How to implement time and Material project in SAP PS for ICT company

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Time and Material (T&M) Project is revenue generating project. This scenario addresses the execution of a project, which has time activities only and classified as time & material engagement. This is realized in mySAP Project System (PS) and Sales & Distribution (SD) modules.  It also integrates with Financial Account (FI) for customer billing and revenue; with Controlling (CO) for profitability analysis; with HR time sheeting for employees time charges; and with Travel Management for travel requests and expenses.

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This scenario starts with reference to a request from Project Managers to Project Shared Services (PSS) to create a new time & material project with simple WBS element structure. The new project is created from scratch or with reference to Standard Project Template or existing T&M projects.  Included in the requests is information on the nature of the project and resources (team members) who will be working on the project. As the project progresses, it is common that a new resource is added to or existing resource is removed from the project.  As a result, the partner assigned to WBS element will be updated accordingly.

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Time & material project will be identified in SAP PS through the project type assigned to the WBS element. The resources or team members are maintained in the WBS element partner page as team member.  This assignment is necessary to allow them to enter timesheet and travel expenses against the project.

A quotation is then created against the billing WBS element where the contract amount (planned revenue), quotation planned cost and other commercial conditions are entered.  It is necessary that the quotation items are assigned to the WBS elements to ensure that the revenues are recorded to the project.

A detailed plan costs is then entered in WBS elements. This plan cost is necessary for managers to analyse the project performance and can make necessary decisions and adjustments if required.  Next step is the maintenance of WBS element settlement rule. To aid Finance analysis, project revenues and costs are settled to Profitability Segment Group (PSG) and settlement is carried out on a periodic basis.

After all the required project master data maintenance is completed, the project is released. Once released, resources working on the project can enter their timesheet against the WBS elements via the CATS application.  Other related expenses such as travel expenses are also recorded against the WBS elements.  Both timesheet and travel expenses must be approved by the Manager before these can be transferred to Financial Accounting and Controlling.

The posting of travel expense to Accounting (step 12 – refer to 2.5.5) is an independent process step and is not a pre-requisite step to be done before transferring time sheet to controlling (step 13 – refer to 2.5.5).

On a periodic basis, the project manager will provide project admin the billing data i.e. how much to bill for the period.  At this step, a sales order is created with reference to sales quotation and a subsequent billing invoice is generated and sent to customer.  Actual revenue will be recorded and posted against the WBS elements.

The project settlement is run. Once settlement is carried out, the revenue and cost posted to the project are transferred to Profitability Segment (this is the settlement rule defined in the WBS element). During the month-end, the Finance group generates project backlog reports to determine the remaining revenues expected to generate from the project.

The project life cycle will come to an end and closure once the project is completed technically and all revenues & costs are settled to final receivers. The project administrator then change the project status to TECO (technically completed), then finally to CLSD (closed).  Once the project is closed, changes and postings to the project are no longer allowed by the system. During the various processes flow steps a Project report is used to outline the project evolution and to clarify the financial results of each process.

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