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The scope item Project Control – Sales (4I9) allows you to integrate projects with sales orders. With the direct flow of costs and revenues from the sales order process to the project, the margin can be analysed along with the incurred costs.
What if costs already occur at the quotation phase (e.g., costs to set up a prototype and T&E to present it to a prospect) before the contract is won and a sales order is created? And you would like to capture these costs to later analyse whether the overall project is profitable?
Here is how you do it.
1. Set up a project structure for the quotation phase and the contract signed phase
Set up a project structure for the quotation phase and the contract signed phase (assuming that the costs during quotation phase are not relevant for revenue recognition).
Because there is no revenue flowing during quotation, use a non-billing wbs element for this phase.
Please refer to Project Control – Sales (4I9) chapters 4.1-4 how to create a project, upload planned costs and revenues and how to create a hierarchical project structure by calling up the Project Planning application from the ‘Project Control - Enterprise Projects’ (Fiori ID: F3215) app.
2. Direct Cost Allocation during Quotation Phase to a non-billing wbs element
In order to capture quotation costs, you can directly post them to the non-billing wbs element of the project. To do so, use the app ‘Manage Direct Activity Allocation’ (Fiori ID: F3697)
There are other possibilities like the option to record time via timesheet on the WBS, using the app ‘Manage My Timesheet’ (F1823).
3. Report on costs
To view the costs that were just posted, you can use the app ‘Project Cost Report - Plan/Actual’ (Fiori ID: F2513).
Please note that this report currently does not include revenues.
4. Sales Order Creation and Fulfillment
Let’s assume the quotation has been successful and a sales order is created as a result. For the sales order revenue is expected, so a wbs billing element is directly assigned to it.
For sales order processing, COGS occur, e.g. when the goods issue for the outbound delivery is posted. COGS (unlike the costs during the quotation phase) can be relevant for event-based revenue recognition (EBBR) and revenue can be recognized for example based on "Percentage of completion" (actual cost divided by planned cost).
Please refer to Project Control – Sales (4I9) chapter 4.5 how to create the sales order, assign the wbs billing-element and process the delivery and customer invoice.
For more information on EBRR, please refer to the scope item Event-Based Revenue Recognition - Project-Based Sales (4GQ) and the blog Financial Accounting for project-based sales in S/4HANA Cloud.
5. Overall Project Profitability
To view the overall profitability for both the quotation and the sales order processing phase, you can analyze the project with the ‘Projects – Actuals’ app (Fiori ID: F0961).
Current Restrictions
In the current release, the field ‘WBS Element’ is visible on the quotation header and item level (tab ‘Account Assignment’). We will hide this field going forward, because the WBS (billing-) element assignment is only meant for sales orders (not sales quotations) to capture COGS in the context of EBRR and margin analysis. Margin analysis in turn is activated by default in S/4HANA Cloud, Public Edition. There is exactly one field in the ACDOCA that contains the information of a sales document. Here the current semantic is on the sales order, and it is not possible to change the assignment later if a sales order follows a quotation.
In the above procedure, how to allocate quotation cost directly to a wbs non-billing element, there is no direct link to the sales quotation. If you require also an attribution to the sales quotation - let us know. We can share a potential work-around or you can raise this requirement as an influence request for standard development: Customer Influence - SAP S/4HANA Cloud Public Edition, Sales
