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 Project Internal

Order Order

01 Revenue-Based Method with Profit Realization Yes Yes Yes

02 Revenue-Based Method Without Profit Realization if Actual Yes Yes Yes

Revenue < Planned Costs

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 No Yes No

Determination

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

09 Completed Contract Method Yes Yes Yes

10 Inventory Determination, Without Planned Costs, Without Yes Yes Yes

Milestone Billing

11 Inventory Determination, Without Planned Costs, with Yes Yes Yes

Milestone Billing

12 Inventory Determination, Reserves for Follow-Up Costs, Yes Yes Yes

Without Milestone Billing

13 Inventory Determination "WIP at Actual Costs" for Objects No Yes Yes

Not Carrying Revenue

14 Derive Cost of Sales from Resource-Related Billing of Yes Yes Yes

Dynamic Items

15 Derive Revenue from Resource-Related Billing and Yes Yes Yes

Simulation of Dynamic Items

*If you use the Quantity-Based Method, you should change the setting of the Base 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 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
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, Snowy
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9 posts • Page 1 of 1

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 works 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

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by charan1 » Thu Aug 23, 2007 1:35 pm

I am trying to understand your problem.

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

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Joined: Wed May 23, 2007 2:57 am

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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% REV 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

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Joined: Wed Aug 22, 2007 3:11 pm

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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

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by sap_in_dallas » Thu Aug 23, 2007 5:14 pm

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

Posts: 14

Joined: Wed Aug 22, 2007 3:11 pm

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by sap_in_dallas » Thu Aug 23, 2007 5:47 pm

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 revenue 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 of 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

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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 look.

1. Define Line IDs

2.Choose New Entries and enter the following 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 above. I thought you might like to have a second look at your RA config .

Regards,

Manohar
 charan1

Posts: 85

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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

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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

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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.

 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:

 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.

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

 POC = R(a) / R(p)

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

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

 POC = C(a) / C(p)

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

The following formula always applies:

 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.

 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.

 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.

 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 revenues, which reduce the room costs to be assessed. Cash discount amounts and exchange rate amounts are also cost-
reducing 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-to-
order-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 so 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 change 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 the 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 WBS element is debited statistically. This statistical
debiting is checked by the system using the budget during 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 current 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 Materials Management (MM).
 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.
 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 positive 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 Cost center with credit entry
Costs 10,000 Costs 10,000
Revenues -5,000 Credit memo -5,000
Cost effective 10,000 Cost effective 5,000

 12: Sales deduction

 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.
 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.
 31: Order/project results analysis
This cost element category is used to save the order/project results analysis data on the relevant
order/project.
 41: Overhead rates
This cost element category is used to further allocate overhead costs using overhead rates from
cost centers to orders.
 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

inShare

Earned value in PS
 This question is Assumed Answered.

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 AnswerRe: 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

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 Helpful AnswerRe: Earned value in PS

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
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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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 Helpful AnswerRe: Earned value in PS

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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 Helpful AnswerRe: Earned value in PS

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 the measurement method cost basis.
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 Re: Earned value in PS
 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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 Re: Earned value in PS

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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 Re: Earned value in PS

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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 Helpful AnswerRe: Earned value in PS
 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 billing 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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 Re: Earned value in PS

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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 Helpful AnswerRe: Earned value in PS

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

Bhadri M wrote:

> 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.

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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 Helpful AnswerRe: Earned value in PS

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 how the earned values are calculated have been
explained in detail.

Refer those first and then come back with specific queries.

Regards,
Gokul
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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%

  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 amaximum 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 degree of processing from
the confirmation becomes the percentage of completion.

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:

 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:
 WP 1 WP 2
Planned cost 1.5 mio 2 mio.
Budget 1 mio 2 mio
Weight 2 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

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13 LITERATURE

 AFOS (Hrsg.) SAP Arbeit, Management. Braunschweig/Wiesbaden 1996

 BAMBERG/COENENBERG.:Betriebswirtschaftliche Entscheidungslehre. 6.Auflage,
München 1974
 BLACKSTONE, John.: Capacity Management, Cincinnatti, Ohio, 1989
 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

[1]
AFOS (Hrsg.) SAP Arbeit, Management. Braunschweig/Wiesbaden 1996 p.59
[2]
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
[16]
Schierenbeck, Henner. Einführung in die Allgemeine Betriebswirtschaftslehre. p. 163
[17]
Dräger, Erich. Projektmanagement mit SAP R/3 p.87 ff.
[18]
Blohm, Produktionswirtschaft p. 286-289
[19]
Zäpfel, Günther: Grundzüge des Produktions und Logistikmanagement
[20]
Blackstone, John, Capacity Management, p. 115-121
[21]
Source: SAP Dokumentation CD
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