Cost Planning and Cost Integration

As a project manager, you have defined the structure of the project and have performed scheduling and resource planning. You need a detailed cost planning before you receive approval to perform the project. You want to calculate the costs of product development based on the assigned resources and their required capacity. For this reason, you require the following knowledge:

• An understanding of cost planning with Project Management
• An understanding of costing
• An understanding of how to check cost/revenue rates
• An understanding of how to check cost/revenue rates
• An understanding of plan costs in Project Management

SAP Project Management allows integration of cost planning into Accounting in an SAP S/4HANA or SAP ERP system. This integration takes usually place using multilevel controlling in SAP Project System (PS) to match the project structure. Single-object controlling using internal orders is also possible.

In the first case, all the costs for a project are collected in a Project System project with Work Breakdown Structure (WBS) that matches the structure of the project or the project roles. Using internal orders enables the cost collection to one or several internal orders. However, the internal orders show no detailed structures like WBS elements. The WBS elements and internal orders are used as cost collectors. They provide accounting for actual and planned costs of the project from SAP Project Management.

The automatic operation for generating the cost collector is called transfer. The preceding figure shows the most important methods of integrating accounting with SAP Project Management.

You can manually assign a cost collector. To do this, you must first create a cost collector in SAP ERP. The accounting integration can be started by setting the corresponding system status to transfer or assignment in the project definition.

If you use accounting integration, you can start costing from SAP Project Management directly. You can save the costing in CO or in PS. You can display the cost planning in SAP Project Management.

Costing is based on the required capacity that is planned in SAP Project Management. You can consider the required capacity according to tasks or project roles. You can use manual costing items such as material items to provide details about the costing. If you want to confirm activities using CATS, the actual effort is updated in the cost collector in the SAP system and the tasks or project roles of SAP Project Management.

The preceding video provides you with an overview of the controlling methods in SAP Project Management. The corresponding scenario is determined by assigning one to the project profile.

The preceding graphic shows the maintenance of the cost/revenue rates in the costing view in resource planning. The cost and revenue rates were previously determined in Customizing for SAP Project Management. If the project roles are not yet staffed, the cost and revenue rates of the project roles are used for the costing. If the project role is partially staffed by a resource, the partial cost and revenue rates are used for the costing. You can find information about the costing logic in the SAP Help Portal under Costing Logic.

The preceding graphic shows the result of costing in SAP Project Management. The data is saved in SAP Project Management. However, when the cost collector is generated by a transfer or is account-assigned to a project element or project role manually, the costing data is saved in the SAP accounting system. In this case, the system displays a Calculate button that you can choose to calculate the cost collector using Easy Cost Planning (ECP). ECP is a planning method in the SAP system that also works without SAP Project Management. However, it is the preferred method for Project Management to be able to calculate the costs from the work in the project.

The term 'transfer' refers to the automatic creation of a cost collector. The cost collector may be a project with Work Breakdown Structure (WBS) elements or a single CO order. An alternative to the automatic creation of a cost collector is to use an already existing created cost collector before and assign it to the project for calculation. The transfer of a project with WBS is described here (multilevel controlling). However, this information also applies for single-level controlling.

The time of the transfer and the type of the generated cost collector depend on the project type. During the first transfer, the SAP system generates an internal order or WBS elements. The following figure shows the detail data of an automatically generated internal order as it is displayed in SAP Project Management.

The preceding figure shows the project ID, which is determined depending on the system settings in SAP S/4HANA CO (Controlling). The project and the WBS are created with reference to organizational units in Controlling, such as controlling area, company code and business area. This data is required to create the project structure.

Data is determined based on the project type and optionally using the Organizational Unit Responsible field in the project definition of the SAP Project Management project. If it is not possible to determine the data, the organizational assignment from the standard project profile CPROJECTS in the system. Data displayed in the figure is read directly from the assigned S/4HANA system which can be (but need be) the same S/4HANA system with SAP PPM.

During the transfer, the following characteristics of the project definition are transferred from Project Management to Project System (PS):

• Project number
• Description in original language
• Responsible organization
• Priority
• Project type
• Project reason
• Grouping
• Search field
• Template number
• Sold-to-party
• System status

Occasionally, there can be errors when you transfer projects to the controlling system. These errors are documented in messages that you can analyze using the controlling cockpit. You can access the controlling cockpit in Project Management from the Accounting tab page. You can also use the transaction COCPCPR to call it in the SAP system.

The preceding figure shows a project with WBS in the SAP system that was automatically generated during transfer from SAP Project Management. If you change the corresponding data in SAP Project Management, the project and WBS are also changed during the next transfer. If the organizational assignment of the project definition is changed in SAP Project Management, the master data of the project and the WBS is also adjusted during the next transfer.

There are several scenarios for performing multilevel controlling with WBS elements. The scenario depends on the project type of your project.

Multilevel controlling is based on either one of the following scenarios:

• Structure element and manual account assignment
• Structure element and automatic creation and assignment during transfer
• Project role and manual account assignment
• Project role and automatic assignment during transfer

When performing multilevel controlling using a transfer, a project is created in PS depending on the status of the project in SAP Project Management. The number of the project in PS is based on the number of projects in SAP Project Management.

The preceding graphic shows the account assignment between the structure elements in SAP Project Management and the WBS elements in PS. SAP Project Management only transfers WBS elements up to the third level. WBS elements in PS do not display the time frame and sequence of the tasks of SAP Project Management.

WBS elements that are created automatically during the transfer receive the status Master data locked (MDLK). This ensures that no inconsistencies arise between the project in SAP Project Management and the project in PS.

Besides the automatic generation of an individual project for each project definition based on the hierarchy of phases and tasks, there are additional scenarios for accounting integration with projects. Costs can also be displayed according to the project roles. In both cases, the account assignment can also be performed manually. Alternatively, one single or several internal orders can be used for the account assignment.

An alternative to the scenario with automatic transfer is the manual assignment of an SAP Project Management project to an existing PS project. In this case, you choose a project definition in PS and manually perform the account assignment to WBS elements. The account assignment can be to any WBS element. Therefore, the hierarchy of the SAP Project Management project may be different from the PS project hierarchy.

You can also switch from automatic assignment to manual assignment. However, in that case the PS project WBS is no longer updated automatically. Also, it is not possible to switch back from manual assignment to automatic assignment.

Cost planning in Project Management is either based on tasks or role demand.

To calculate the planned costs, cost rates are multiplied by the planned work of the individual tasks or the demand of roles. The rates are defined in Customizing for Project Management, depending on organizational units and validity periods.

Planning of further costs, such as the consumption of material, is not possible in Project Management without linking to one or more Controlling objects in an assigned FI/CO system. You cannot post actual costs or perform period-end closing activities in objects directly in Project Management. You can only do this in linked Controlling objects in an FI/CO system. The cost integration of Project Management supports various scenarios for linking Project Management projects with controlling objects in FI/CO systems.

The preceding figure displays the various scenarios. During the cost integration of Project Management, either the demand or staffing of roles, or the work for tasks is transferred to Controlling objects of an FI/CO system. During the transfer, cost elements, activity types, and cost center information are added to the data. The transfer generates costing items for internal activities in the Controlling objects in an Easy Cost Planning (ECP) costing. In a FI/CO system, you can add costing items for material, external procurements, and services or additional variable items to the ECP costing. Overhead rates can be automatically determined in ECP based on the planned costs. During the realization phase, the Controlling objects in the FI/CO system are also used to post commitments and actual costs or manage budgets. Internal orders or work breakdown structure elements (WBS elements) can be used as controlling objects in the FI/CO system.

The use of WBS elements has a particular advantage: you can use multilevel controlling functions, such as the multilevel assignment of budgets or aggregated evaluation of costs in your project management.

After linking one or more controlling objects with a Project Management project, you can display various controlling object data directly in the Project Management project. If required, you can navigate directly from Project Management to the processing of controlling objects in the FI/CO system to manually add costing items to the ECP costing. In addition, you can call detailed reports for the controlling objects.

You must make specific settings in Customizing to enable Accounting Integration in SAP Project Management. You must carry out the following Customizing steps:

1. Activate integration: Define if the accounting integration is active and when the integration occurs, for example, when there is a status change in the project definition.

2. Define object links for accounting integration: Define the object link that is used for accounting integration. In the standard system, tow entries are already defined — one for internal orders and one for WBS elements. In the object link, you also have to define the shown fields from the cost collector, the RFC connection and logical system used, and the services available through SAP WebGUI.

3. Make General Settings: Determine the look of the overview screen per project type in the accounting section of SAP Project Management. The object type is relevant for the link.

4. Define Cost and Revenue Rates: Define the cost and revenue rates of the tasks and the project roles for SAP Project Management.

5. Replicate Cost and Revenue rates: The cost and revenue rates are replicated to a connected S/4HANA Controlling system for cost calculation, where the internal orders or WBS elements are created.

6. Replicate accounting-relevant characteristics: The project types and project reasons are replicated to the SAP S/4HANA Controlling system.

7. Make settings in S/4HANA system: Make accounting-relevant settings in SAP S/4HANA of the internal orders and WBS elements. For example, you can assign cost and revenue rates to cost elements, activity types, and revenue elements in SAP S/4HANA. You specify the controlling methods that you want to use for accounting integration.

   For theInternal Order (Project Definition, Automatic) scenario, the order type CPR1 is delivered in the standard system with the sample order $CPR1 in SAP Controlling (CO). For the Multilevel Controlling (Structure Element, Automatic) and Multilevel Controlling (Project Role, Automatic) scenarios, you require the project profile CPR0001. This profile is not contained in the standard system; you must create it. If the configuration options using the profile described are insufficient, there are various Business Add-Ins (BAdIs) that you can use to control the system behavior during the transfer.

   The BAdIs that you can use to influence system behavior during the transfer are as follows:

   • Additional attributes for replication using single-object controlling

     You can transfer additional characteristics to the accounting interface. You can update these characteristics in accounting in the controlling object or in the settlement rule. You can also use this method to change standard characteristics.

   • Change costing data for single-object controlling

     You can manually change the costs and revenues on which costing is based. In addition, you can divide or group together the costing rows.

   • Enhancement for manual multilevel controlling

     You can specify default values for assigning WBS elements to SAP Project Management project elements. This action saves the project manager or the controller from performing a lengthy manual assignment. You can find further information in the Configuration Guide for Project Management. You can download the configuration guide from the SAP Help Portal.