Describing Project Management with SAP S/4HANA Project System

James is a project planner at Hybrid Machinery. Linda works as a Controller. They are discussing the way in which they want to handle the upcoming logistics project together with their colleagues Lisa from Sales and Manuel from Procurement and Manufacturing. They have talked about this topic already with Thomas, who is the IT Manager at Hybrid Machinery.

They discuss various aspects of project management. It is very important to know what a project is composed of, and which key factors are most relevant for a successful project. They also need to investigate how projects are maintained in a project management application such as SAP S/4HANA Project System (PS).

To summarize:

A logistics project is mainly focused on the engineering, manufacturing, and assembly process. Therefore, it requires networks and activities to map these processes. These values also need to be aggregated and analyzed on department or project phase level. This means that a hierarchical structure is needed. A work breakdown structure can be used for this purpose.

A logistics project often also has connections to Sales, to Procurement, and to Manufacturing. SAP Project System can be used to support this. The advantage is that SAP Project System is very much integrated with the other areas of SAP S/4HANA.

The work breakdown structure can be used to aggregate dates, costs, and commitments from the network activities. The WBS elements themselves would be used for planned and actual revenues, and they can also be used for budgeting, if required. WBS elements are also required for results analysis.

Maintaining project stocks for critical components and analyzing project-related production orders are also things that can be done using WBS elements.

Professional project management is becoming an increasingly important factor for boosting the competitive strength of a company. And not just for those companies whose success is based on project-oriented business processes. Both large-scale projects, such as constructing a factory, and smaller projects, such as organizing a trade fair, require that the numerous activities involved are planned, controlled, and monitored precisely, systematically, and also efficiently.

Projects usually involve cross-departmental and highly complex business processes, the results of which must often yield an extremely high level of quality. Projects are often cost-intensive, time-consuming, and of strategic importance.

This all means that projects may also be seen as a potential risk for a company. Using the right software to support project management under these conditions is essential.

A project is an undertaking, carried out by a company, that is characterized by its complexity and the uniqueness of its general conditions and constraints.

These general conditions for a project include the following elements:

• The objectives of the project
• The time frame for executing the project
• Any financial and/or capacity-related restrictions

Projects are normally given an appropriate structure to allow dates, resources, costs, budgets, and payments to be planned, controlled, and monitored transparently. This structure is a hierarchy.

Hierarchies are often used for the following purposes:

• Evaluating aggregated data
• Allocating budgets
• Defining responsibilities

Projects are often cross-departmental. And project-specific organizational structures are usually created for projects that are integrated in a company’s business processes. These organizational structures are in a position central to the departments involved. This is done so that all relevant tasks can be easily planned and can then be controlled during project execution.

This course focuses on individual logistics projects created in SAP Project System (PS). It is however also important to take Portfolio Management into account. Portfolio Management analyzes the costs, revenues, and the budget of several projects in the whole company. Different solutions exist to map the project portfolio. One of these is SAP Enterprise Project and Portfolio Management (EPPM).

In the following section, you can see the different applications in the area of SAP Enterprise Portfolio and Project Management and their integration options.

SAP Portfolio Management is used for the strategic management of entire project portfolios. Data from various project management tools, such as SAP Project Management, SAP Project System (PS) or external applications such as Microsoft Project can be consolidated and enriched with controlling data from SAP S/4HANA Financials. With the usage of SAP Portfolio Management, it is possible to distribute budget across several projects or to analyze financial and other data of several projects. SAP Project System (PS) projects can be integrated directly with SAP Portfolio Management.

You use SAP Project Management as an alternative to SAP Project System to oversee projects, tasks, and time lines, while identifying critical paths, assigning resources, and tracking progress. With SAP Project Management, you can handle company-wide project management operations from structuring to visualization, and you can support various implementation and financial management models.

SAP Project Management is typically used in implementation and consulting projects, whereas SAP Project System (PS) is mainly used for projects serving as a cost collector, projects that are integrated to asset accounting, and especially for logistics projects. SAP PS projects are also used for the cost calculation of SAP Project Management projects. SAP Project Management should not be used for logistics projects, as this solution is not integrated in the other SAP S/4HANA areas such as Procurement, Sales or Manufacturing.

SAP Project System provides structures that you can use to model and organize projects flexibly. You can plan and monitor dates, costs, revenues, budgets, resources and materials in these structures, using the relevant tools and reports from SAP Project System (PS).

In project financial control, you calculate and distribute costs in projects, analyze costs and revenues, and carry out budgeting activities. Project financial control plays an important part in all SAP PS Projects, investment projects, as well as logistics projects. For the planning and execution of investment projects, you can refer to the course Exploring investment projects in SAP S/4HANA.

In mechanical engineering, complex machinery is manufactured and assembled in lot sizes of one. A complex and detailed project schedule has to be taken into account, and resources have to be assigned to the project. The planning, production, and procurement of the required components is also an important task.

SAP Project System (PS) offers the structures to model these processes. By integrating with most areas of SAP S/4HANA, SAP Project System (PS) supports the total supply chain. From the inquiry of a customer, to the engineering activities, the scheduling of resources, the planning and procurement of materials, and the planning and realization of revenues. Delivery and billing of the project are also supported. All of these parts will be covered in this training.

You use Resource Management to identify the right resources, check availability, optimize utilization, and avoid project bottlenecks.

With Resource Management, you achieve optimized resource utilization by allocating human capacities, capital, and equipment based on project requirements, qualifications, availability, and future needs.

SAP Portfolio and Project Management also offers a resource management application that can only be used for SAP Project Management projects.

SAP Project System (PS) has its own integrated resource management solution. It is however also able to access the more detailed capacity leveling functions of advanced capacity planning in Manufacturing. Resource Management in SAP Project System (PS) is part of this training.

Commercial Project Management is a solution to increase profitability and achieve real-time transparency of customer projects. In project financial planning, you can improve planning, monitoring, and control by creating cost and revenue plans and integrating them with enterprise accounting. In issue and change management, you establish transparent processes to record project issues and deviations and determine the financial impact of changes. In risk management, you document and assess project risks through standardized evaluation methods and plan and track risk mitigation activities.

To summarize the video:

SAP Project System supports the following structures to map out projects:

• A work breakdown structure (WBS):

  A WBS is used to organize a project in the form of a hierarchy.

• A network:

  Networks are used to represent the individual project activities, together with their relationships. Networks represent the flow of the project.