SAP Solutions for Engineering, Construction and Operation industry. Michael Ragozin Noveco Systems Pty Ltd

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1 SAP Solutions for Engineering, Construction and Operation industry Michael Ragozin Noveco Systems Pty Ltd

2 Construction: Key Business challenges Preparation of accurate cost estimates and their integration with planning and budgeting at a project level. Provide clear visibility of project costs, revenues and cash position Accurate forecasting of To Complete Measurement and Reporting of Progress, including Earned Value and other Productivity measures Management of project variations and customer escalations, and their seamless integration with project cost forecasting and revenue planning Integration of subcontractors into project execution, monitoring of work performed and the incorporation of this work into progress reporting. Accurate customer billing Profitability forecasting

3 SAP for Construction Business Integrated Financial reporting Human Capital Management Portfolio Management ESTIMATE BUILD OPERATE Engineering and Design Estimation Planning Profitability planning Contract Management Variation Management Labour costing Reporting Maintenance and Service Agreements Service Planning and Execution Do & Charge Warranty management SAP Enterprise Solutions

4 Structure in SAP Structure WBS : WBS elements represent project organizational as built WBS is a project element that define project activity, e.g. Engineering, Design, Construction product, 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: s and Resources, e.g. labour, materials, plant Network activities, Work Orders Network : Present 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.

5 Contract: Sales and Construction view Contract BOS Structure How Built Bill Of Services How d and Sold

6 Bill of Services Structure Power Generator Electrical Work $31,300 Cable Laying 100 m $213/m $21,300 CE Cable 100 m $200/m CE Locknuts 20 pc $15/pc CE Electrician 10 H $100/H $20,000 $300 $1,000 Transformer 11Kv 1 AU 10,000 $10, Mechanical $50,

7 Transfer to Contract BOS Transfer Estimation To

8 : from s can be created on project elements such as WBS Different cost codes (SAP term: 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 created from s can be locked and protected from any changes; Comparison reports can be made to compare Actual vs Original will serve the basis for initial planning of d At Completion (EAC) and profitability planning can be changed via, where approved variations are included as budget variations and/or adjustments ing lines CE Cable CE Excavator CE Electrician 100 m $200/m 20 hr $150/hr 10 hr $40/hr $20,000 $300.0 $400.0 Materials Labour Plant Services Administration Fees Etc.

9 Original, EAC and CTC creation Structure Bill of Services Structure Transfer Transfer Excel Spreadsheets Estimation packages Orig. EAC CTC d at Completion (EAC) initially created from Original (or Estimation) Updated: (positive or negative) Actual s and Commitment (when exceed CTC amount) manually via workbench (cost forecasting) To Complete (CTC) initially created from EAC Updated: automatically reduced by Actual s and Commitment manually via workbench (cost forecasting) automatically by (positive or negative)

10 Management materials Purchase Requisition EAC Actual Commitments To Complete $1,000.0 $0.0 $0.0 $ Services Purchase Order EAC Actual Commitments To Complete $1,000.0 $0.0 $800.0 $200.0 of Materials or subcontacted services directly to project progress affected by procurement process of materials to project stock Automatic adjustments of to Complete from raising commitments or actual costs ( workbench) Good receipt or Service Entry Invoice EAC Actual Commitments To Complete $1,000.0 $500.0 $300.0 $200.0

11 : EAC and CTC EAC CTC EAC EAC CTC AC January 09 February 09 March 09 AC CTC Recalculated from Actual s, Commitments and manually adjusted CTC Automatically calculated and manually adjustable in workbench Element EAC Actual Commitments To Complete Concrete work $3,000.0 $3,000.0 $0.0 $ Electrical labour $2,500.0 $1,000.0 $0.0 $ 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

12 : To Complete Management To Complete using workbench: Automatic adjustment (reduction) of CTC from actual costs and commitments Automatic adjustments of d at Completion s from non planned actual costs and/or commitments Manual Planning of To Complete on Elements: WBS and/or Network activity in workbench Resource based CTC planning on 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 Result Analysis

13 : : s and Revenue Variation documents Status: CREATED Status: APPROVED Status: ACCEPTED Curr. Revenue Curr. Revenue Curr. Revenue EAC CTC EAC CTC EAC CTC

14 : summary Different types of variations and revenue planning within variation document assignment to various WBS or Network Activities within one variation document Automatic update of project Current, To Complete and at Completion Sales Document update with revenue adjustment from variation document Variation status control, e.g. Pending, Approved Full Integration with reporting

15 Sales Contract Revenue Milestone for Lump Sum project Progress billing on percentage basis plan can be created from projects milestones Sales Contract Invoice Service Based for Schedule of Rate projects based on services performed Actual services completed are billed based on quantity and rate agreed in a contract Request Resource Related for Plus project based on cost incurred on a project Services materials Margins set for different cost types

16 workbench workbench

17 : KPIs Management and Reporting workbench Consolidated KPIs One stop shop for Managers to view project KPIs, perform cost forecasting, run drill down reports and more Integrated visual exceptions in form of traffic lights Powerful Reporting : change tracking Full history of project s d at Completion, to Complete, Commitments, Actual costs,, Variation of costs and revenue values. See how your project was evolving during its lifecycle. Report and changes Report Original Estimation vs. Actual s at its completion

18 : workbench Perform manual forecast of to Complete on project elements: WBS, Network Activities or PM/SC orders Multi level To Complete management utilizing planning level concept for multi tier project s allowing integration of work orders (SC/PM and PP) into project cost forecasting Enter Forecast on 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 Result Analysis

19 : Variation Management workbench Variation Management Plan s 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 elements: update project current budget and To Complete depending on variation status Sales Document update with revenue adjustment from variation document Full Integration with cost forecasting and reporting

20 Extended Management workbench highlights: is set of applications fully integrated with standard SAP ECC enhances SAP standard functionality providing cutting edge planning and reporting capabilities specific for Engineering and Construction industry Enables Management of s, s, To Complete, d At Completion, of s 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.

21 SAP: Other Capabilities directly related to Construction Structure Full and real time integration with Financials and Controlling Detailed 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, Systems, and Service Management Cash flow management Powerful reporting tools on integrated data and more

22 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.

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