Settling a Project

Objective

After completing this lesson, you will be able to settle projects

Settlement Rules

The trade fair was a great success for the company! Now that you have gathered every relevant posting and cost on your project, you want to go over the steps to credit the project to the cost center of the Sales Department. You want to understand the best way to analyze the transferred data after the settlement.

In general, the costs that were debited to cost centers or overhead projects in overhead cost controlling are to be transferred to account assignment objects in cost object controlling or margin analysis at the latest during period-end closing. Therefore, actual costs are collected on projects only temporarily, at most until they are completed.

The method for crediting an overhead project completely is settlement. A credit by activity allocation or universal allocation is not possible because, in these methods, an overhead project cannot be selected as the sender. The projects are then settled to one or more receivers as part of period-end processing to transfer their costs to those receivers.

Settlement Rule

The settlement rule is defined in the project master data, using for example the Project Control – Enterprise Projects app.

To be able to settle the project, a settlement rule needs to be defined for the sender. This settlement rule determines where and how the costs are to be settled.

This graphic gives an example of the settlement of costs from a project to a cost center.

When analyzing a settlement rule, you can focus on:

The receivers to which the costs are settled (project/WBS element, cost center, G/L account …).
The percentage specified for the distribution to each receiver. From complex distributions to complete settlement on a single object.
The settlement type to identify exactly which amounts are to be settled.
The periodic and full settlement for which settlement is to be run.

Note

Settlement type Periodic Settlement settles only the costs for the period you specify. Settlement type Full Settlement settles all costs on a sender object that have been incurred until the point of time you want to settle your project.

Settlement Run

You can use the Run Settlement-Actual app to:

Run the settlement of a single project, a WBS element (with or without hierarchy)
Perform a test run without affecting actual data
Perform an update run affecting actual data
Run settlement in parallel ledgers, if needed

Note

You can only run settlements per ledger.

The figure shows the data set development when the settlement of a project is executed.

As a first step, during the month, a marketing expense on a primary G/L account was posted to the project through a G/L posting. However, there hasn't been any posting to the receiver yet. Then, as a second step, at closing, a settlement is run for the project for the current period, transferring 100% of the costs to the receiver.

As a consequence a new line item is generated to credit the project for the same amount and using the same account. You can check that the project has a zero balance. As a counterpart, the receiver object, defined in the settlement rule, is debited for the same amount of 200 euros using the original account.

There is no impact at the company level. It is just a reassignment for analytical purposes.

The Display Settlement Documents app can be used to track the different settlement runs for a specific project. This app allows you to display documents containing transaction details that were created during the settlement and reversal process for a WBS element

Once the project is finished and completely settled, to be sure that no other cost will be posted on it, its status should be set to Complete.

Settle a Project

Close a Project

Summary

Settle projects to allocate costs to receivers.
Define settlement rule in project master data.
Settlement type determines amounts to be settled.
Use Run Settlement-Actual app for settlement runs.
Analyze transferred data after settlement using reports.

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