Contract Billing for Engineering and Construction

SAP Best Practices for Engineering, Construction, and Operations(India)SAP Best Practices

SAP 2010 / Page *Scenario Overview Contract Billing for Engineering and ConstructionPurpose This scenario covers the three primary contract billing processes used by the engineering construction and operations industries, the first is Lump-Sum Contract with Milestone Billing, the second is Bill of Services Unit Price Contract with Service Entry Sheet and third is Cost Plus and Time and Material Billing (RRB)Benefits Project ManagementContract ManagementMilestone Billing according to performance of defined Milestones

Purpose and Benefits:

SAP 2010 / Page *Scenario Overview 2Enhancement Package 4 for SAP ERP 6.0Business Function DIMP_SDUD Discrete Industries of the Business Function Set Discrete Industries

Sales AdministrationProject ManagerSales Billing

Lump-Sum Contract with Milestone Billing Bill of Services Unit Price Contract with Service Entry SheetCost Plus and Time and Material Billing (RRB)

Company Roles Involved in Process Flows:SAP Applications Required:Key Process Flows Covered:

SAP 2010 / Page *Scenario Overview 3Lump-Sum Contract with Milestone BillingThis scenario demonstrates the process where owner and general contractor has agreed on a lump sum for the execution of the contract on a billing plan with dates usually depending on the progress of the work.A project is created with a billing work breakdown structure (WBS) element. Network and activities are optional. Define milestones for the billing plan which includes the percentage value for billing amount of the contract value.A Customer order is created with a material item that contains a service specification. If the contract is a result of a tendering the customer order will be created with reference to a customer quotation. Latest negotiation will be considered in the customer order. The customer order item is linked to the project (billing WBS element) by the account assignment of the customer order item. Hence the billing WBS element will be debited with all revenues and down payments created de to the settlement (billing) of the customer order. Defined milestones of the project are taken over to the billing plan of the customer order item.

Detailed Process Description:

SAP 2010 / Page *Scenario Overview 3 Lump-Sum Contract with Milestone BillingAfter a part of the construction project has been completed the work can be documented by confirming a network activity with an attached billing milestone. Due to the confirmation of the network activity the milestone is reached and the block in the assigned billing plan item is removed.The Billing document is then created for all items without a billing block. Once the billing documents have been created, they are transferred to Financial Accounting automatically, and the corresponding FI documents are generated.The financial accounting transactions post the outgoing and incoming payments. The posting can be done automatically or manually, depending on the transaction that you choose to use.

Detailed Process Description:

Accounts ReceivableSalesAdministrationCreate QuotationCreate InquiryPost Customer Down PaymentInquiry from prospectProject ManagerCreate ProjectEventCreate Sales OrderAssign Billing Plan ro Sales orderCreate Down Payment Request and Down PaymentCreate Billing DocumentProcess Flow DiagramContract Billing Lump-Sum Contract with Milestone BillingAssign Milestone to ProjectConfirm Milestone

SAP 2010 / Page *Scenario Overview 3 Unit Price Contract (with Bill of Service)A Project with a billing work breakdown structure (WBS) element is created. A Customer Order is created with a material item that contains a service specification. If the contract is a result of a tendering the customer order will be created with reference to a customer quotation. Latest negotiation will be considered in the customer order. The customer order item is linked to the project (billing WBS element) by the account assignment of the customer order item. Hence the billing WBS element will be debited with all revenues and down payments created de to the settlement (billing) of the customer order.The services that have been performed, planned and unplanned are entered in the service entry sheet. After checking the service entry sheet remove the billing block. The service entry sheet constitutes the basis for the billing process.

Detailed Process Description:

SAP 2010 / Page *Scenario Overview 3 Unit Price Contract (with Bill of Service)A service entry sheet is created then the down payment request or invoice is generated. Once the billing documents have been created, they are transferred to Financial Accounting automatically, and the corresponding FI documents are generated.The financial accounting transactions post the outgoing and incoming payments. The posting can be done automatically or manually, depending on the transaction that you choose to use.

Detailed Process Description:

Process Flow DiagramContract Billing Bill of Services Unit Price Contract with Service Entry SheetAccounts ReceivableSalesAdministrationCreate QuotationCreate InquiryPost Customer Down PaymentInquiry from prospectProject ManagerCreate ProjectEventCreate Sales OrderCreate Service Entry SheetCreate Down Payment RequestCreate Service Entry Sheet for Subsequent BillingCreate Debit Memo

SAP 2010 / Page *Scenario Overview 3Cost-Plus using Resource Related BillingTo perform resource-related billing for customer-specific services. You invoice your customers for specific materials, internal services and costs incurred here. The billing request is used as the basis for creating the billing document. Prices for customer-specific services are not always defined in a contract as fixed prices, or determined using standard pricing. This is for instance the case if no empirical values are available for specific services, and services cannot therefore be calculated accurately before the contract conclusion.Define which billing data is to be supplied and/or postponed. The system reads the expenses (hours, travel expenses or third-party invoices) for the project or sales order, and uses the dynamic item processor to summarize these according to any criteria you define here. The system determines a corresponding material, which has the character of a service to be billed, for each dynamic item. The system uses these materials to create a billing request (which is a sales document that is similar to the sales order), in which it also performs pricing. The system will accept entries you make manually during pricing.

Detailed Process Description:

SAP 2010 / Page *Scenario Overview 3Cost-Plus using Resource Related BillingThe system uses fixed price billing to convert the billing request to a billing document (the actual invoice document).Create billing document with reference to the billing request. Once the billing documents have been created, they are transferred to Financial Accounting automatically, and the corresponding FI documents are generated.

Detailed Process Description:

Process Flow DiagramContract Billing Cost Plus or Time and Material BillingTime AdministratorProject ManagerDetail the Project StructureCreate Project StructureCreate Billing RequestInquiry from prospectSales AdministratorCreate Sales OrderEventApprove and Release the ProjectConfirm ActivityChange Debit Memo RequestCreate Billing DocumentConfirm Labor through CATSService EmployeeCATS ApprovalTransfer Data to Controlling

SAP 2010 / Page *Legend

External to SAPBusiness Activity / EventUnit ProcessProcess ReferenceSub-Process ReferenceProcess DecisionHardcopy / DocumentFinancial ActualsBudget PlanningManual ProcessExisting Version / DataSystem Pass/Fail Decision

SymbolDescriptionUsage CommentsBand: Identifies a user role, such as Accounts Payable Clerk or Sales Representative. This band can also identify an organization unit or group, rather than a specific role.The other process flow symbols in this table go into these rows. You have as many rows as required to cover all of the roles in the scenario.Role band contains tasks common to that role.External Events: Contains events that start or end the scenario, or influence the course of events in the scenario.Flow line (solid): Line indicates the normal sequence of steps and direction of flow in the scenario. Flow line (dashed): Line indicates flow to infrequently-used or conditional tasks in a scenario. Line can also lead to documents involved in the process flow.Connects two tasks in a scenario process or a non-step event

Business Activity / Event: Identifies an action that either leads into or out of the scenario, or an outside Process that happens during the scenarioDoes not correspond to a task step in the document

Unit Process: Identifies a task that is covered in a step-by-step manner in the scenarioCorresponds to a task step in the document

Process Reference: If the scenario references another scenario in total, put the scenario number and name here.Corresponds to a task step in the document

Sub-Process Reference: If the scenario references another scenario in part, put the scenario number, name, and the step numbers from that scenario hereCorresponds to a task step in the document

Process Decision: Identifies a decision / branching point, signifying a choice to be made by the end user. Lines represent different choices emerging from different parts of the diamond. Does not usually correspond to a task step in the document; Reflects a choice to be made after step execution

SymbolDescriptionUsage CommentsTo next / From last Diagram: Leads to the next / previous page of the DiagramFlow chart continues on the next / previous page

Hardcopy / Document: Identifies a printed document, report, or form Does not correspond to a task step in a document; instead, it is used to reflect a document generated by a task step; this shape does not have any outgoing flow linesFinancial Actuals: Indicates a financial posting document Does not correspond to a task step in a document; instead, it is used to reflect a document generated by a task step; this shape does not have any outgoing flow linesBudget Planning: Indicates a budget planning document Does not correspond to a task step in a document; instead, it is used to reflect a document generated by a task step; this shape does not have any outgoing flow linesManual Process: Covers a task that is manually done Does not generally correspond to a task step in a document; instead, it is used to reflect a task that is manually performed, such as unloading a truck in the warehouse, which affects the process flow. Existing Version / Data: This block covers data that feeds in from an external process Does not generally correspond to a task step in a document; instead, this shape reflects data coming from an external source; this step does not have any incoming flow lines System Pass / Fail Decision: This block covers an automatic decision made by the software Does not generally correspond to a task step in the document; instead it is used to reflect an automatic decision by the system that is made after a step has been executed.

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See template 020_Scenario_Oververview.zipTemplate Pool SAP Business All-in-One Documentation Templates 020_Scenario_Overview.zip

Sample data are to be deleted and replaced (red entries)See template 020_Scenario_Oververview.zipTemplate Pool SAP Business All-in-One Documentation Templates 020_Scenario_Overview.zip

Sample data are to be deleted and replaced (red entries)

See template 020_Scenario_Oververview.zipTemplate Pool SAP Business All-in-One Documentation Templates 020_Scenario_Overview.zip

Sample data are to be deleted and replaced (red entries)

See template 020_Scenario_Oververview.zipTemplate Pool SAP Business All-in-One Documentation Templates 020_Scenario_Overview.zip

Sample data are to be deleted and replaced (red entries)

See template 020_Scenario_Oververview.zipTemplate Pool SAP Business All-in-One Documentation Templates 020_Scenario_Overview.zip

This slide is optional.Since the process flow diagram is later required in development process (scenario overview), it can reuse some effort in development, if the diagram ist created in blueprint/specification phase. The diagram visualizes the process flows and is a great tool to discuss the process with the stakeholders.

See template 020_Scenario_Oververview.zipTemplate Pool SAP Business All-in-One Documentation Templates 020_Scenario_Overview.zip

Sample data are to be deleted and replaced (red entries)

See template 020_Scenario_Oververview.zipTemplate Pool SAP Business All-in-One Documentation Templates 020_Scenario_Overview.zip

Sample data are to be deleted and replaced (red entries)

See template 020_Scenario_Oververview.zipTemplate Pool SAP Business All-in-One Documentation Templates 020_Scenario_Overview.zip

This slide is optional.Since the process flow diagram is later required in development process (scenario overview), it can reuse some effort in development, if the diagram ist created in blueprint/specification phase. The diagram visualizes the process flows and is a great tool to discuss the process with the stakeholders.

See template 020_Scenario_Oververview.zipTemplate Pool SAP Business All-in-One Documentation Templates 020_Scenario_Overview.zip

Sample data are to be deleted and replaced (red entries)

See template 020_Scenario_Oververview.zipTemplate Pool SAP Business All-in-One Documentation Templates 020_Scenario_Overview.zip

Sample data are to be deleted and replaced (red entries)

See template 020_Scenario_Oververview.zipTemplate Pool SAP Business All-in-One Documentation Templates 020_Scenario_Overview.zip

This slide is optional.Since the process flow diagram is later required in development process (scenario overview), it can reuse some effort in development, if the diagram ist created in blueprint/specification phase. The diagram visualizes the process flows and is a great tool to discuss the process with the stakeholders.