SAP Solutions for Engineering, Construction and Operation industry Michael Ragozin Noveco Systems Pty Ltd
SAP Solutions for Engineering, Construction and Operation industry
Michael RagozinNoveco Systems Pty Ltd
Michael Ragozin: SAP Solutions for Engineering and Construction
Construction: Key Business challenges
Preparation of accurate cost estimates and theirintegration with planning and budgeting at aproject structure level.
Provide clear visibility of project costs, revenuesand cash position
Accurate forecasting of Cost To Complete
Measurement and Reporting of ProjectProgress, including Earned Value and otherProductivity measures
Management of project variations and customerescalations, and their seamless integration withproject cost forecasting and revenue planning
Integration of subcontractors into projectexecution, monitoring of work performed andthe incorporation of this work into progressreporting.
Accurate customer billing
Project Profitability forecasting
Michael Ragozin: SAP Solutions for Engineering and Construction
ESTIMATE BUILD OPERATE
SAP for Construction Business
Engineering and Design
Cost Estimation
Budget Planning
Profitability planning
Contract Management
Cost Forecasting
Variation Management
Procurement
Labour costing
Customer Billing
Reporting
Maintenance and Service Agreements
Service Planning and Execution
Do & Charge Billing
Warranty management
Project Portfolio Management
Integrated Financial reporting
Human Capital Management
SAP Enterprise Solutions
Michael Ragozin: SAP Solutions for Engineering and Construction
Project Structure in SAP
Network structure:
Present Project tasks to be performed on the project
Network activities represent process flow on lowest level of detail, and can be grouped under WBS element
Activities /operations are used for:
Scheduling of dates, planning of resources
Collecting of actual costs through material procurement and labour time allocation
Confirming progress, etc.
WBS structure:
WBS elements represent project organizational structure “as‐built”
WBS is a project element that define
project activity, e.g. Engineering , Design, Construction
product structure, e.g. Electrical, Cooling System
project phase, e.g. Commissioning, Testing
WBS control project budget, actual costs, material stock, project progress etc
The following objects can be allocated to WBS elements:
Costs and Resources, e.g. labour, materials, plant
Network activities, Work Orders
Estimate Build
Project structure
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariations
ePMProject
StructureCustomerBilling
Michael Ragozin: SAP Solutions for Engineering and Construction
Contract: Sales and Construction view
Bill Of ServicesProject Structure “How Estimated and Sold”“How Built”
BOS
Contract
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariations
BudgetEstimate
CustomerBilling
Estimate Build
ePM
Michael Ragozin: SAP Solutions for Engineering and Construction
Bill of Services Structure
Power Generator
Cable Laying
Electrical Work
100 m $213/m
$31,300
CE 60100 „Cable“ 100 m $200/m
CE 70100 „ Locknuts“ 20 pc $15/pc
CE 90003 „Electrician“ 10 H $100/H
$20,000
$300
$1,000
$21,300
Transformer 11Kv 1 AU 10,000 $10,000
... ... ... ...
Mechanical $50,000
... ... ... ...
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariations
BudgetEstimate
CustomerBilling
Estimate Build
ePM
Michael Ragozin: SAP Solutions for Engineering and Construction
Transfer Estimate to Budget
BOS
Contract
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariations
BudgetEstimate
CustomerBilling
Transfer Cost Estimation
To Project Budget
Estimate Build
ePM
Michael Ragozin: SAP Solutions for Engineering and Construction
ePM: Project Budget from Estimates
100 m $200/m
20 hr $150/hr
10 hr $40/hr
$20,000
$300.0
$400.0
Costing lines
Project Budget Estimate can be created on project elements such as WBS
Different cost codes (SAP term: Cost Elements) represent different types of costs to be planned on a project;
Value of costs is calculated from quantities, labour rates, material prices, subcontracted services etc.
Original Budget created from Estimates can be locked and protected from any changes;
Comparison reports can be made to compare Actual vs Estimate
Original Budget will serve the basis for initial planning of Cost Estimated At Completion (EAC) and profitability planning
MaterialsLabourPlantServicesAdministrationFeesEtc.
Project Budget can be changed via Variations, where approved variations are included as budget variations and/or adjustments
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariations
BudgetEstimate
CustomerBilling
Estimate Build
CE 60100 „Cable“
CE 80100 „Excavator“
CE 90100 „Electrician“
ePM
Michael Ragozin: SAP Solutions for Engineering and Construction
Original Budget , EAC and CTC creation
Excel Spreadsheets
Estimation packages
Estimate TransferBudget
Transfer
Orig
. Bud
get
EAC CTC
Project Structure
Bill of ServicesStructure
Estimated Cost at Completion (EAC)initially created from Original Budget (or Cost Estimation)
Updated:Budget Variations (positive or negative)Actual Costs and Commitment (when exceed CTC amount)manually via ePM workbench (cost forecasting)
Cost To Complete (CTC)initially created from EAC
Updated:automatically reduced by Actual Costs and Commitmentmanually via ePM workbench (cost forecasting)automatically by Budget Variations (positive or negative)
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariations
BudgetEstimate
CustomerBilling
Estimate Build
ePM
Michael Ragozin: SAP Solutions for Engineering and Construction
Procurement Management
materials
Services
Procurement of Materials or sub‐contacted services directly to project
Project progress affected by procurement process
Procurement of materials to project stock
Automatic adjustments of Cost to Complete from raising commitments or actual costs (ePM workbench)
PurchaseRequisition
PurchaseOrder
Invoice
Good receiptor
Service Entry
EAC Actual Cost Commitments Cost To Complete
$1,000.0 $0.0 $0.0 $1000.0
EAC Actual Cost Commitments Cost To Complete
$1,000.0 $0.0 $800.0 $200.0
EAC Actual Cost Commitments Cost To Complete
$1,000.0 $500.0 $300.0 $200.0
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariationsProcurement Customer
Billing
BuildEstimate
ePM
Michael Ragozin: SAP Solutions for Engineering and Construction
Cost Forecasting: EAC and CTC
Cost Element EAC Actual Cost Commitments Cost To Complete
60000 Concrete work $3,000.0 $3,000.0 $0.0 $0.0
90100 Electrical labour $2,500.0 $1,000.0 $0.0 $1500.0
80100 Equipment installation
$8,000.0 $4,500.0 $2,500.0 $1,000.0
Total $13,500.0 $8,500.0 $2,500.0 $2500.0
EAC CTC EACCTC
EAC
CTC
January’09 February’09 March’09
ACAC
Automatically calculatedand manually adjustable in ePM workbench
Recalculated from Actual Costs, Commitments and manually adjusted CTC
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariations
CostForecasting
CustomerBilling
BuildEstimate
ePM
Michael Ragozin: SAP Solutions for Engineering and Construction
ePM: Cost To Complete Management
Automatic adjustment (reduction) of CTC from actual costs and commitments
Automatic adjustments of Estimated at Completion Costs from non‐planned actual costs and/or commitments
Manual Planning of Cost To Complete on Project Elements: WBS and/or Network activity in ePM workbench
Resource based CTC planning on Cost Elements on WBS or NWA
Operation based of CTC on Network activity based on quantity of work remained to complete
Period Sensitive CTC recalculation
Full history of EAC and CTC throughout project lifetime
Automatic Integration with Project Result Analysis
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariations
CostForecasting
CustomerBilling
BuildEstimate
Cost To Complete Forecasting using ePM workbench:
ePM
Michael Ragozin: SAP Solutions for Engineering and Construction
ePM: Project Variations: Costs and Revenue
Rev
enue
Status:CREATED
Cur
r. B
udge
t
EACCTC
Rev
enue
Cur
r. B
udge
t
EAC CTC
Rev
enue
Cur
r. B
udge
t
EAC CTC
Status:APPROVED
Status:ACCEPTED
Variationdocuments
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariationsProject
VariationsCustomerBilling
BuildEstimate
ePM
Michael Ragozin: SAP Solutions for Engineering and Construction
Project Variations: summary
Different types of variations
Cost and revenue planning within variation document
Cost assignment to various WBS or Network Activities within one variation document
Automatic update of project Current Budget , Cost To Complete and Estimate at Completion
Sales Document update with revenue adjustment from variation document
Variation status control, e.g. Pending, Approved
Full Integration with Project reporting
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariationsProject
VariationsCustomerBilling
BuildEstimate
ePM
Michael Ragozin: SAP Solutions for Engineering and Construction
Customer Billing
Progress billing on percentage basis
Billing plan can be created from projects milestones
materials
Services
Billing based on cost incurred on a project
Margins set for different cost types
Billing based on services performed
Actual services completed are billed based on quantity and rate agreed in a contract
Service Based Billing for Schedule of Rate projects
Resource Related Billing for Cost‐Plus project
Milestone Billing for Lump‐Sum project
Sales Contract
Sales Contract
Billing Request
Rev
enue
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariations
CustomerBilling
CustomerBilling
Invoice
BuildEstimate
ePM
Michael Ragozin: SAP Solutions for Engineering and Construction
ePM workbench
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariations
ePM workbench
CustomerBilling ePM
Michael Ragozin: SAP Solutions for Engineering and Construction
ePM: KPIs Management and Reporting
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariations
ePM workbench
CustomerBilling ePM
Consolidated Project KPIs
One stop‐shop for Project Managers to view project KPIs, perform cost forecasting, run drill down reports and more
Integrated visual exceptions in form of traffic lights
Powerful Reporting
Cost Forecasting : change tracking
Full history of project Costs Estimated at Completion, Cost to Complete, Commitments, Actual costs, Budget, Variation of costs and revenue values. See how your project was evolving during its lifecycle.
Report Project Variations and Budget changes
Report Original Project Estimation vs. Project Actual Costs at its completion
Michael Ragozin: SAP Solutions for Engineering and Construction
ePM: Cost Forecasting
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariations
ePM workbench
CustomerBilling ePM
Cost Forecasting
Perform manual forecast of Cost to Complete on project elements: WBS, Network Activities or PM/SC orders
Multi‐level Cost To Complete management utilizing “planning level” concept for multi‐tier project structures allowing integration of work orders (SC/PM and PP) into project cost forecasting
Enter Cost Forecast on Cost Elements or adjust network activity forecast work quantity;
Enter forecast cost to complete as a value only or enter as quantity multiplied by rates;
View your project financial position immediately after forecast is entered
Automatic reduction of CTC from actual costs and commitments.
Instant Integration of forecast results with Project Result Analysis
Michael Ragozin: SAP Solutions for Engineering and Construction
ePM: Variation Management
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariations
ePM workbench
CustomerBilling ePM
Variation Management
Plan Costs and Revenue within one variation document. Assign variation cost to multiple project elements (WBS, Network Activities and orders) within one variation document
Variation status control, e.g. Pending, Approved with automatic cost allocation to assigned Project elements: update project current budget and Cost To Complete depending on variation status
Sales Document update with revenue adjustment from variation document
Full Integration with Project cost forecasting and reporting
Michael Ragozin: SAP Solutions for Engineering and Construction
ePM – Extended Project Management
ePM highlights:
ePM is set of applications fully integrated with standard SAP ECC
ePM enhances SAP standard functionality providing cutting edge planning and reporting capabilities specific for Engineering and Construction industry
Enables Management of Project Estimates, Budgets, Cost To Complete, Estimated At Completion, Variations of Costs and Revenue
Present information in one easy to read screen for project managers to review their project KPIs, perform forecasting, execute drill down reports etc.
Provides data layout for comprehensive reporting and analysis
e‐PM is an add‐on that does not modify SAP standard core components and is fully integrated with BW, RPM for strategic planning and reporting.
Budget Estimate ProcurementProject
structureCost Forecasting
ProjectVariations
ePM workbench
CustomerBilling ePM
Michael Ragozin: SAP Solutions for Engineering and Construction
SAP: Other Capabilities directly related to Construction
Full and real time integration with Financials and Cost Controlling
Detailed Project scheduling
Progress and Earned Value analysis
Capacity Planning and Workforce planning (planning of people on individual level)
Integrated Time sheets: integration with Human Resources, Payroll, Project Systems, Procurement and Service Management
Project Cash flow management
Powerful reporting tools on integrated data structure
…and more
ProjectVariations
CustomerBilling
CostForecasting
ProcurementBudget
EstimateProject
Structure
Michael Ragozin: SAP Solutions for Engineering and Construction
Facts about SAP for E&C
More then 350 SAP E&C customers worldwide (where more then 70% of customers under 1bn US turnover a year)
SAP is fully integrated system that covers most of your company key areas and processes providing best platform for your company development and growth
SAP software solutions present industry best practice developed by thousands of implementations and continues software improvement and industry specific enhancements
SAP has been developing its core ERP system and ECO software application add-on together with the world leading construction companies in the past 30 years.
SAP has the broadest fully integrated solution coverage based on the most advanced technological platform
SAP ECO customers increase revenue, reduce costs, improve operating income margin, reduce overhead expenses
SAP solutions bring the experiences of the world’s best operating companies and will help you integrate and streamline your company key business processes.
Michael Ragozin: SAP Solutions for Engineering and Construction
Thank you!
For more information visit Noveco Systems on
web: www.noveco.com.au
email: [email protected]