UTILIZING SAP OAA AND COMPATIBLE UNITS
WITH EHP5 TO EFFECTIVELY OPTIMIZE
WORK PLANNING AND CONSTRUCTION COST
MANAGEMENT
Greg Harby - WM/FI/CO Business Analyst-Northwestern Energy
Al Colabawala – SAP EAM Consultant - My EAM Group
INTRODUCTION
Greg Harby
 SAP FI/CO/FERC Business Analyst/Configuratior
• Since original SAP implementation – 2000
 Project Mgr – EHP5 Upgrade - 2012
 NWE employee for 30 years
» Greg.Harby@northwestern.com
Altaf (Al) Colabawala – My EAM Group
 SAP EAM Solution Architect with 15 years of SAP experience in
system wide Implementations, Upgrades, Business Process Reengineering, complex system integration and software
development.
Al.C@myeamgroup.COM
LEARNING POINTS
Construction Cost Management can be a
reality
Efficiencies are evident in a relatively short
time
Focus on defining your data metrics early
TALKING POINTS
NWE Background
Why CU/OAA?
How does it work?
How we are using it?
What do you get?
NWE BACKGROUND
 Regional Electric & Gas Dist. & Trans. Utility
 400K electric & 250K natural gas customers in Montana,
S. Dakota, Nebraska
 Corp. Headquarters – Sioux Falls, SD
 IT operations located primarily in Butte, MT
 Montana operations previously know as The Montana Power
Co. (MPC) until purchase by NorthWestern Corp. (NWE) in
2002.
 MPC HQ has been in Butte since 1912.
 Approx. 1,420 employees
NWE BACKGROUND
SAP AT NWE
NWE has been using SAP since 2000. We went through different projects to
get to where we are today:
 MPC live on 4.5b version in May 2000
 NWE – SD/Neb operations live June 2002
 Upgrade to 4.6c in Nov 2002
 ECC 5.0 Oct 2006
 ECC 6.0 – SP12 EP2 June 2008
 CU/OLC Go-Live Feb. 19 2009
 EHP5 Upgrade – OLC to OAA Conversion – June 2012
Our OAA integration solution touches FI, HR, MM,
Assets, PM, CS/SD, PS, WM, BW, CU/OAA, CLM
THE NWE PROJECT
Common Terms/Abbreviations
“SAP’eze”
OAA = Operation Account Assignment
 Previously OLC – Operation Level Costing
OP ACT = Operation Activity
CU
= Compatible Unit
LDPro = Electric & Gas distribution line design
software tool
THE NWE PROJECT
What is CU/OAA?
SAP Enhancement Pack 2 delivers:
 Compatible Units (CU)
 A Compatible Unit (CU) - a defined combination of
material(s) and associated labor hours to install or remove
those materials
SAP Enhancement Pack 5 delivers:
 Operation Account Assignment (OAA)
 Used in conjunction with Compatible Units
• But use of CU’s is not required
 Delivered with ECC 6.0 EHP5
 Provides estimated, planned & actual project costs in
terms of defined activities (Operation Activities)
• Lower level of detail than order
• Includes Statistics & Settlement Rules at Oper. Act level
• Allows Electric & Gas, Capital & Expense work on single
order
THE NWE PROJECT
Why Did We Need CU/OLC?
Need to capture more detailed construction data to:
 Provide more accurate customer estimates
 Evaluate customer collections for construction
 Manage costs at appropriate levels across large
geographic area
 Provide comparative construction data for industry
benchmarking
 Request tariff adjustments from PSC
THE NWE PROJECT
What are Compatible Units?
Example – Primary OH 3 Phase + Transformers
Cross arm
CU’s would be:
• CPOL-045-1-WRC = POLE, WRC, CL 1, 45 FT,
BUTT TRTD
• COARM-T-09S-38B = XARM, TAN,SGL,9FTX3.75
X 4.75, 38IN BRC
Conductor
• COCND-BR-1/0AS = COND, 1/0ACSR BARE
(RAVEN)
Transformer
• COGUY-WIR-10M = WIRE, GUY, 10M (50 FEET)
• COXF-1P-4604310 = 1PH 25kVA 7200/12470Y
120/240 NO TAPS
+ Each set of hardware and all other asst. parts for
the above CU’s would be a separate CU’s
• EACH CU CONFIGURATION INCLUDES THE LABOR
TO INSTALL EACH PART PLUS ALL MATERIALS
REQUIRED
Pole
Guy Wire
Compatible Unit Master Data Model
CU Category
CU Planning Plant
Functional Location
CU Reference Object
CU BOM Category
Equipment Record
CU Authorization Group
CU Classification
CU Master
CU ID and CU Description
Labor Hours
CU Primary Class
Materials
CU Instance Class
Task List
CU Influence Class
CU Secondary Class
Work Center
Activity Type
PRT’s
Operation Account Assignment
Operation Account Assignment
Allows for a single order with cost objects at the
operation level.
Each of the processes available at the order header
level are now available at the operation.
Enabled from the business switch framework by
activating business function LOG_EAM_OLC .
Operation Account Assignment
Operation Account Assignment
(cont.)
The OAA enhancement touches many parts of the
EAM work processes
 Cost Estimation
 Settlements
 Resource Related Quotation
 Investment Management
 Procurement
 Confirmations – Labor & Materials
 G/L Postings
PM Technical Objects integration
Enhancement with EHP5 also provides PS integration
via WBS assignment at the operation level.
Operation account elements included in PS reports
Benefits
Capturing and
Organizing Data to
capitalize on CU/OAA
framework
CAPTURING THE DATA
HOW?
 Order
 Budget Category
 Operation Activity
CAPTURING THE DATA – HOW?
The Orders
 Order Type
 Configured as OAA in IMG
 Created unique order type for OAA orders
CU20
• Can be used for combined Electric & Gas
• Used ED20 (Electric) an GD20 (Gas) previously
 Order Number
 Created unique order numbers for OLC orders
24xxxxxx
• Used 23xxxxxx for ED/GD20 orders
CAPTURING THE DATA – HOW?
The Orders?
(cont.)
 Order Header (GuiXt customized screen)
CAPTURING THE DATA – HOW?
Budget Category?
 Broad classifications of budgeted capital dollars
 Defined by “Priority” number input by user on the notification
 One Budget Category per OAA Order
 These will be the highest level of reporting by Operation Activities
Budget Category
Priority
Damages
0
Substation
1
Reactive
2
DOT GOV Relocate
3
Growth
4
Customer Requested Relocate
5
Townsend Propane Growth
6
SI Proactive
7
Capacity
8
Proactive Blanket
9
DSIP (Dist.System Infrastructure Proj.)
I
CAPTURING THE DATA – HOW?
Operation Activities
Need reporting at higher level than individual CU’s
(for NWE application)
 Each Operation Activity will include:
 Roll-up (“Bundling”) of all applicable CU’s based on design
 All Labor, Materials, Contractor Costs, Fleet & OH Loading, Customer
Payments, etc. recorded at this level
 Overhead Costing Sheets
 Includes Statistics (Plant Additions) and PRU’s (Property Retirement
Units)
 Settlement Rules
Can have several Op Acts on one order
Also identified as a primary characteristic on CU to
bundle and determine Operation
CAPTURING THE DATA – HOW?
Operation Activity?
 Provide for unit cost reporting and analysis
 Oper Act is a 4-digit # added to our 8-digit order #
Cost per foot
 Overhead 3 Phase Primary Install
 Underground Single Phase Primary Install
 2” Gas Main Install
Cost per unit
 Transformer Installed
 Electric Overhead Service
 Gas Service from Main
• KEEP NUMBER OF ACTIVITIES AT MANAGEABLE
AND USEFUL NUMBER
 Critical to expectation of capturing actual labor hours from
crews, materials and coding of Contractor invoices
 Ended up with 54 Operation Activities
DESCRIPTION
ELECTRIC ADDITIONS
1000
Primary UG Single Phase
1010
Primary UG 2 Phase
1020
Primary UG 3 Phase
1030
UG Cable Repl Single Phase
1040
UG Cable Repl 2 Phase
OPER
#
DESCRIPTION
OPER
1050 # UG CableDESCRIPTION
Repl 3 Phase
ELECTRIC
ADDITIONS
ELECTRIC
1100
Primary OHADDITIONS
Single Phase
1000
Primary
UG
Single
Phase
1000
Primary
UG
Single
Phase
1110
Primary
OH
2
Phase
1010
UG
23
Phase
1010 Primary
Primary
UG
2
Phase
1120
Primary
OH
Phase
1130
Pole
Replacement
- Install
1020 Primary
Primary
UG
Phase
1020
UG
33
Phase
1140
Transformer
Single
Phase
OH
1030 UG
UG
Cable
Repl
Single
Phase
1030
Cable
Repl
Single
Phase
1150
Transformer
Multi
Phase
OH
1040
UG
Cable
Repl
2
Phase
1040
UG Cable Repl 2 Phase
1160
Transformer
Single
Phase UG
1050 UG
UG
Cable
Repl
Phase
1050
Cable
Repl
33
Phase
1170
Transformer
Multi
Phase
1100 Primary
Primary
OH
SinglePhase
PhaseUG
1100
OH
Single
1200
Secondary
- OH
& UG
1110 Primary
Primary
OH
Phase
1110
OH
22
Phase
1300
Elect
SvcOH
- OH
Res
1120
Primary
3 Phase
1120
Primary OH 3 Phase
1310
Elect
Svc - OH Commercial
1130
Pole Replacement
- Install
1130
Pole
Replacement
- Install
1320
Elect
Svc - UG
from Phase
OH Res
1140
Transformer
Single
OH
1140
Single
Phase
OH
1330
Elect
Svc - UG
from
Stub OH
Res
1150 Transformer
Transformer
Multi
Phase
1150
Multi
Phase
1340
Elect
Svc - UG
from
XfmrOH
Res
1160 Transformer
Transformer
Single
Phase
UG
1160
Transformer
Single
Phase
UG
1350
Elect
Svc
UG
from
OH
Com
1170
Transformer Multi Phase UG
1170
Multi
Phase
1360
Elect
Svc - UG
from
StubUG
Com
1200 Transformer
Secondary
- OH
&
UG
1370
Elect
Svc
UG
from
Xfmr
Com
1200
Secondary
OH
&
UG
1300
Elect Svc - OH Res
1400
Lighting
Street
Light
1310 Elect
Elect
Svc
- OH
Commercial
1300
Svc
- OH
Res
1410
Lighting
Yard/Area
1320 Elect
Elect
Svc
- UG
from OH Res
1310
Svc
-- OH
Commercial
N
OPER
#
DESCRIPTION
1420
Lighting
Post
Top/Decorative
1330
Elect
Svc
UG
fromOH
Stub
Res
1320
Elect Svc - UG from
Res
1500
Substation
ELECTRIC
REMOVAL/RETIREMENT
OPER
# Svc
1340
Elect
Svc
- DESCRIPTION
UG
fromStub
XfmrRes
Res
1330
Elect
- UG
from
se
1900
UG
Primary
Removal
1350
Elect
Svc
UG
from
OH
Com
ELECTRIC
REMOVAL/RETIREMENT
1340
Elect Svc - UG from Xfmr Res
1910
OH
Removal
13601900
Elect
Svc
- UG
from
Stub
Com
e
UG
Primary
Removal
1350
Elect
Svc
-Primary
UG
from
OH
Com
13701910
Elect
Svc
UG
from
Xfmr
Com
OH
Primary
Removal
1920
Pole
- Removal
1360
Elect Svc
- Replacement
UG from
Stub
Com
14001920
Lighting
-Replacement
StreetService
Light - Removal
Pole
Phase1370
1930
UG -Electric
Removal
Elect Svc
UG from
Xfmr
Com
1410
Lighting
Yard/Area
hase
1930
UG
Electric
Service
Removal
1940
OH
Electric
Service
Removal
1400
Lighting
- Street
Light
14201940
Lighting
- Post
Top/Decorative
OH
Electric
Service Removal
1950
Lighting
Removal
1410
Lighting
- Yard/Area
15001950
Substation
Lighting
Removal
se
1960
Substation
Removal
1420
Lighting
- Post Top/Decorative
e
1960
Substation
Removal
1900
UG
Primary
Removal
1500
Substation
1900
UG Primary Removal
1910
OH Primary Removal
1910
OH Primary Removal
all
1920
Pole Replacement - Removal
all
1920
Pole Replacement - Removal
se
OH
1930 UG
UGElectric
ElectricService
Service Removal
Removal
e OH
1930
e OH
OPER #
1940
OH Electric Service Removal
OPER #
DESCRIPTION
ELECTRIC REMOVAL/RETIREMENT
1900
UG Primary Removal
1910
OH Primary Removal
1920
Pole Replacement - Removal
1930
UG Electric Service Removal
1940
OH Electric Service Removal
OPER##
DESCRIPTION
OPER
1950
LightingDESCRIPTION
Removal
ELECTRIC
REMOVAL/RETIREMENT
ELECTRIC
REMOVAL/RETIREMENT
1960
Substation
Removal
1900
UG
Primary
Removal
1900
UG
Removal
UG Primary
Primary
Removal
1910
OHPrimary
Primary
Removal
1910
OH
Removal
OH
Primary
Removal
Pole
Replacement
Removal
1920
Pole
-- Removal
1920
PoleReplacement
Replacement
- Removal
UG
Electric
Service
Removal
1930
UG
Service
Removal
1930
UGElectric
Electric
Service
Removal
OH
Electric
Service
Removal
1940
OH
Electric
Service
Removal
1940
OH Electric Service Removal
Lighting
Removal
1950
Lighting
Removal
1950
Lighting
Removal
1960
Substation
Removal
Substation
Removal
1960
Substation
Removal
GAS ADDITIONS
1900
UG
Removal
1900
UGPrimary
Primary
Removal
2000
GasPrimary
Less than
2-Inch Main
1910
OH
Removal
1910
OH Primary Removal
2010
Gas
2-Inch
Main
1920
Pole Replacement - Removal
1920
Pole
Replacement - Removal
2020
GasElectric
3-Inch Main
1930
UG
Service Removal
1930
UGElectric
Electric
Service
Removal
2030
Gas
4-Inch
Main
1940
OH
Service
Removal
1940
OH
Electric
Service
Removal
2040
Gas 6-Inch
Main
1950
Lighting
Removal
1950
Lighting
Removal
2050
Gas
8-Inch
Main
1960
Substation
Removal
1960
Substation
Removal
2060
Gas
Larger
than
8-Inch Main
GAS
ADDITIONS
2310
Gas
Svc
Res
from
GAS
ADDITIONS
2000
Gas Less than 2-InchStub
Main
2320
Gas
Svc
Resl
- from
Main
2010
Gas
Main
2000
Gas2-Inch
Less
than
2-Inch
Main
2330
Gas
Svc
Com
- from Stub
2020
Gas
Main
2010
Gas3-Inch
2-Inch
Main
OPER
#
DESCRIPTION
2340
Gas
Svc
Com
- from Main
2030
Gas
Main
2020
Gas4-Inch
3-Inch
Main
2410
Gas
Regulator
Stations
GAS
REMOVAL/RETIREMENT
OPER
#
DESCRIPTION
2040
Gas
Main
2030
Gas6-Inch
4-Inch
Main
2910
Service
Removal
2050
Gas
8-Inch
Main
GASGas
REMOVAL/RETIREMENT
2040
Gas
6-Inch
Main
2920
Gas
Main
Removal
2060
Gas
Larger
than
8-Inch Main
2910
Gas
Service
Removal
2050
Gas 8-Inch
Main
2310
Gas
Svc
Res
from
Stub
2920
Main Removal
2060 Gas
Gas
Larger than 8-Inch Main
2320
Gas Svc
Resl - from Main
OTHER
2310
Gas Svc
Res - from Stub
2330
Gas
Svc
Com - from Stub
OTHER
4000
EL
Permits/Easements/Other
2320
GasSvc
Svc
Resl
- from
Main
2340
Gas
Com
- from
Main
4000
EL
Permits/Easements/Other
4010
NG
Permits/Easements/Other
2330
GasRegulator
Svc Com
- from Stub
2410
Gas
Stations
4010
NG
Permits/Easements/Other
4400
Elect
Engineer
Labor
Gov Main
Reloc
2340
Gas
Svc
Com
- from
4400
Elect
EngineerLabor
Labor
GovReloc
Reloc
4410
Gas
Engineer
Gov
2410 Gas
Gas
Regulator
Stations
4410
Engineer
Labor
Gov Reloc
O
CAPTURING THE DATA – HOW?
O
CAPTURING THE DATA – HOW?
Operation Activity?
OLC Order Example
CAPTURING THE DATA – HOW?
Operation Bundling
Program
CAPTURING THE DATA – HOW?
Bundling Program for Order Creation
AS DELIVERED – Every CU used in the CU design creates an operation
on the order.
 1000 CU’s in design = 1000 Operations on order.
 The “Bundling” program combines CU’s and creates far fewer operations
on the order.
 Upon Creation of Order from Notification:
 CU’s are bundled based on Operation Activity
characteristic identified in the design
• Estimated Labor & Materials for individual CU’s are totaled for each Oper Act
 Settlement rules determined by combination of Location
(Sales Office), Budget Category and Operation Activity
 Statistics automatically populated
• Based on Custom CU’s (SpanLength; TrenchLength) and/or planned
materials (Poles, Conductor) and user defined fields for each operation
 WILL NEED TO BE CUSTOM – NOT DELIVERED YET BY SAP
CAPTURING THE DATA – HOW?
Without Bundling Program
 OLC Order created with each CU as Oper Act
 31 Individual Operations
CAPTURING THE DATA – HOW?
With Bundling Program
 OLC Order created with CU’s rolled up into applicable Oper Act
 5 Operation Activities
CAPTURING THE DATA – HOW?
What do Operation Activities Give Us?
Project to Install 1000 ft Single Phase UG Primary with
padmount transformer and 80 ft UG Service
Before OAA:
After OAA:
Project cost = $3,690
Project cost = $3,690
1 PH UG Primary = $2,340  2.34/ft
Padmount xfmr = $610  $610/xfmr
UG Service = $740
CAPTURING THE DATA – WHAT?
 Estimated (Planned) Costs
 Actual Costs
 Stats – Additions/Retirements
All by Op Act, Order & Budget Category
CAPTURING THE DATA – WHAT?
 Property Units - Additions & Removals
# of E & G Services
# of Poles
Feet of Primary
Feet of Conduit
Feet of Main
AGAIN - ALL AT THE OPERATION ACTIVITY LEVEL
CAPTURING THE DATA – WHAT?
 Stats Example - Addition
HOW IT ALL COMES TOGETHER
Notification
Construction
Measure
CU Design
CU Assignment
Operation
Activity on CU
Release
Settlements, Confirmations, Good Movement,
FI and CO documents are created with
operation as account assignment object.
Bundling
CU/OAA Order
CAPTURING THE DATA – HOW?
What are we using the
data for now that
we’re capturing it?
HOW ARE WE USING THE DATA
1. Cost Per Unit Reporting
 Primary purpose of OAA
 BW Reports
•
Now we have over 3 full years of data accumulated
 Reports provided directly to users monthly by:
•
Budget Category

•
•
•
•
Growth, System Integ., Cust Relocates, etc.
Operation Activity; OLC order
Current YTD; 12-Month; Prior Yr
Total System; Division/District
Overhead vs. Underground
 Based on Closed OAA orders only
HOW ARE WE USING THE DATA
1. Cost Per Unit Reporting (cont.)
 Used to evaluate :
•
•
•
•
•
Number and average length of E & G services installed by type
Cost per service by type (PSC filing requests)
Primary & Main cost per foot
Number of pole replacements performed and assoc. cost each
Compare work practices between areas


Identify large fluctuations in costs/unit
Identify inconsistent procedures
 Contractor coding
 Labor all charged to single activity
HOW ARE WE USING THE DATA
Example – Pole Replacements
Distribution System Infrastructure Project (DSIP)






Major New Capital & Expense Initiative
New Budget Category (Priority)
7 Years – est. $380M
Primarily Pole, UG Cable & Gas Main Replacements
Final approval in late November 2010
Kicking off January 2011 – “Soft Start”
The Challenge
 Approved budget amount for each program
 Needed to develop estimated # of units that could be
replaced for each
HOW ARE WE USING THE DATA
Example – Pole Replacements
The Solution – Pole Replacements
(cont.)
(report example slides to follow)
 Pole Replacement – Installs & Removals tracked in separate Oper
Acts
 Ran Cost/Unit Report for 12 mos ended 12/31/2010
 Segregated Pole Replacement – Install (1130) and Pole
Replacement – Removal (1920) Oper Acts
 Used SI Proactive Budget Category
o Most closely represents type of work to be performed
 Reviewed detail by OLC order to identify any “anomalies” and
remove if appropriate
 Recalculated Ave Cost/Pole to remove & replace
 Used results to estimate number of poles we could reasonably expect to
replace given $’s budgeted
 Repeated for UG Cable & Gas Main
HOW ARE WE USING THE DATA
Cost Per Unit Report  SI Proactive By Operation Activity?
HOW ARE WE USING THE DATA
Cost Per Unit Report  SI Proactive By Operation Activity?
REVIEW EXTREMES TO
DETERMINE IF THEY SHOULD
BE EXCLUDED
HOW ARE WE USING THE DATA
2. Engineer’s Estimates vs. Actual Cost Report
 Custom ABAP report
•
Can be run by Eng/Est, Constr. Mgrs & Dir. of Const.
 Closed orders ONLY
•
Growth & Customer Req. Relocate Budget Categories

Those where we had customer collections
 To evaluate accuracy of estimated costs
•
CU configuration

•
Hours, Materials
Engineer/Estimator’s ability to prepare accurate designs

Identify scope; circumstances; contractor needs; etc.
HOW ARE WE USING THE DATA
2. Engineer’s Estimates vs. Actual Cost Report (cont.)
 Estimated Costs drive customer quotes
•
•
Need to be sure we are covering costs where appropriate
Or – that we are not over-collecting from customers
 Variances by individual E/E currently used as factors
in their performance appraisals as of 2010.
• Must be <> 5%
 Had a significant impact on the accuracy
of estimates from 2009 to 2012
FINALLY – SOME ACCOUNTABILITY
HOW ARE WE USING THE DATA
Engineer’s Estimated Vs. Actual Report – Summary Comparison
2009 VARIANCE
- $ 2,267,849
-14.11%
12/31/2009
12/31/2012
2012 VARIANCE
- $171,846
-1.21%
HOW ARE WE USING THE DATA
Engineer’s Estimate vs Actual Cost Report – Summary by Engineer/Estimator
12/31/2012
57% Over
Estimate
HOW ARE WE USING THE DATA
Engineer’s Estimate vs Actual Cost Report - Drilldown to Value Category
12/31/2012
Planned for
Internal Labor
Used Contractor
RETURN ON INVESTMENT
 Accurate Estimated Costs are critical when they drive
contributions from customers requesting utility construction.
 Especially when contributions (CIAC’s) are collected in advance with no
opportunity for “true-up” based on Actual costs.
 Estimated vs. Actual cost variances on Growth and Customer Requested
Relocate work:
 2009 – prior to first full year of CU/OLC/OAA
 $2.3M (14.1%) variance – Actual ($18.4M) > Estimated ($16.1M)
 2012 – after 3 full years of CU/OLC/OAA
 $172K (1.2%) variance – Actual ($14.4M) > Estimated ($14.2M)
This represents over $2M in construction costs that we were
able to collect from the “Cost Causers”.
WHAT YOU NEED TO KNOW
1. COMPATIBLE UNITS

SAP DELIVERS
•
Flexibility to include about any configuration you may need



Characteristics
Install/Remove Hours
Materials. #’s & Qty
 YOU COME UP WITH
•
What you want to create as CU’s




Which “parts” to group together
Based on Standards
How to load them in
We were fortunate to already have most of what we needed in
LDPro – our Distribution Line design tool.
Note: You can create a tabular design in SAP using SAP CU design
builder
WHAT YOU NEED TO KNOW
2. OPERATIONAL ACCOUNT ASSIGNMENT

SAP DELIVERS
•
Configuration to categorize an order to be an OAA order
•
•
 BADI to assign customer defaults
 BADI to assign settlement rules
 Integration to PS via WBS assignment to an operation
Hierarchical relationships – OAA order as Sub-Order
Hierarchical drill-down reports in PM and PS
 YOU COME UP WITH
•
•
Bundling - to group CU/Operations to fulfill your requirements
either for scheduling purpose , supply management etc.
Billing - Customer Bill to integrate with OAA work order for credit is
not supported by SAP. A Custom approach is possible.
CAPTURING THE DATA – HOW?
QUESTIONS?
THANK YOU FOR PARTICIPATING
Please provide feedback on this session by
completing a short survey via the event mobile
application.
SESSION CODE: 2610 & 4708
For ongoing education on this area of focus,
visit www.ASUG.com