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SAP Best Practices for Engineering Construction and Operations V1.

604 (IN)

SAP Best Practices

General Information

SAP Best Practices for Engineering Construction and Operations was developed for small and midsize companies to implement a solution quickly and easily. The focus of this solution is primarily on construction companies that perform a subsantial portion of the project work using their own workforce.

Functionalities
The SAP Best Practices for Engineering Construction and Operations V1.604 (IN) package supports your business in the following areas :
Project

Management and Tools Management

Equipment

Procurement

Accounting
Controlling Analytics

SAP Best Practices for Engineering Construction and Operations V1.604 (IN)Solution Scope
Project Management
Tender Process For Engineering and Construction Project Setup for Engineering and Construction Project Budgeting for Engineering and Construction Project Planning for Engineering and Construction

Accounting
General Ledger Accounts Receivable Accounts Payable

Procurement
RFQs for Project-based Procurement Purchase Orders for Project-based Procurement Consumable Purchasing Procurement Contract

Cash Management
Asset Accounting Period End Closing Financial Accounting

Analytics
Project Reporting for Engineering and Construction SAP ERP Reports for Accounting

Project Forecasting & Earned Value Management


Time Entry for Construction Revenue Recognition for Projects

Cross Functions
Period End Closing Activities Travel Management

Equipment and Tools management


Equipment & Tools Management for Construction

Contract Billing
Contract Billing for Engineering and Construction

Black = Baseline Scenarios Blue = Engineering Construction and Operations

Industry-Specific Scenarios
SAP Best Practices for Engineering Construction and Operations V1.604 (IN)provides the following industry-specific scenarios:

439 Project Setup for Engineering and Construction 440 Project Budgeting for Engineering and Construction 441 Project Planning for Engineering and Construction

442 RFQs for Project-based Procurement


443 Purchase Orders for Project-based Procurement 444 Equipment & Tools Management for Construction 445 Project Forecasting & Earned Value Management

446 Revenue Recognition for Projects


447 Contract Billing for Engineering and Construction 448 Project Reporting for Engineering and Construction 449 Time Entry for Construction 756 Tender Process for Engineering and Construction

439 Project Setup for Engineering and Construction


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 covered


Take

the needs of the client from the quote or awarded contract. Take the original estimate for an assessment on the scope of services. Devise a project framework following a Work Breakdown Structure approach Devise tasks and milestones just enough to represent the relevant project steps

440 Project Budgeting for Engineering and Construction


Purpose and Benefits:
Purpose
The project estimate, 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. Its typical that estimates are performed in a 3rd party solution or spreadsheets. 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 production.

Benefits

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 covered


Create and assign a cost version to be used as the preliminary budget (version E01) Import or re-key an external estimate master data into a project cost version Deploy 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

441 Project Planning for Engineering and Construction


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 covered


Devise

the project schedule Devise the work plan Devise the production plan (construction output) Determine purchase requirements and create the purchase plan Assign costs to the schedule and purchase plans Compare preliminary budget to the new budget, adjust, release the project plan

442 RFQs for Project-based Procurement


Purpose and Benefits:
Purpose :
This scenario describes the typical processes used In the construction 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 RFP process Transparent selection of the right supplier Easy collaboration with suppliers

Key process flows covered


The process starts with the definition of the required materials and subcontracted services for a specific project. The definition of the quotation criteria's and the bidding packages are the next steps, followed by a selection of suppliers for the relevant quotation utilizing price comparison report. The quotation will be compared, after the decision for the relevant suppliers the purchase orders / subcontractor orders are defined. The RFQ process is to a certain extent an optional process: It is also possible to purchase materials & subcontractor services ad hoc by converting a purchase requisition into a PO directly without the RFQ process (example: purchasing of low value materials or equipment)

442 RFQs for Project-based Procurement


Purpose and Benefits:
Purpose
This scenario describes the typical processes used In the construction 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

RFP process Transparent selection of the right supplier Easy collaboration with suppliers

Key process flows covered


The

process starts with the definition of the required materials and subcontracted services for a specific project. The definition of the quotation criteria's and the bidding packages are the next steps, followed by a selection of suppliers for the relevant quotation utilizing price comparison report. The quotation will be compared, after the decision for the relevant suppliers the purchase orders / subcontractor orders are defined. The RFQ process is to a certain extent an optional process: It is also possible to purchase materials & subcontractor services ad hoc by converting a purchase requisition into a PO directly without the RFQ process (example: purchasing of low value materials or equipment)

443 Purchase Orders for Project-based Procurement


Purpose and Benefits:
Purpose
This scenario describes the typical processes used in the construction industry to generate and process purchase orders (POs). These POs are used to procure materials, subcontracted services with retentions and equipments with the aspect of progress tracking.

Benefits

Transparent view of created outstanding orders, commitments and delivery Standardized invoice handling by using retentions Progress tracking option based on POs for equipments

Key process flows covered

Transforming purchase requisitions (PRs) into purchase orders (POs)for materials, subcontracted services and equipments, create POs directly without using master records, define delivery commitments, create goods receipt and service entry. Invoice receiving and handling from suppliers with progress tracking and quality tracking. Handle retentions for the subcontracted services.

444 Equipment and Tools Management


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 equipment Manage the increasing administrative workload Reduce handling and administration cost Introduce most flexible prices and account determination Optimize equipment utilization Improve the visibility of profitability, TCO and return on asset and equipment

Key process flows covered


Timebased

Equipment Process Timebased Equipment Process including 3rd Party Rental Equipment Performance Based Equipment Process Non-Consumable Material Process Consumable Material Process

445 Project Forecasting & Earned Value Management


Purpose
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. 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.

Benefits

Both processes provide project insights which are essential for the management to control the future course of the project.

Key process flows covered


Determine the planned and actual POC, based on defined rules and POCs estimated manually or automatically Determine Earned Value and other KPIs like productivity, cost performance index, and scheduling performance index Project Forecasting

Process prerequisites

Posting of project actual cost and quantities like time Enter Network confirmations

446 Revenue Recognition for Projects


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. 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. It uses percentage of completion based upon planned costs and revenue to calculate the values.

Key process flows covered


Execute

Results Analysis Perform Settlement Project Reporting for revenue posting and related KPIs

Prerequisites
Essential

master and organizational data was created in your ERP system in the implementation phase, such as the data that reflects the organizational structure of your company and master data that suits its operational focus, for example, master data for materials, vendors, and customers. The pre-requisite for executing results analysis is that an appropriate RA key has been assigned to the top level WBS element during the setup of the project.

447 Contract Billing for Engineering and Construction


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
Project

Management Contract Management Milestone Billing according to performance of defined Milestones

Key process flows covered


Lump-Sum

Contract with Milestone Billing Bill of Services Unit Price Contract with Service Entry Sheet Cost Plus and Time and Material Billing (RRB)

448 Project Reporting for Engineering and Construction


Purpose and Benefits:
Purpose
Show basic reports for a project manager / project controller in a construction environment. Custom reports developed using Report Painter tool. Standard delivered project financial reports.

Benefits
View

of cost, revenue, cash flow, earned value, installed quantities, recognized revenue, project forecast, budget as out of the box reporting capabilities

Key process flows covered


Budget (Project Overview) Report Orginal Budget, Changes, Current Budget, Actual Cost, Commitment, Forecast as main KPI Project Progress & Productivity Report PoC, EVA, Budgeted and Installed Quantities, Productivity, Actual Cost as main KPI
Project

449 Time Entry for Construction


Purpose and Benefits:
Purpose Record working hours for employees, installed quantities. Transfer hours and derived cost to project. Assign prevailing wages against employee and the working hours. Maintain employee information as new hires come onboard or employees leave the company. Maintain 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 UI Hours and Quantities can be transferred to the project as base for cost, productivity and progress reporting Key process flows covered
Entry

of Time and Quantities installed for one person Timesheet approval process Time and Material Project - Transfer to Costing Object (Projects, FI/CO) Maintenance of employee mini master records Maintenance of the company organizational structure

756 Tender Process For Engineering and Construction


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 values Copy functionalities e.g. from inquiry to quotation are facilitating compliance with the process rules Document management feasibility study document, drawings are linked to WBS element

Easy cost planning is used to estimate project cost roughly for quotation

Key process flows covered

Creation of inquiry with linkage to project Easy Cost Planning Creation of quotation with reference to the inquiry

Integration to the project system including calculation costing and scheduling functionalities Assignment of technical documents