

I do not want to add to your confusion. Sometimes , it is trial and error with configuration until you get your desired results.

I was having a look at the bulding block config documentation for someother RA method. Nevertheless , some of the following settings in config , are worth a second l ook.

1. Define Line IDs 2.Choose New Entries and enter the f ollowing data: CO Area Line ID Name BP01 COP Primary Costs BP01 COS Secondary Costs BP01 REV Revenues BP01 SET Settled Costs

2. In the assignment lines , you have to maintain the account range for COP, COS,REV,SET.

3. In define update for RA, need to maintain COP,COS,REV AND SET. Here no accounts for SET.

4. In WBS , need to maintain dist. rules for COP,COS,REV and SET.

May be you already know the a bove. I thought you might like to have a second look at your RA config .

Regards, Manohar

charan1


T o p

by sap_in_dallas » Mon Aug 27, 2007 3:55 pm

Many thanks to everyone who has been contributing. A few things have come to mind.

Frist, sure enough my basic config was off and causing the settlement problem. so it is no longer an issue. The settlement is happening.

The problem still exists with the use of POC and our need to breakout Def'd Revenue by Line Item ID (LID). The SAP docs say that using POC means that SAP will NOT write Revenue Calculations to LIDs, instead it only used the single account defined in the Version.

Has ANYONE used RA to defer revenue? I am getting lots of WIP help, but that is working fine.

Also, does anyone have/created any documentation of the rules/calculations used by SAP in each of the RA Methods? I've looked everywhere (including the best SAP book ever written "Product Costing Made Easy", back in 1999( and don't see that level of information.

Ron sap_in_dallas


Re: Results Analysis and Deferred Revenue

by sapireland » Tue Jul 10, 2012 10:58 am

Hi SAP_in_Dallas, Could you please share you configuration solution for the deferred revenue issue - I seem to be having the same issue as you.

Regards, sapireland sapireland

Posts: 1 Joined: Tue Jul 10, 2012 10:54 am T o p

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Results Analysis Methods Use Which results analysis method you choose depends on your business requirements. A company will normally run different types of processing – and therefore use different methods of results analysis – simultaneously. Results analysis methods contain the rule for calculating the results analysis data.

Prerequisites The standard system contains a number of different results analysis methods. Decide which results analysis method you want to use. Choose a results analysis method in simplified Customizing for Product Cost by Sales Order under Period-End Closing  Results Analysis



Valuation Method .

Decision Criteria Capitalized Costs, Revenue in Excess of Billings, and Reserves Legal requirements in different countries stipulate that unrealized profits can be capitalized or that they cannot be capitalized. This situation requires different balancing methods in the different countries. 

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If you want to capitalize unrealized profits, use a results analysis method that can be used to create revenue in excess of billings. If you want to capitalize unrealized profits, use a results analysis method that can be used to create capitalized costs.

Some methods of creating capitalized costs and creating revenue in excess of billings also allow automatic creation of reserves for unrealized costs or reserves for imminent losses. Milestone Billing / Milestone Delivery If you want to use milestone billing or milestone delivery, use a results analysis method that allows creation of new capitalized costs in each period.

Features For the system to be able to place the costs and revenues in relation to each other, a calculated percentage of completion (POC) must be generated. The percentage of completion can be calculated on the basis of the following data:  

R(p) planned revenues; C(p) planned costs; Q(p) planned quantity R(a) actual revenues; C(a) actual costs; Q(a) actual quantity

The system can calculate results analysis data using the percentage of completion. This data includes:      

C(z) capitalized costs C(r) reserves for unrealized costs R(z) revenue in excess of billings R(r) revenue surplus R(PA) revenue affecting net income C(PA) costs affecting net income (cost of sales)

This results in the following formulas: R(PA) = POC * R(p) C(PA) = COS * C(p) This has the following consequences:

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The revenue affecting net income is calculated by multiplying the percentage of completion by the planned revenue. The cost of sales is calculated by multiplying the percentage of completion by the planned costs.

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In the revenue-based results analysis method, the COS is calculated as follows:

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POC = R(a) / R(p) Result: R(PA) = R(p) * R(a) / R(p) = R(a) C(PA) = C(p) * R(a) / R(p)

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In the POC method, the COS is calculated as follows:

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POC = C(a) / C(p) Result: R(PA) = R(p) * C(a) / C(p)

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

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C(PA) = C(p) * C(a) / C(p) = C(a) The following formula always applies:

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C(PA) < C(a) --> C(z) If the calculated costs are less than the actual costs, the system creates capitalized costs. The capitalized costs can be capitalized in the balance sheet through settlement to FI.

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C(PA) < C(a) --> C(r) If the calculated costs are greater than the actual costs, the system creates reserves for unrealized costs. The reserves can be shown as a liability in the balance sheet through settlement to FI.

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R(PA) < R(a) --> R(r) If the calculated revenue is less than the actual revenue, the system creates a revenue surplus. The revenue surplus is basically a reserve. The revenue surplus can be shown as a liability in the balance sheet through settlement to FI.

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R(PA) > R(a) --> R(z) If the calculated revenue is greater than the actual revenue, the system creates revenue in excess of billings. The revenue in excess of billings can be capitalized in the balance sheet through settlement to FI.

Activities Choose a results analysis method in Customizing for Product Cost by Sales Order under Period-End Closing  Results Analysis



Define Valuation Method .

You can view the settings for the simplified results analysis methods in the Expert Mode of the valuation method.

Hi, In Cost Element Master record if you click F4 in CElem category, you can find all Category's with Descriptions by which you can Select as per your requirments. the below is a small notes which can help you to understand the concept.

Primary Cost Element Categories: You can use the following cost element categories for primary cost elements: 01: Primary costs / cost reducing revenues: This cost element category can be debited for all primary postings, for example, in Financial Accounting (FI) or in Materials Management (MM).

Cost-reducing revenues are revenues that are to be handled in CO similarly to overhead costs, and which reduce the prices of an

activity type or the costs to be assessed. This is the case, for example, with rent rev enues, which reduce the room costs to be assessed. Cash discount amounts and exchange rate amounts are also costreducing revenues. Note: In contrast to revenues of cost element category 11, cost-reducing revenues in the CO module are typically assigned to cost centers. Note that when you use Profitability Analysis (CO-PA, costing-based) these cost-reducing revenues can only be transferred to Profitability Analysis during secondary allocations and not during invoicing.

3: Accrual Calculation Using the Percentage Method : You can only use this cost element category during accrual calculation in Cost Center Accounting (component CO-OM-CCA) when you

are using the percentage method. You can post directly from FI to take account of the actual costs incurred. The system

also uses cost elements of this category to post the accrual amounts within Cost Center Accounting CO-OM-CCA. If you do take actual costs into account (say, for additional costs), create cost elements of this category in Controlling (CO) only. The account must be defined in the chart of accounts, but you do not need to create the general ledger account in FI. 4: Accrual Calculation Using the Target=Actual Method Used in Cost Center Accounting (CO-OM-CCA) only for accrual calculation when you are using the target=actual method. You can post costs directly from FI to register actual costs incurred. At the same time, the R/3 System uses this category of cost element to post accrual cost amounts within Cost Center Accounting CO-OM-CCA. If you do take actual costs into account (say, for additional costs), create cost elements of this category in Controlling (CO) only. The account must be defined in the chart of accounts, but you do not need to create the general ledger account in FI. 11: Revenues: Used to post revenues. These revenues are generally posted during make-to-stock-production directly into the operating profit, or with make-toorder-production to the sales order. In Controlling (CO) revenues are displayed with negative +/- sign. An exception to this is Profitability Accounting (CO-PA, costing-based), in which all values, including revenues, are displayed with a positive +/ - sign. Caution: If you post revenues to cost centers, the values are displayed as statistics only (for information purposes). This means: You can repost revenues to other cost centers to correct, postings, but other allocation is not possible. Revenues are not taken into account during activity price

iteration and are therefore not included in activity allocation prices.

Note: Revenues are generally defined as cost element category 11. This enables the integrated transfer of billing documents to CO-PA. An exception to this rule is cost-effecting revenue. See the section "Primary Costs / Cost Reducing Revenues". Example : 12: Sales Deductions : Used to post deductable items (sales adjustments, sales corrections) such as discounts and rebates. Certain deductable items (freight charged separately in the invoice, surcharges for small quantities, special orders) are not classified as sales deductions, but as revenue elements. You can use this category in the same manner as revenue elements (category 11). Values on cost centers are displayed as statistical only. 22: External Settlement : Used to settle order costs, project costs, or cost object costs to objects outside of CO. These objects could be assets (Asset Management), materials (Materials Management), or general ledger accounts (Financial Accounting). The R/3 System creates an accounting document when the costs are settled. Cost elements of this category cannot be used for settlement within CO (cost centers, orders, projects, and s o on). Use secondary cost element category 21 for this purpose. The R/3 System does not create an accounting document when costs are settled within CO. 90: Cost Elements for Balance Sheet Accounts in FI : Automatically assigned when you create cost elements in CO whose general ledger accounts in FI are asset reconciliation accounts (special balance sheet accounts), not income statement accounts. You cannot c hange this category in CO master data maintenance. FI does not require CO account assignments to cost elements of Category 90. However, if you enter an account assignment, it is only recorded statistically for true objects. Category 90 cost elements enable you to check the budget of an order or project when you acquire fixed assets that can be directly capitalized. To do this, enter the capital investment order or the WBS element in t he corresponding field of the asset master data. Asset Management (AM) ensures that the specified order or WBS element is automatically entered in the document during the asset acquisition. In CO the order or W BS element is debited statistically. This statistical debiting is checked by the s ystem using the budget d uring availability control. Secondary Cost Element Categories The following categories exist for secondary cost elements: 21: Internal Settlement: Used to settle order costs or project costs to objects in Controlling (CO), such as orders, profitability segments, cost centers, and projects. Cost elements of this category cannot be used for settlement to objects outside of CO (assets, materials, general ledger accounts, and so on). Use primary cost element category 22 for this purpose. 31: Order/Project Results Analysis : Used to store results analysis data from order/project results

analysis on the order/project.

41: Overhead : Used to allocate overhead costs from cost centers to orders. This overhead rate can be material, sales, or administrative costs . 42: Assessment : Used to allocate costs during assessment. 43: Internal Activity Allocation : Used to allocate costs during internal activity allocation and for allocating process costs. 50: Incoming Orders: Sales Revenue : Used for sales revenues from sales orders with incoming orders in the c urrent period of the project-related incoming orders. 51: Incoming Orders: Other Revenues : Used for other revenues, such as imputed interest from sales orders with incoming orders in the current period of the project-related incoming orders. 52: Incoming Orders: Costs : Used for the costs arising from sales orders with incoming orders in the current period of the project-related incoming orders. 61: Earned Value : Used for earned values from earned value analysis in the project system.

Thanks Goutam

Cost Element Categories Definition The cost element category has a technical control function. It determines whether you can post to a cost element directly or indirectly. Direct posting means: You post a fixed amount to an account by specifying the account number. You can post directly to all primary cost elements.

Indirect posting means: The system determines the account automatically at the time of posting You can not enter the account number with the posting transaction. You can only post indirectly to secondary cost elements.

Use The following cost element categories can be used for primary cost elements: 

01: Primary cost element This category of cost element can be debited with all primary postings, for example, in Financial Accounting (FI) or Material s Management (MM).

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03: Accrual cost element / percentage method This cost element category may only be used in Cost Center Accounting (CO-OM-CCA) with the percentage method of accrual calculation. You can post directly in Financial Accounting to register when actual costs are incurred. The system uses this cost element category to post accrued costs in Cost Center Accounting. If you do not want to consider actual costs (for example, additional costs), you can create this category of cost elements exclusively in Controlling. You define the account in the chart of accounts, but you do not need to create the account as a G/L account in Financial Accounting.

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04: Accrual cost element / target=actual method This cost element category may be used only in the target=actual method of accrual calculation with Cost Center Accounting. You can post the cost directly from Financial Accounting to register when actual costs are incurred. The system uses this cost element category to post accrued costs in Cost Center Accounting. If you do not want to consider actual costs (for example, additional costs), you can create this category of cost elements exclusively in Controlling. You define the account in the chart of accounts, but you do not need to create the account as a G/L account in Financial Accounting.



11: Revenue elements The cost element category is used to post revenues. Revenues are displayed in Controlling with a negative sign (-). An exception to this is Profitability Analysis (CO-PA). In CO- PA revenues are displayed with a positi ve sign (+).

If you post revenues to cost centers, the values appear as statistical information only. This means that you can repost revenues for posting adjustments to other cost centers, but another allocation is not possible. Revenues are ignored in iterative activity price calculation and are therefore not included in the allocation price of an activity type.

Before you define a revenue element, check whether the posting is in the form of a credit memo whose costs you want to take into account. If this is the case, use cost element category 01 (primary cost elements), not category 11 (revenue elements). These credit memos appear as negative costs and are processed in the same way as all other cost elements of category 01. Example: Cost centers Cost center with revenue posting Costs 10,000 Revenues -5,000 Cost effective 10,000



12: Sales deduction

Cost center with credit entry Costs 10,000 Credit memo -5,000 Cost effective 5,000

Cost elements of this category are used to post sales deductions. Sales deductions (reductions, adjustments, corrections) are adjustment or deduction postings of revenues, such as discounts and rebates. Certain revenues, such as freight charged separately in the invoice, surcharges for small quantities or special orders, are not classified as sales deductions. Such value items are defined as revenue elements. The account assignment options for cost elements of this category are the same as for cost element category 11 (revenue elements). Values on cost centers are displayed statistically only (as for revenues). 

22: External settlement Cost elements of this category are used to settle order, project, or cost object costs to objects outside of Controlling. CO external objects can be, for example, assets (AM), materials (MM) or G/L accounts (FI). The system always creates an accounting document when you settle to external objects. You cannot use this cost element category for settlement to objects within Controlling (such as cost centers, orders, or projects). Use secondary cost element category 21 for internal settlement. In contrast to settlement to CO-external objects, no accounting documents are generated by the system for settlement to CO internal objects as the value flow occurs exclusively within CO.

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90: Cost element for balance sheet accounts in Financial Accounting Cost elements of this category are generated automatically when you create cost elements in Controlling that have asset reconciliation accounts, that is, special balance sheet accounts, as corresponding general ledger accounts in Financial Accounting. You cannot change this cost element category in CO master data maintenance. FI does not require CO account assignments of category 90. However, if you do enter a CO account assignment, this is only updated statistically even for true CO objects. Cost elements of category 90 enable you to control the costs of an order or project budget during the acquisition of fixed assets that can be directly capitalized. To achieve this you enter a capital investment order or work breakdown structure (WBS) element in the appropriate field in the asset master data. The Asset Management (AM) component ensures that when the asset is acquired, the order or WBS element is automatically entered in the document. In Controlling, orders and WBS elements are debited statistically. This statistical debit is checked with the budget during availability control. The system does not support other uses of category 90 cost elements at present. You cannot plan using these cost elements.

The following cost element categories can be used for secondary cost elements: 

21: Internal settlement This cost element category is used to settle (further allocate) order or project costs to Controlling (CO) internal objects. CO-internal objects are, for example, orders, profitability segments, cost centers and projects. You cannot use this cost element category for settlement to CO-external objects (such as fixed assets, materials, or G/L accounts). Use primary cost element category 22 for external settlement.

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31: Order/project results analysis This cost element category is used to save the order/project results analysis data on the relevant order/project.

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41: Overhead rates This cost element category is used to further allocate overhead costs using overhead rates from cost centers to orders.

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42: Assessment This cost element category is used to allocate costs using the assessment method.

43: Allocation of activities/processes



This cost element category is used during internal activity allocation and in Activity-Based Costing. 50: Incoming orders: sales revenues



This cost element category is used for sales revenues from sales orders with incoming orders in the current period of the project-related incoming order. 51: Incoming orders: other revenues



This cost element category is used for other revenues, such as imputed interest, from sales orders with incoming orders in the current period of the project-related incoming order. 52: Incoming orders: costs



This cost element category is used for costs from sales orders with incoming orders in the current period of the project-related incoming order. 61: Earned values



This cost element category is used for the earned values from the earned value analysis in Project System.



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More discussions in SAP Project Systems (SAP PS)Where is place located? 12 Replies Latest reply: Nov 28, 2011 2:11 PM by abdul khader

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Earned value in PS

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Bhadri M Nov 21, 2011 10:11 AM

Hi Experts, In report S_ALR_87015124, I want to see how the Earned Value break i.e. on what basis the earned value is calculated. Can u please let me know what is earned value and how it is calculated. Thanks in advance. Regards, Bhadri M. Helpful Answers by Ammar Zaheer Syed, Vengaiah Chowdary Pachava Chinna, Gokul Pillai, Vengaiah Chowdary Pachava Chinna, abdul khader , abdul khader , abdul khader

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Helpful Answer Re: Earned value in PS

Ammar Zaheer Syed Nov 21, 2011 11:11 AM (in response to Bhadri M)

Bhadri M wrote:

> Can u please let me know what is earned value and how it is calculated. It will be impossible to explain EV on this thread. You can search SAP Help to gain the relevant knowledge and post specific queries here. Try searching this forum as well, as it has been discussed before. Regards, Ammar Edited by: Ammar Zaheer Syed on Nov 21, 2011 3:10 PM o

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Vengaiah Chowdary Pachava Chinna Nov 21, 2011 10:41 AM (in response to Bhadri M)

Hi, We need to configure Progress analysis. To get the Earned Value. Thanking you Vengaiah Chowdary o

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Re: Earned value in PS

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Bhadri M Nov 21, 2011 11:04 AM (in response to Vengaiah Chowdary Pachava Chinna)

Hi All, Thanks for the your valuable replies. I am not from PS module, we need to extract this Earned value against each service entry to BI. Can you please provide the logic to calculate Earned value against each Service Entry. Regards, Bhadri M. 

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Vengaiah Chowdary Pachava Chinna Nov 21, 2011 8:49 PM (in response to Bhadri M)

Hi, We understand your issue. But you need two things to know. 1) you got to know what Earned Value. 2) How do we calculate that in sap. It is not possible to explain in here. Thanking you Vengaiah Chowdary 

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abdul khader Nov 22, 2011 9:13 AM (in response to Bhadri M)

Bhadri M wrote:

> I am not from PS module, we need to extract this Earned value against each service entry to BI. > > Can you please provide the logic to calculate Earned value against each Service Entry. > Please read SAP Help first from the below path.. SAP Help Portal >>> Logistics >>>> Project System >>>> Project Progress To meet your above requirements you can use t he measurement method cost basis. 

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Bhadri M Nov 28, 2011 7:13 AM (in response to abdul khader)

Hi All, Thanks for your inputs. I got some info about EV. Please clarify few doubts. 1. Suppose for a project the EV is run on 5th of every month. Project:1 EV Run date:EV Value 05/04: 100 05/05: 200 05/06: 300 Is there any table which stores these EV Values along with the EV run date. 2. Is there any possibility whether the EV run date and billing due date will be on the same date ? Thanks in advance. Regards, Bhadri M. 

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Vengaiah Chowdary Pachava Chinna Nov 28, 2011 7:33 AM (in response to Bhadri M)

Hi, Try milestones. Thanking you Vengaiah Chowdary 

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Bhadri M Nov 28, 2011 8:51 AM (in response to Vengaiah Chowdary Pachava Chinna)

Hi Vengaiah, Thanks for your reply. Actually it is my doubt that EV run data and billing due date will be on the same day or they will be done as and when required. And also please provide the table name to see EV run date and EV. Regards, Bhadri M. 

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abdul khader Nov 28, 2011 10:10 AM (in response to Bhadri M)

Bhadri M wrote:

> Is there any table which stores these EV Values along with the EV run date. > > 2. Is there any possibility whether the EV run date and bill ing due date will be on the same date ? >. 1. Please check Table RPSCO - Value type P1 and Value Type P2 2. Plan Back ground Job for EV analysis based on the billing due date from the milestone. But if you are changing the schedule please do not forget to change the background jobs as well. 

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Bhadri M Nov 28, 2011 1:10 PM (in response to abdul khader)

Hi Abdul, Thanks for your inputs. I am not getting the values in this table by EV run date. Is there any other way to see across a project, how many times the EV has run and EV for that date. Ex: Project;EV date;EV 1;05/05/11;100 1;06/05/11;200 1;07/05/11;300 Kindly advice. Regards, Bhadri M. 

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abdul khader Nov 28, 2011 2:11 PM (in response to Bhadri M)

Bhadri M wrote:

> I am not getting the values in this t able by EV run date. > > Is there any other way to see across a project, how many times the EV has run and EV for that date. I do not think history of EV calculation is storing in the system. It will just calculate and update when you run CNE1 / CNE2 Please use Project Version to get historical data. Make a Project versions whenever you run the EV calculation.

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Gokul Pillai Nov 21, 2011 11:06 AM (in response to Bhadri M)

Hi, Please search the forum. There are more than a couple of threads where the relevant configuration for Progress Analysis and h ow the earned values are calculated have been explained in detail. Refer those first and t hen come back with specific queries. Regards, Gokul o

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10 EARNED VALUE ANALYSIS 10.1 General

Successful project control requires more than just an isolated accounting of costs, resources, or schedules. Meaningful conclusions about the progress of a project must compare costs which are in fact comparable. Since deviations between planned and actual costs can have various reasons, the earned-value analysis (EVA) tries to use an appropriate basis for project controlling. The earned-value analysis is an important method for evaluating project progress. For proper measurement, performance, time and costs must be compared simultanously. This is very important, because a simple cost comparison can lead to false decisions. Actual costs might be very low in comparison to those planned. However, this does not necessarily imply good progress of the project as actual performance may be well behind the planned one. Before proceeding to the deviation analysis, some keywords should be explained:    

Actual Percent of Completion (POC) Planned Percent of Completion (POC) Planned Earned Value Actual Earned Value

Actual and planned POC measure projects performance. The assignment of completion values depends on the measurement technique. To calculate the planned earned value, POC is multiplied with planned cost. Actual earned value is calculated by multiplying planned cost with actual POC. The first step when controlling a project is, therefore, to find a measure for progress. The PS module offers the following measurement techniques:[21] 10.1.1 Measurement techniques

Start - finish rule This is generally known as 0/100 or 50/50 Technique. Here, SAP provides the following measurement methods: 

Method 0-100 with an initial Percentage of Completion of 0%

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Method 20-80 with an initial Percentage of Completion of 20%

Method 20-80, for example, assigns a planned completion value of 20% when an activity planned date is reached and assign the remaining 80% at finish date. An actual completion value of 20% is assigned after the activity has started, the 80% are added after finishing the activity.

Milestone technique To use the milestone technique, we have to define milestones to the corresponding activities. In contrast to other project management tools, a milestone is not just an activity with duration 0 but a different object. Milestones can be used for several purposes; we will use them only for EVA. To create a milestone related to an activity, follow the procedure below. First, move to the project planning board and mark the activity for which you want to create a milestone.

Check the box in the usage section to define the milestone as relevant for EVA. Then, we have to define the percentage of completion and the time position related to the activity. Press Enter to insert the Milestone. Create two more milestones.

You see the milestone displayed in green. This information is now used for EVA. Since we defined an offset percentage, the system can calculate a planned date for the milestone to be finished. When this date is reached, the system sets the planned percent of completion (POC) to the value defined with the milestone . Note that this value can differ from the offset percentage. The actual percentage of completion is set to this value, when the milestone is confirmed during realization.

Source: SAP Documentation CD

Estimates

Enter an estimate for the actual percentage of completion in the work breakdown structure or network. In addition, a measurement method for estimates and a maximum percentage of completion can be specified in the Customizing for the Project System. The maximum percentage of completion prevents an overestimate of completion which occurs when tasks are "almost finished ", also called the "90% syndrome". As long as the task has not been completed, that is, no actual finish date has been entered, the system will not allow you to have an actual percentage of completion which is higher than the maximum percentage of completion.

Degree of processing When this measurement technique is used, the the confirmation becomes the percentage of completion.

degree

of

processing

from

Source: SAP Online Documentation IDES Release 4.0B

Time proportionality (level of effort) Assuming linear progress of the percentage of completion of an activity over time the system determines the percentage of completion in proportion to the time required. This kind of measurement technique is useful for activities such as controlling, quality assurance and the like.

Secondary proportionality (apportioned effort) This means that the degree of completion of a WBS element depends on the progress of another WBS element or another activity. Possible applications are the approval of drawings.

10.1.2 Calculation of Earned-Value and Deviation Analysis

When planned and actual POC are available, the calculation of planned and actual earned value is straightforward. To calculate the planned earned value, POC is multiplied with planned costs. Thus, this value represents the planned costs for a status of the project as if it where completed in time. Actual earned value is calculated by multiplying planned costs with actual POC. Thus, this value represents the planned costs which were planned for the status of the project right now. A third figure in this context are actual costs which – of cours- represent actual costs for the project right now. Now, we can go to the analysis of variances.Two possible variances are of special interest: 

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What is the difference between planned project progress and actual project progress: this is captured in terms of money with schedule variance. Schedule variance is defined a the difference between actual earned value and planned earned value. Given the actual progress of the project, how is the project status in terms of costs: this is what usage variance measures. Usage variance is defined as the difference between actual earned value and actual costs, comparing what has been done so far to actual costs.

10.1.3 Aggregation

The analysis described above is usually done on work package level. However, project managers, especially if they are in charge of a many of projects simultanously, are interested in a measure for the progressa of an entire project. To perform this kind of analysis, these figures must be aggregated to the top. Three possible categories for aggregation are possible:   

Planned cost Budget Manually entered weight

Imagine the following simple project consisting of two work packages, 1 and 2. The first one has a percentage of completion of 40%, the second on of 20%. What is the percentage of completion of the whole project?

Certainly, this depends on the aggregation measurement. Look at these figures:

Planned cost Budget Weight

WP 1

WP 2

1.5 mio 1 mio 2

2 mio. 2 mio 1

If planned costs are the aggregation factor, the total percentage of completion is

Budget based aggregation leads to a value of 26,7 % and the manually adjusted weights to 33,3 %. 10.2 Implementation

Starting from editing the project in the structure planning screen, select all activities.

Select the proper measurement techniques according to the case description.

Press Enter and proceed by pressing -> to the next activity.

11 EXECUTION In the execution phase, actual date is entered. During the project, deviations between planned and actual values are bound to arise. Therefore, it is important to enter the new information into the system and use it as the basis for subsequent planning work, value analysis and reports. Actual data can be: Confirmation, documenting the state of network activities  Invoices  Material consumption  11.1 Implementation 11.1.1 Confirming network activities

To confirm the first activity, specification of the cabine, select the corresponding network for our project by match-code search.

Press Enter . Then select the activity you want to confirm.

Click Actual Data.

The specification of the cabine is finished, therefore we check FinalConf. The activity started as planned and was finished in time. 20 working hours werde needen. To enter another confirmation, use the arrow.

The specification of the engine started in due time but ended on 5.3.2000. 30 working hours werde needed. Confirm all activities according to realization data.

11.1.2 Invoices

Incoming invoices are posted in the general ledger. This is done in the Financial Accounting module.

First, we have to enter the date, company code and currency. Then, the debit entry account has to be chosen. To enter a debit entry, we chose 40 and account number 415000 (external procurement cost).

Secondly, we have to enter the amount and a tax code. Invoices can be posted to a cost center, an order, a WBS element or – as in our case – directly to a network. Therefore, we enter a network element according to our project structure. Furthermore, we have to enter the credit account. We intend to pay this invoice via our bank account (131000).

Again, we have to enter the amount.

To avoid making a consistency error, we can simulate the posting.

After pressing the save button, the following message should appear:

11.1.3 Material

Costs from material movement are posted, when the material is taken from stock.

Before the material can be taken, the date for posting and the movement type must be specified. Since we take the material for a network activity, we specify movement type 281 (consumption for network from warehouse). Clearly, also plant and location must be entered.

Now, we can specify the network and the materials and quantities which we want to post to the network elements.

Pressing the save button should be followed by the message:

Proceed with issuing the rest of materials.

12 INFORMATION SYSTEM The Project Information System is useful for monitoring and controlling the project. You can navigate in the System and thereby make use of its integration. You can use standard reports or you can create your own reports with the Report Writer. Here, we will make use of standard reports only . Standard reports offer different degrees of detail, summarizes, and views of current data, version data, and archive data for:      

Costs/revenues Budget Payments Dates/structures Resources Earned value

From the R/3 main menu you can reach the project information system as follows:

If you want to save time, you can use the transaction code “ PS01“. In the following, we will have a look – as an example - at cost reports and earned value analysis.

12.1 Implementation

12.1.1 Cost reports

Hierarchical cost report

There are two categories. Hierarchical means that the report follows the project structure. By cost elements means that the report is structured according to cost categories.

Select ,e.g., Plan/actual/variance to compare planned to actual costs.

Select our project and trigger report generation by pressing the button below the Enter button. Thus, when getting the report, expand the structure..

Drilling down Select a value of which you want to know how it has been calculated.

Press F5 to trigger the drill-down function.

Select Period/year

If you want, you can drill down further. Exit the report by pressing the exit button and close the branch hierarchical reports.

Report by cost elements Select the report by cost elements.

Trigger the report generation by clicking execute. Select our project and execute the report.

12.1.2 Earned-Value Analysis

From the info system main screen (If you are currently not there, you get there with transaction code “PS01”.

Select the project and press the execute button.

Note the method for measuring the performance of the project. Further, thelatest finishing dates can be seen. On an aggregate level, actual performance is above planned one. However, this is not very useful for effective Earned value analyis. We therefore change the view:

Now, we can select the fields in which we are interested in. For proper view, you can adjust the size of the colums.

Lets have a look at the specification WBS-element. We see a planned POC of 64% and an actual POC of 48%. As aggregation is based at planned cost, this is calculated by . Specification has planned cost of 25000. Multiplied by a planned POC of 64%, this results in a planned earned value of 16000. Actual earned value as calculated by 25000 (planned cost) multiplied with an actual POC of 48% is 21000. Thus, this results in a schedule variance of 5000. Look at the activity "Specification of the mechanical parts. Actual earned value is 5000. Comparing the actual earned value to actual costs yields a usage variance of 5000.

Periodic Evaluation Change to a periodical view

and display the result graphically after choosing the appropriate fields.

Exporting Data The SAP system has an interface to export data. SAP R/3 provides a possibility to exchange data with other Software tools e.g. Microsoft Project. It can be useful for you to export data from the Project System to PC programs for project management, especially if you want to decentralize how you present, process and specify your data. Microsoft Project and Microsort Excel are easy to handle and used for many small projects. Thus, for providing aggregate figures to the management it is important to load the information into the system.

Select the appropriate option

When you click Enter, Excel ist startend, and the report is being displayed

Inicio 13 LITERATURE  

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AFOS (Hrsg.) SAP Arbeit, Management. Braunschweig/Wiesbaden 1996 BAMBERG/COENENBERG.:Betriebswirtschaftliche Entscheidungslehre. 6.Auflage, München 1974 BLACKSTONE, John.: Capacity Management, Cincinnatti, Ohio, 1989

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BLOHM, Hans u.a.: Produktionswirtschaft, Berlin 1987 CHASE R./AQUILANO N./JACOBS R.: Production and Operations Management: Manufacturing and Services, Eight Edition DILWORTH James.: Operations Management, Design, Planning, and Control for Manufacturing and Services, New York 1976 DRÄGER, Erich.: Projectmanagement mit SAP R/3 HIGGINS, James.: The Management Challange, New York 1991 HILLIER F./LIEBERMANN G.: Introduction to Operations Research, Sixth Edition, Singapore 1995 LAUX, Helmut.: Entscheidungstheorie II, Erweiterung und Vertiefung. Berlin/Heidelberg/New York 1982 LAUX, Helmut.: Entscheidungstheorie, Grundlagen. Berlin/Heidelberg/New York 1982 PETERS T./WATERMAN R.: In search of excellence, New York 1982 SAP AG. R/3 System Project System - Functions in Detail PS, InformationFolder SCHIERENBECK, Henner.: Einführung in die Allgemeine Betriebswirtschaftslehre. 14. Auflage, München/Wien 1999 SEICHT, Gerhard.: Moderne Kosten- und Leistungsartenrechnung. 9. Auflage, Wien 1997 WÖHE, Günter.: Einführung in die Allgemeine Betriebswirtschaftslehre. 19. Auflage, München 1996 ZÄPFELT, Günther.: Grundzüge des Produktions und Logistikmanagement SAP Online Documentation IDES Release 4.0B SAP Online Help

AFOS (Hrsg.) SAP Arbeit, Management. Braunschweig/Wiesbaden 1996 p.59 Computerwelt No. 13 of 13. 3. 1998, p. 20 [3] AFOS (Hrsg.) SAP Arbeit, Management. Braunschweig/Wiesbaden 1996 p. 59 [4] Chase R./Aquilano N./Jacobs R. Production and Operations Management: Manufacturing and Services, p.48 [5] Chase R./Aquilano N./Jacobs R. Production and Operations Management: Manufacturing and Services, p.48 [6] Chase R./Aquilano N./Jacobs R. Production and Operations Management: Manufacturing and Services p. 69 [7] SAP Online Documentation IDES Release 4.0B [8] Higgins, James: The Management Challenge p.232 [9] Heinrich, Lutz: Systemplanung p.206 [10] Schierenbeck, Henner. Einführung in die Allgemeine Betriebswirtschaftslehre, p.165 [11] Schierenbeck, Henner. Einführung in die Allgemeine Betriebswirtschaftslehre, p. 159ff [12] Laux, Helmut. Entscheidungstheorie, Grundlagen p..273 [13] Chase R./Aquilano N./Jacobs R. Production and Operations Management: Manufacturing and Services p.55ff [14] Hillier F./Liebermann G. Introduction to Operations Research, Sixth Edition p.389ff [15] Higgins, James: The Management Challenge p.234 [2]

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