Revenue and cost planning in SAP CPM
Using Financial Plans
To use the revenue and cost planning functionality in SAP CPM, the system introduces the Financial Plan as another new business object. It always belongs to a Master Project and allows you to plan costs, revenues, quantities, margins and expenses over the entire lifecycle of your project. You can also plan for attributes that you defined yourself, for example project overhead, and you can also attach more than one Financial Plan to each Master Project.
The functionality of the Financial Plan itself is pretty straight-forward. You can:
- Plan resources, material and expenses
- Do calculations for quotations and estimates for possible changes
- Forecast project management KPIs like Earned Value, Estimate To Complete or Estimate at Completion.
Financial Plans are done on the basis of a hierarchical Planning Structure. You effectively have the choice to plan according to the structure of the quotation (usually in the selling phase of a project) or according to the Master Project structure, which is then called an execution structure. Of course, you can copy the quotation structure to the execution structure once you’ve won a bid. From a detail point of view, you can do daily, weekly, monthly or yearly planning using different planning views (or anything in between, if you build your own).
Just like in SAP ERP, SAP CPM allows you to create several versions of a Financial Plan, reflecting the planning of the project at different points in time or under different assumptions. These versions have a type, such as quote, baseline, current or forecast. You can easily create as many versions as you want, independent from the CO versions in SAP ERP. However, there may only ever be one baseline version at a time.
To integrate your planning with SAP ERP, of course everything you do on the CPM side can (and should) be written back to the ERP system to have a consistent set of data. You can copy your material and time planning from CPM into SAP ERP PS network activities and/or WBS elements. It’s also possible to integrate SAP MRS and copy your personnel planning there.
From a technical point of view, the revenue and cost planning function of SAP Commercial Project Management makes use of BW Integrated Planning, so you will need a SAP BW instance for it to work. That, however, gives you the advantage that the planning data is actually locked in the ERP while you’re working in SAP CPM, which is achieved by using realtime-enabled InfoCubes. The actual planning is done in Microsoft Excel, via the SAP BusinessObjects Analysis for MS Office plugin.
Project issue and change management (PICM)
Every project has its problems – the bigger the project, the bigger the issues. The challenge for a good project management is to manage issues efficiently and make the costs of changes transparent. The Project Issue and Change Management (CA-CPD-PCM) component allows you to create issues in your project, investigate and analyze them, create project changes and calculate their costs and impact on the project bottom line.
The first step is to create an Issue (another new business object), then assign activities and responsible persons to further investigate it. Issues can also have an urgency level to make their importance clear. After an Issue has been investigated, the outcome can be documented (for example via text or attached files), possibly resulting in a Change Request.
Managing Project Changes
When one or multiple Issues becomes a Change Request, the process for it is quite similar to how the Issues themselves are processed. You can create and schedule activities, assign responsible persons and monitor the progress. Additionally (and most importantly), it’s possible to make an assessment of the impact of each CR on the project. To do this, you can create one or more Cost Estimation Alternatives which allow you to plan cost and additional revenue for the project. Of course, this object also provides an integration point into ERP, for example if you need to create an additional purchase request to implement the change. This makes the impact of each individual CR on the project very clear. After this has been done, you can get the approval for the Change Request via electronic workflow within SAP CPM – another good idea that brings SAP’s project management functionality up to speed with reality.