Your company has received the turbine project. As the project owner, you need to estimate the revenue for each period of each fiscal year of project execution.
You must flag WBS elements for which you want to plan revenue as billing elements.
Performing Revenue Planning
Objective
After completing this lesson, you will be able to perform revenue planning
Business Example
Overview of Revenue Planning
You can plan revenues in projects using the following methods:
Manual planning in billing elements: You can follow the same procedure as in hierarchical cost planning or enter it by revenue element.
Sales orders (all SD documents assigned): Sales order items are assigned to WBS elements. You can specify in Customizing a combination of sales document category (quotation, order, and so on), sales document type, controlling area, and system status. You can also specify if the billing data (for example, in a billing plan) from a sales order needs to update the revenue plan for an assigned WBS element. The dates and planned revenues originate either from the billing plan for sales order items or, if there is no billing plan, from the net value and apportionment data for the item. The revenue element originates from G/L account determination in SD.
Billing plan in project billing elements: You can define the revenue in Customizing.
Sales Order Account Assignment
For a sales order item to be recognized for either planned or actual revenue, you must assign the item to a WBS element. You must select the operative indicator "billing element" for the WBS element before you can assign a sales item to the WBS.
For example, company 1010 is selling a forklift to an external customer. They will bill the customer using a billing plan based on progress (milestone billing). However, to complete the project, company 1010 needs to contract the engineering design services of company 1710. Company 1710 bills company 1010 for the resources they use (in this case, labor) plus a surcharge (time and materials billing or resource-related billing). In this manner, company code 1710 receives revenue credit for the portion of the project that they are supporting, and company 1010 receives revenue credit for the turbine system they are selling.
In the forklift project, two companies are responsible for executing the project: Company 1010 (DE) and Company 1710 (US). Company 1010 is responsible for selling the turbine to the external customer. The customer is billed using a milestone billing plan. In support of this project, Company 1710 supplies Company 1010 with engineering services. Engineering services are identified for WBS F-1200##.1.2.
Company 1710 creates a sales order for Company 1010 and assigns the document item to billing element F-12##.1.2.
Company 1710 bills its services to Company 1010 on a resource-related basis. A billing request is created in the system through resource-related billing. This request results in revenues for Company 1710.
You must assign sales document items to the project. You can use these items to plan and post actual revenues to the project using milestone billing. Flag the assigned WBS elements as billing elements.
The system only updates planned revenues from quotations and sales orders for the project if there is no billing plan for the WBS element. If you maintain a billing plan for the WBS element, the system updates only the detailed values from the billing plan to the project. Values already recorded from the SD document are deleted (this is a change from earlier releases, where values from the SD document and the billing plan were added).
Manual Revenue Planning
You can use manual revenue planning during preliminary planning, but you must maintain it manually and change the periods and years if the project is delayed or accelerated. This planning is version-specific, so you can use an alternate version (other than 000) if you want to maintain these values for comparative analysis.
Revenue planning estimates the revenues to be received as a project is executed.
Manual Revenue Planning
The following forms of manual planning are available in the Project System:
Hierarchical planning enables you to plan revenue by the WBS billing element and year.
Revenue element planning (detailed planning) enables you to plan revenue by revenue element for each WBS billing element. Revenue values are assigned to a period within a fiscal year. You can enter values for each period of each fiscal year or on an annual basis (distribute the values to the appropriate fiscal year periods).
Billing Plans
A billing plan is a schedule that contains individual billing data for a particular sales document.
You can define the use of a billing plan in Customizing of the sales order item’s item category. You can maintain billing plans for sales order items or WBS billing elements. WBS billing plans are only for planning and cannot generate an actual invoice. You can use WBS billing plans for planning before sales documents are created or with simulation versions.
A WBS billing plan supersedes a sales document billing plan for revenue planning. If a WBS billing plan exists, it is used for revenue planning, regardless of the sales document.
Billing Plan Creation
You can create billing plans in the following ways:
Manually
By copying a reference billing plan in SD and PS; it is possible to access reference billing plans automatically
By copying billing milestones from WBS or networks
By copying billing milestones automatically from the network in assembly processing
Milestone billing plans are connected to milestones either in the WBS or network. When the milestone is completed, the lock on the billing date is automatically removed. You can then bill the billing date.
Progress Billing
Progress billing is represented by a billing plan. Although the dates in the billing plan can be maintained manually, you can complete this process more efficiently if you can use a billing milestone so that the billing dates can remain with the project schedule.
You can maintain billing plans either in the WBS element or SD document.
If you begin with a billing plan in the WBS element, you must delete that billing plan if you want a sales document billing plan to replace the WBS billing plan. If you do not complete this action, the planned revenues are determined via the Project System WBS element billing plan, not the SD billing plan.
A billing plan can contain down payment dates. These dates affect payment, but not revenues.
Structure of a Billing Plan
In the SD document, you can define a detailed billing plan with several billing dates.
Milestone billing is widely used in projects (for example, construction projects). If you use milestone billing, the total value to be billed is apportioned to individual dates in the billing plan according to defined rules. The billing dates are assigned to individual milestones.
You can block billing plan dates for billing. You can set billing blocks manually or remove them by completing the billing milestones.
As of SAP R/3 4.0, billing plans can also be entered for billing elements in projects. You can copy such billing plans, if required, to the sales order.
Hint
Make sure to delete the existing billing plan in the billing element. If you do not delete the existing billing plan, the planned revenue is determined by the PS billing plan and not the SD billing plan.