- SAP Managed Tags
Introduction
In today's manufacturing and engineering business, overseeing customer projects from the bidding stage through execution and delivery can be a challenging task. From the initial stages of project conception to the final delivery, companies must navigate a labyrinth of variables to ensure projects are completed on time, within budget, and to the satisfaction of their clients.
SAP's Enterprise Portfolio and Project Management (EPPM) solution addresses these challenges. By providing an integrated approach to cost and revenue planning, SAP EPPM helps manufacturing companies gain real-time visibility into project performance, enabling them to make informed decisions and maintain control over project execution.
This blog will illustrate how SAP EPPM can transform your project management processes, ensuring seamless integration of project schedules with cost and revenue plans.
How Sarah keeps her promise to clients !
Sarah is a project manager at a leading manufacturing company for solar technologies. She is responsible for overseeing a new large project to install solar panels for a major client. The project is complex, involving multiple teams, long lead-time materials, and tight deadlines. Sarah knows that meticulous planning is crucial for the project's success.
Sarah receives a draft project start and end date based on the project schedule agreed with the customer in the sales contract. She starts detailing out the project timeline entering expected duration of network activities, creating dependencies and scheduling project milestones. To plan and structure the project she uses the embedded project management module SAP Project System.
Image: Review project network activities in SAP Project System
As a next steps Sarah creates a project cost and revenue plan based on the project structure and timeline she has defined in the step before. At this point she can specify the demand for external and internal workers, material components, and external services needed for each work package in the project. For instance, she identifies the need for 85 units of Solar Panel (320KW) to be procured between July and October each costing 5000 EUR.
Image: Financial Cost and Revenue planning in EPPM - Commercial Project Management
This detailed planning of material demands includes expected costs rates, required quantities and the revenue rates for each material and planning period. With a click on the “Valuate” button she can trigger to automatically derive material cost and revenue rates from various sources in SAP S/4HANA such as product master data and sales order information.
Image: Initiate handover of project financial planning into controlling
Sarah develops multiple versions of the project plan accommodating budget and resource availability while optimizing overall project profitability.
Once Sarah has finalized the planning, she releases the current version to be transferred into finance and controlling module in SAP S/4HANA. This creates an active cost and revenue plan used by project controllers to monitor progress and cost performance, and to trigger invoicing and billing processes.
Sarah uses the Project Cost Status report in EPPM to track actual costs, quantities and costs rates against the current plan and baseline plan. In addition she can compare these values against the estimation from the latest forecast (ETC - Estimation to Completion / EAC - Estimation At Completion)
Image: Detailed Costs and Revenue Reporting based on Project Structure
Transferring the cost and revenue plan into project controlling also updates the material demand information in the project. For example, the required 85 units for Solar Panel ML-SPANEL, including availability dates and cost information, are transferred into the component demand details managed in the Project System.
Image: Project Demand Details in SAP Project System derived from the integrated cost and revenue plan
The logistic information stored in SAP Project System now serves as the trigger for procurement and production planning, automatically creating material purchase requisitions with reservations. This ensures that once the material is delivered and added to stock, it is reserved for the specific project and not consumed by other projects.
Image : Details of the material purchase orders generated out of SAP Project System
One of the key benefits Sarah experiences with this integrated approach is the ability to forecast material and resource demands accurately based on the underlying project structure and timeline, keeping both processes in synch with each other,
E.g. for materials with long lead times, such as in this case solar panels, the demand derived from the project plan is included in the long-term parts and resources planning provided by Integrated Business Planning for the Maintenance, repair, and operations solution. This ensures that all demands, whether from maintenance orders or individual customer projects, are visible in a single supply plan. This structured approach reduces errors and ensures all financial and procurement data is received from the demanding sources and up-to-date.
Sarah's team benefits from early insights into material demands, avoiding delays and cost overruns. The procurement team can create purchase requisitions and orders based on the information derived from the cost and revenue plan. This well-coordinated effort between procurement, project management, and supply chain teams ensures that materials are procured at expected prices and are available on-site when needed.
Outro
In conclusion, SAP's Enterprise Portfolio and Project Management solution provides a comprehensive, integrated approach to managing project costs and revenues.
By leveraging this powerful tool, Sarah and her team can ensure that all aspects of their project are aligned, from financial planning to material procurement and labor management.
This improves the project’s performance and drives business value by reducing errors, avoiding delays, and ensuring projects are completed on time and within budget.
With SAP EPPM, manufacturing companies can navigate the complexities of project management with confidence and precision and such keep their promises that they gave to their customers.
