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Earned Value Methods 4.6

SAP Earned Value Methods 4.6

SAP measures earned value from the financial perspective measuring progress using
planned costs as its basis. SAP has seven general methods for measuring earned
value, any of which can be applied to either a WBS element or Network Activity.
This job aid describes the seven available methods and how to apply them to either the
WBS element or Network Activity.
Other related job aids - This job aid is used in conjunction with the following job aids.

Maintain Work Breakdown Structure

Maintain Networks
Maintain Standard Milestones
Maintain Confirmations
Change Control

This job aid is organized under a number of Sections and two Appendices:
1.
2.
3.
4.
5.
6.
A.
B.

SAP Earned Value Concepts

SAP Earned Value Methods
Updating WBS and Network Earned Value
Use of Milestones
Earned Value and Change Control
Earned Value Reporting
Earned Value Configuration
Quantity Based Earned Value

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1 - SAP Earned Value Terminology

The SAP basis for reporting earned value, or progress, is the objects cost plan. While the
intent is the same as the E&C Industry, the E&C Industry has traditionally used

Earned Value Analysis

$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000

Plan EV (bcws)
Actual EV (bcwp)

$1,000
$0

Plan EV (bcws)
Actual EV (bcwp)
Actual Costs (acwp)
Sched. Index (bcwp/bcws)
Cost Index (bcwp/acwp)
Sched. Variance (bcwp-bcws)
Cost Variance (bcwp-acwp)

Per 01
$1,000
$1,500
$1,000
1.50
1.50
500
500

Per 02
$3,000
$3,500
$3,300
1.17
1.06
500
200

Per 03
$6,000
$6,800
$6,500
1.13
1.05
800
300

Per 04
$8,000

Per 06

Per 05

Per 04

Per 03

Per 02

Per 01

Actual Costs (acwp)

Per 05
$9,500

Per 06
$10,000

(physical) quantities as the basis for measuring earned value or progress. SAP uses the
following concepts, all of which are based on project costs.

BCWS Budget Cost Work Scheduled: Plan Version 0 Cost Plan through time
measured as Planned Percent of Completion (POC).

BCWP Budgeted Cost Work Performed: Earned value measured against Plan 0
Cost Plan as Actual Percent of Completion (POC).

ACWP Actual Cost Work Performed: Actual Costs expended to accomplish BCWP.

EAC Estimate at Completion: Plan Version 0 Total Cost Plan.

Progress (or Schedule Index) equals BCWP/EAC

Performance (or Cost Index) equals ACWP/BCWP (NOTE: This differs from
Productivity, which is quantity based).

Schedule Variance (SV) equals BCWP - BCWS

Cost Variance (CV) equals BCWP ACWP

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2 - SAPs Seven Methods to Measure Percentage of Completion

1. Start-finish Rule: A pre-defined percentage is assigned to the WBS Element,
Network Activity or Activity element upon start and upon completion. Currently
three options are defined: 0-100 (0% upon start, 100% upon finish), 50-50 (50% upon
start, remaining 50% upon finish) and 20-80 (20% upon start, remaining 80% upon
finish). Additional options can be defined if needed. The initial confirmation triggers
the Start percentage and the final confirmation, the final percentage.
2. Milestone Technique: Milestones are defined for Network Activities and/or WBS
Elements. For each Milestone you enter a % complete and a "Fixed Date" on which
the Milestone should be reached. When the Milestone is actually achieved, you enter
the Actual Date. The entry of an Actual Date triggers the pre-defined % complete as
the actual % complete.
3. Degree of Processing: The % complete is as reported through the Confirmations
procedure. You manually enter the % complete to the Network Activity detailed
information. See the related procedure Maintain Confirmations.
4. Estimates: An estimate is entered for the planned % complete by period and year for
all Network Activities and/or WBS Elements selected for this method. Each period,
you enter the actual % complete for the corresponding Network Activities and/or
WBS Elements.
5. Time Proportionality (level of effort): The % complete is calculated based on the
percent elapsed time proportional to the duration of the Network Activity and/or WBS
Element. For WBS Elements, you enter a Basic Start Date and a Basic Finish to set
up planned % complete through time. For Networks, the % complete is calculated
from the scheduled Activity durations.
6. Secondary Proportionality: The % completes for a WBS element or Activity is
copied from another WBS element or Activity. This method is used where a WBS
element or Activity is dependent upon the progress of another.
7. Quantity based: SAP has a quantity based earned value method that allows you to
define planned quantities and track against installed quantities. This method is quite
static and is not recommended. It is discussed in Appendix B.
The progress methods other than Milestones are fairly straight forward and wont be
elaborated in this writing. However, milestones are more complex and are discussed at
length in section 4, Milestones.
Planned vs. Actual (Earned) Percentage of Completion (POC) - Earned value analysis
requires you to set up an Earned Value baseline plan (BCWS) in order to measure Actual
or Earned value (BCWP). Remember, Actual Earned Value is not to be confused with
Actual costs (ACWP).
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Not all the above methods are available for all Network Activities and WBS Elements.
The following table shows the methods available and the qualifications that apply:
Methods and Qualifications
Method:
Start-Finish
Milestone
Degree of Processing (Work)
Estimate
Time Proportionality
Secondary Proportionality

Plan % complete
Actual % complete (BCWP)
(BCWS)
Network
WBS
Network
WBS
x
1
2
4
x
x
x
x
x
x
5
x
5
x
1
3
4
x
x
x
x

x - No restrictions
Blank = Not available
1 - Requires Basic Dates entered for WBS elements.
2 - In the confirmation process, the "finish % complete" is applied when
the activity status is set to "final confirmation". See the related procedure
Maintain Confirmations.
3 - Calculates % complete based upon actual start date entered at first
confirmation, and planned end date. See the related procedure Maintain
Confirmations.
4 - WBS Element must be released and have actual dates entered to get
actual % complete. See the related procedure Enter Actual Dates.
5 - You can only enter Estimate % complete (Planned and Actual) for
WBS elements through Structure Planning or the Project Planning Board.
NOTE: See Appendix B for a discussion on Quantity-based Earned value. This method
is not recommended at this time.
The following are the recommended methods for the various objects.
Cost Object
WBS element
Activity / element, internal
Activity / element, external
Activity / element, general cost

Planned % of Completion
(BCWS)

Actual % of Completion
(BCWP)

Estimate
Degree of Processing
0 - 100
Estimate

Estimate
Estimate *
0 - 100
Estimate

* Actual Earned Value is normally tracked by progress item on an external system and
transferred to SAP as an aggregate percent complete for the Activity (Work Package).
NOTE: Milestones can also be used for any of the above Cost Objects.
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3 Earned Value Update

Progress Version - A progress version is required to plan and track earned value and
must be set up in configuration in order to use earned value. A progress version is a
specialized Plan Version used exclusively for Earned Value analysis. You can use more
than one progress version against a project and / or cost object. Multiple progress
versions allow you to report the project from more than one perspective. For example,
you may want to determine Engineering progress, Construction Progress by individual
stem accounts and evaluate the project as a whole. Progress versions would allow you to
do this, if you are willing to set them up.
A Progress Version is required to enter POC methods at the WBS or Network Activity.
You can enter more than one Progress version at the object level, which means that you
could enter the Engineering Project Version
with a particular measurement method and
another for the Project Progress Version with
the same or different measurement method
Networks and WBS elements - Select the Activity and click the Detail button. Use the
Progress tab at the activity level to enter the planned and actual progress. The WBS
element is processed in the same way as the Network activity. Select the WBS element
and click the Detail button. Go to the Progress tab and enter the same way as the
Network above.

Enter the Progress Version. This determines whether or not you can plan and/or
perform actual progress on this item. We will discuss the
set up Project Versions and Measurement Types
immediately following the overall mechanics of entering
the POC.

Enter the Measurement method for planned and actual.

For those POC Methods (plan and / or actual) that require

further definition, such as Estimation or Secondary Proportional, select the record and
click the Estimate or Reference buttons at the bottom of the screen and fill in the
required information.

Note that for Estimation, the period percentages are limited to the duration of the
object.
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Object Weighting. You can weight the objects of the project in relative weighting.
The entire project Weighting should total 100 (percent) or 1000, else you may get
unintended results. To weight the object, whether network or WBS, enter a value in
the field POC weight that represents the objects relative contribution to progress.
NOTE: The Progress Version must be set to Weight active project for this method
to function. See section on Progress Versions, below.

NOTE: Default Method You can set up POC Measurement Method Defaults in
configuration for Networks and WBS elements so that all you need to enter in set up
is the exceptions. See configuration, Appendix A.
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4 - Milestones
The Milestones Method is the most powerful earned value method. You can:
define standard milestones, with an array of attributes,
tie these standard milestones to a milestone group creating a chain
copy and modify standard milestones to an object or
create unique milestones for the particular object
See job aid Maintain Standard Milestones for details on the specific functions of a
milestone.
Maintain Milestones - The process for both WBS elements and Network Activities are
similar. The major difference is that the Networks are scheduled. The network also has
more milestone functionality than the WBS element.
Select a WBS element or Network Activity. Go to menu path WBS element (or Activity)
and select Milestone overview.

Network

WBS
Enter Usage, this is a fixed
category, but can be ignored and
used as a sort by milestone.
Enter description.
You can use The Include Standard Milestone or
Include Standard Milestone Group to copy existing standard milestones and
attributes.
The Grp column allows you to enter an authorization group to restrict update. This
is normally left blank.

For WBS elements,

Enter the fixed Basic (and / or Forecast dates). You can lag the milestone using the
Detail screen. See Details.
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Enter planned Percent of Completion (POC) and PA indicator to indicate that the
milestone is sued for Progress Analysis.
You can double-click on the description, if you want a long text. A long text is
indicated by the LT indicator at the far right.
To view the milestone details, click the Detail Button at the bottom of the
screen. See Details.

For Networks,

Update the Fixed date (and time) or the offset from the start / finish of the activity,
either in absolute time or percentage of duration. The column Fin Offset should be
checked only if the offset is from the finish date. The Lat column, if checked,
indicates that the latest dates should be used.
Check the Fct (function) box to set up milestone functions. Select the
milestone and click the Detail icon at the bottom of the screen. See Details.

For all,

Each milestone carries a system number. You can double-click on the Usage to
create, change or display the detailed attributes of the milestone. For details on these
functions, see job aid Maintain Standard Milestones. Arrow back to return to the
milestone overview.
Update the Actual date when milestone is complete.
Update the other, selected objects by using the navigation buttons.

Details - The milestone details differ from the WBS and the Network. The Network has
many more functions.
WBS

Network

For WBS,

Usage You can extend the usage of the Milestone to trigger a Sales Order billing
date when the milestone is complete. You can also set the Milestone as part of Trend
Analysis, which is not discussed here.
Percent Complete Invoice Plan. You can set a percent complete for an Invoice
Plan.
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Dates you can view or update the Basic, Forecast and Actual completion dates.
You can set the milestone offset from the start / finish dates relative to the WBS
dates.

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For Networks,
The Network Milestone has a number of added functions compared to the WBS element
Milestone. These are organized within the Basic and Functions tabs.

Usage Like the WBS milestone, you can set the usage of the Network milestone
to include Sales Document date and Trend analysis. In addition, there are a Release
Stop indicator and other Functions. A Release Stop Indicator prevents the automatic
release of the Activity based upon the Release up to stop indicator function in the
Functions tab of a predecessor activity. The Function indicator indicates the
functions are activitated within the Function Tab.
Billing Invoice Plan - You can set a proposed percent of (lump sum) Client
billing. This can be over-ridden at the time of the Sales Order Billing Plan.

Functions - The function Indicator

must be checked. The functions can be
grouped into Activity release
strategies, Network (Activity) creation,
Start Workflow.

If you elect not to release

networks manually or
automatically, you can set up
release strategies for the subsequent
Network Activities. The stop Indicator strategy allows you to release up to an activity
that has a Release stop indicator. See Basic Tab.
You can create additional Networks / Activities by using Standard Networks. The
new Networks (or Subnetworks) must be internally assigned numbers.
Start Workflow allows you to craft a process and execute that process when the
milestone is complete.

Each of the functions allows the user to set the conditions when the function will be
executed.

The function can be executed based upon System and / or a user status attained by
the Activity.

The function can be performed more than once or only once depending on how
the Change and Once columns are set.

Activate determines if the function is triggered automatically, manually or a

combination of manual / automatic.
The Parameters button allows the user to set further conditions on the functions
execution, such as the standard network used for creation or the process (task) call for
workflow.
NOTE: Be sure to Schedule the project after you have completed creating or updating
the milestones.
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View Network Milestones - You can view the milestones by going to the Gantt Bar
Chart report. Use menu path Goto > Graphics > Gantt chart. You can also use the
Project Planning Board, CJ2B.

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5 Earned Value and Change Control

If you plan to use Earned Value on a project with the customized E&C Change Control
process, the following procedures should be followed:

Plan version 0 should exclude forecast deviation, that is, deviations that are not
included in approved scope changes. This is necessary because earned value
calculations are based on Plan version 0.
Plan version FB should include all deviations, including those deviations not
approved by the client.
The Forecast work field can be aligned with Plan version FB, thus creating a
secondary version of Work. The forecast Work field can be updated through
manual confirmations, transaction CN25, to include these unapproved deviations
that include Work. See job aid Maintain Confirmations.

CAUTION: If you are using automated confirmations through CATS, when labor is
confirmed SAP automatically assigns an actual start date and an actual finish date to
the network activity. If the activity is not complete, you MUST assign a forecast
finish date to the activity. This will overrule the actual date.
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6 - Earned Value Reporting

Calculating Progress - You must process the Progress
Earned Value calculation before you can report on progress /
earned value. This is done through transaction CNE1.

Enter the object (Project) for which you wish to calculate

progress.
Select With Hierarchy and With Activities.
Enter the Progress Version as the basis.
Enter the through period and fiscal year.
You can run a test run, if desired.
The test run will give you statistics on
the process.
The process will:
a) Calculate both planned and actual
earned value for the period ending
b) Determine the default
measurement techniques where
there are none entered on the
object.

Reporting Earned Value - There are three standard SAP reports that can be executed,
CNE5 and two Cost Hierarchy Reports.
CNE5 generates a Structure Overview report and process
the same as any other Structure Overview report. Be sure
to change the PS Information Profile to SAPPS_EV0001.
Next, Click the Progress version button and
select the Progress version you wish to
report against

NOTE: There are other Profiles that SAP has set up for earned value.
NOTE: You can compare with a Simulation Version by changing the parameters of the
DB Profile to include Versions.
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Report Format for CNE5 follows

the same processing rules as
Structure overview reports. The
progress through date is always
defined as the current period. This
means that you must run the report
before period close. If you run the
report after period close, the period
after progress has been earned; the
summary report will provide zeros.
However, when you click on the
period drill down, the values by
month are displayed.
Go to menu path Execution >
Period breakdown.

Cost Hierarchy Reports - There are two

standard SAP Cost Hierarchy Reports for Earned
Value, S_ALR_87015124 (Hierarchy) and 5125
(Detail).
S_ALR_87015124 (Earned Value Hierarchy
Report) - The selection for the Earned Value
Hierarchy Report is the same as any other Cost
Hierarchy Report.

Enter the Object.

Make sure PS Information Profile is
SAPPS_EV0001.
Enter the Plan Version, Progress Version
and Fiscal Year/Period Ending.

The report processes like any Cost Hierarchy Report and compares Planned (from
Progress Version) with Actuals from the Operational Plan. You can call the EV detail
report from the hierarchy report by selecting a line item, clicking the Call report button
and select the Detail report.

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S_ALR_87015125 (Earned Value Detail Report) - The

selection for the Earned Value Detail Report is the same as any
other Cost Hierarchy Report, including the EV Hierarchy
Report, above.
The EV Detail report breaks down
planning and actuals by Aggregated
and non-Aggregated elements. Note
the drill down dimension Progress
Version. Also note that there is a new
value category called Progress Cost
Element (Business Transaction
PEV1).
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Appendix A Progress Version Configuration

Maintain Progress Versions Progress versions are maintained in Configuration under
the Progress node.
Define the Progress Version and set to
Plan. Scroll to the right and select
Progress analysis for the Exclusive
use.

Next, select the Progress version and select the different

Settings that define the detail settings for the Progress
Version.
Earned Value Basis and Version. Normally, this should
be Cost Plan and 0 respectively. However, you can
select Budget Values (overall or annual) for Capital
Projects. Plan version can be other than 0, but can not be
a simulation version.
Percent Completion Basis is normally set as the cost plan for
the project, but can other bases listed to the right.
Reference defines what the bases, Plan and/or Forecast, for
which the Progress version will be used. This affects the use for the Plan version.

Maintain Measurement Methods You maintain measurement

Methods in configuration. You can add to the SAP Standard
Methods.
Enter a new Method Number, in this case M000000001 (10 90
rule) along with the short and long texts, measurement technique, POC at
completion (max) and the starting POC.
NOTE: Each Measurement technique has different parameters related to it.
Setting Up EV Cost element - It is necessary to create an Earned
Value Cost element (Cost element Category 61, Earned Value) and
tie it to a Value Category. You need to set up one for labor and if you
are earning progress against material, subcontracts, etc; you need to
create one for each additional value category. This is done in
configuration, once the Cost elements are set up in master data.
Aggregated/non-Aggregated Measurements - You can determine
if you wish to aggregate a POC measurement or not. If you take
progress out of sequence, the Aggregated method takes the total
value up to the point of progress; non-Aggregated takes only the
percent attributable to the step only. This is determined in
configuration.
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Measurement Statistical Key Figures (SKF) - You must first set up the measures by
creating Statistical Key Figures within PS Progress Analysis node. In this case, SKF
has been set to 10, 20 and 30 for PS non-aggregated POC, PS aggregated POC and PS
results analysis POC.

Setting Default Measurement Methods - You can set default

Measurement Methods for WBS elements and Activities. This
helps setting up project progress measurements, since you
need only set up those objects that vary from the default.
You set up defaults values by Progress Version in
configuration. You need to set up the default for WBS elements and networks for both
planned and actual. Assign a Measurement Method to each of these four parameters.
NOTE: In setting defaults, other that the start-finish and quantity based methods, you
still would have to define POC for estimation method and the reference object for
secondary proportional method.
Setting Default Measurement Methods for Orders - You can further
break down default measurement methods to the specific Order
(Network) Type. The process is the same, but in a different
configuration table. Enter the progress version, the Order type, whether
it affects the Plan or Actual bases and the measurement method.
NOTE: You could develop the Network Types to match the desired default Progress
Version and Measurement Method.

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Appendix B Quantity Based Progress Measurement

Quantity Based Measurement - There are a number of steps in setting up quantity based
measurement. Statistical Key Figures are used as the basis.
Create Statistical Key - The first step is to set up a
statistical key figure(s) to use for quantity based
measurement. You need one for each unit of measure,
for example lineal feet, cubic yards, square feet, etc. Use
transaction KK01 to create a statistical key figure.
KK02 / KK03 are to change/display an existing statistical key
figure.
Enter the Statistical key you wish to create, change or view. Enter a description, the Unit
of measure and click the total values, since the totals per object will be variable.
Statistical Key Figure Group - You can create
Statistical Key Figure Groups to help in
displaying and using statistical key figures for
progress measurement. This is done in
configuration under Progress Analysis/Statistical
Key Figures. You can also create a Statistical
Key Figure Group Hierarchy, if desired.

Enter a Statistical Key Figure Group or define one.

Add other Statistical Key Figure Groups to create a hierarchy.
Add Statistical Key Figures to the appropriate groups.

Assign Statistical Key Figure to Value Category - You

must tie the Statistical Key Figure to a Value Category in
order to properly report the Earned Value for quantity-based
progress. This is done within the PS Configuration node
Progress Analysis/Statistical Key Figure.

Enter the Value Category and sequence number if entering more than one Statistical
Key Figure that is out of a range.
Enter the Statistical Key Figure (or range, if appropriate).

Schedule Quantities - The next step is to schedule the key

quantities by the defined objects, either Networks or WBS
elements. Transaction CJK2 is for Networks and CJS2 is for WBS
elements. CJK3/CJS3 are for display.
Enter the Planning Profile ZSAP102 to display the correct entry
layout. NOTE: Use User master record button to save as default.
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Enter the period range and fiscal year.

Enter the Network.
Enter Activity or Work element item (WEI) in From Business Transaction. The
process will determine if it is an Activity or a WEI.
Enter the Statistical Key Figure.
Enter Free form.
Click the Period overview button to enter
quantities.
Enter the planned quantities per period.
NOTE: You can use the summary overview, if the
quantities are distributed evenly through the duration.
This, however, is not likely.

The WBS element screen is the same layout. The only difference is that the range is by
WBS elements and not networks.
Measuring Actual Quantities - Once the project is set up,
you can begin to take progress based on quantities.
Transaction KB31N creates the progress entry; KB34N
cancel the entry. KB33 displays the progress document.

Enter the Document and Posting Date with the version to

post (usually 0).
Select Screen variant WBS element/Network and List entry to enter more than one
receiving object.
Enter the Network/Activity (or WEI) and quantity earned / installed. The process will
no where to post the earned value. NOTE: Sub-activities are always posted to the
Activity.
Save and record the document number created. You will need this if you want to
cancel the entry, though you can search for the document.

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