SAP Best Practices for
Engineering Construction and
Operations V1.604 (IN)
SAP Best Practices
General Information
SAP Best Practices for Engineering Construction and Operations was developed for small and
midsize companies to implement a solution quickly and easily.
The focus of this solution is primarily on construction companies that perform a subsantial portion of
the project work using their own workforce.
Functionalities
The SAP Best Practices for Engineering Construction and Operations V1.604 (IN) package supports
your business in the following areas :
Project
Management
Equipment
and Tools Management
Procurement
Accounting
Controlling
Analytics
SAP Best Practices for Engineering Construction
and Operations V1.604 (IN)Solution Scope
Project Management
Tender Process For Engineering and
Construction
Project Setup for Engineering and
Construction
Project Budgeting for Engineering and
Construction
Project Planning for Engineering and
Construction
Accounting
General Ledger
RFQs for Project-based Procurement
Accounts Receivable
Purchase Orders for Project-based
Procurement
Accounts Payable
Cash Management
Asset Accounting
Period End Closing Financial Accounting
Project Forecasting & Earned Value
Management
Time Entry for Construction
Revenue Recognition for Projects
Cross Functions
Period End Closing Activities
Travel Management
Contract Billing
Equipment and Tools
management
Equipment & Tools Management for
Construction
Procurement
Contract Billing for Engineering and
Construction
Black = Baseline Scenarios
Blue = Engineering Construction and Operations
Consumable Purchasing
Procurement Contract
Analytics
Project Reporting for Engineering and
Construction
SAP ERP Reports for Accounting
Industry-Specific Scenarios
SAP Best Practices for Engineering Construction and Operations
V1.604 (IN)provides the following industry-specific scenarios:

439 Project Setup for Engineering and Construction

440 Project Budgeting for Engineering and Construction

441 Project Planning for Engineering and Construction

442 RFQs for Project-based Procurement

443 Purchase Orders for Project-based Procurement

444 Equipment & Tools Management for Construction

445 Project Forecasting & Earned Value Management

446 Revenue Recognition for Projects

447 Contract Billing for Engineering and Construction

448 Project Reporting for Engineering and Construction

449 Time Entry for Construction

756 Tender Process for Engineering and Construction
439 Project Setup for Engineering and
Construction
Purpose and Benefits:
Purpose
A project structure can be a set of work packages with reference to the physical object
and construction disciplines into which the contractor organizes the work to perform,
mostly for accounting and time control purposes, and is designed for project control and
execution. It connects with the project owner needs reflected in a quote or awarded
contract. It provides cost and resources spread in a time perspective.
Benefits
The
project structure provides an organized view into manageable sections and
disciplines, which makes it possible to control all dimensions of a project, such as costs,
milestones, dates, resources.
Key process flows covered
Take
the needs of the client from the quote or awarded contract.
Take the original estimate for an assessment on the scope of services.
Devise a project framework following a Work Breakdown Structure approach
Devise tasks and milestones just enough to represent the relevant project steps
440 Project Budgeting for Engineering and
Construction
Purpose and Benefits:
Purpose
The project estimate, calculated when preparing the quote to the client, is essential to create
the preliminary project budget and major timelines. It has now to be embedded into the project
structure, having in mind the need of connecting the client needs with the construction view.
It’s typical that estimates are performed in a 3rd party solution or spreadsheets. The preliminary
budget provides the cost view and equally quantifies the scope of work (physical output or
production) and the necessary resources to be consumed in performing such production.
Benefits


The preliminary budget structure can be built mirroring the originating external estimate,
which makes it easier for planning engineers to achieve the task of connecting the client
world to the construction world in a first step.
Estimators and engineers work together, resulting in teamwork delivering a reconcilable,
reliable preliminary budget.
Key process flows covered



Create and assign a cost version to be used as the preliminary budget (version E01)
Import or re-key an external estimate master data into a project cost version
Deploy the items from the estimate within the project structure (WBS and network), for
resources (material, labor, equipment, lump sum items) for each line item with their
respective unit costs
441 Project Planning for Engineering and
Construction
Purpose and Benefits:
Purpose
A detailed project plan is put in place to commit resources, funding and the corporate staff, with
the ultimate goal of delivering the project.
The project plan can be comprised of schedule, work plan (hours), construction equipment,
purchase plan (construction material, equipment), budget (cost plan) and the production plan
(construction physical output).
Benefits
A
project plan is a solid, detailed management framework. It brings in elements to control
execution and forecasting, enabling the contractor to steer the project, thus creating conditions
to deliver on-time and on-budget
Numerous mechanisms to plan, simulate, execute, control, and forecast resources, costs and
time can be applied to the project plan, bringing superior ability to maneuver the project to be
delivered on budget and on time.
Key process flows covered
Devise
the project schedule
Devise the work plan
Devise the production plan (construction output)
Determine purchase requirements and create the purchase plan
Assign costs to the schedule and purchase plans
Compare preliminary budget to the new budget, adjust, release the project plan
442 RFQs for Project-based Procurement
Purpose and Benefits:
Purpose :
This scenario describes the typical processes used In the construction industry to solicit,
obtain, and compare supplier pricing information to select the appropriate supplier for the
material or subcontracted service to be procured.
Benefits
Standardizing RFP process
Transparent selection of the right supplier
Easy collaboration with suppliers
Key process flows covered
The process starts with the definition of the required materials and subcontracted services
for a specific project. The definition of the quotation criteria's and the bidding packages
are the next steps, followed by a selection of suppliers for the relevant quotation utilizing
price comparison report. The quotation will be compared, after the decision for the
relevant suppliers the purchase orders / subcontractor orders are defined.
The RFQ process is to a certain extent an optional process: It is also possible to purchase
materials & subcontractor services ad hoc by converting a purchase requisition into a PO
directly without the RFQ process (example: purchasing of low value materials or
equipment)
442 RFQs for Project-based Procurement
Purpose and Benefits:
Purpose
This scenario describes the typical processes used In the construction industry to solicit,
obtain, and compare supplier pricing information to select the appropriate supplier for the
material or subcontracted service to be procured.
Benefits
Standardizing
RFP process
Transparent selection of the right supplier
Easy collaboration with suppliers
Key process flows covered
The
process starts with the definition of the required materials and subcontracted services
for a specific project. The definition of the quotation criteria's and the bidding packages are the
next steps, followed by a selection of suppliers for the relevant quotation utilizing price
comparison report. The quotation will be compared, after the decision for the relevant
suppliers the purchase orders / subcontractor orders are defined.
The RFQ process is to a certain extent an optional process: It is also possible to purchase
materials & subcontractor services ad hoc by converting a purchase requisition into a PO
directly without the RFQ process (example: purchasing of low value materials or equipment)
443 Purchase Orders for Project-based
Procurement
Purpose and Benefits:
Purpose
This scenario describes the typical processes used in the construction industry to
generate and process purchase orders (PO’s). These PO’s are used to procure
materials, subcontracted services with retentions and equipments with the aspect of
progress tracking.
Benefits



Transparent view of created outstanding orders, commitments and delivery
Standardized invoice handling by using retentions
Progress tracking option based on PO’s for equipments
Key process flows covered

Transforming purchase requisitions (PR’s) into purchase orders (PO’s)for
materials, subcontracted services and equipments, create PO’s directly without
using master records, define delivery commitments, create goods receipt and
service entry. Invoice receiving and handling from suppliers with progress tracking
and quality tracking. Handle retentions for the subcontracted services.
444 Equipment and Tools Management
Purpose and Benefits:
Purpose
Addresses the unique requirements of self performing construction companies, building
contractors and equipment distributors by handling the industry-specific business processes such
as equipment planning, -processing, -settlement and evaluation of resources (equipment and
materials) including performance measurement.
Benefits
Improve
the availability and tracking of equipment
Manage
the increasing administrative workload
Reduce handling and administration cost
Introduce most flexible prices and account determination
Optimize equipment utilization
Improve the visibility of profitability, TCO and return on asset and equipment
Key process flows covered
Timebased
Equipment Process
Timebased Equipment Process including 3rd Party Rental Equipment
Performance Based Equipment Process
Non-Consumable Material Process
Consumable Material Process
445 Project Forecasting & Earned Value
Management
Purpose
Earned Value Management is used to evaluate current project performance. Earned
value management is a method to accurately determine a project’s health in terms of
cost and schedule progress against the plan.
Project Forecast is used to evaluate based on the past performance of the project the
future course of the project. It provides insights how current productivity, for example, will
impact the project’s final results and is used to indicate areas of concerns.
Benefits

Both processes provide project insights which are essential for the management to
control the future course of the project.
Key process flows covered



Determine the planned and actual POC, based on defined rules and POCs estimated
manually or automatically
Determine Earned Value and other KPIs like productivity, cost performance index,
and scheduling performance index
Project Forecasting
Process prerequisites


Posting of project actual cost and quantities like time
Enter Network confirmations
446 Revenue Recognition for Projects
Purpose
In industries such as engineering and construction, it can take months or years to finish
an entire project. Therefore, it is essential to recognize revenue against the time spent,
cost incurred, or milestones achieved.
Results Analysis (RA) is a sophisticated tool within the Controlling module that
computes the cost of sales, WIP inventory and the reserves for unrealized revenue or
surplus revenue. It uses percentage of completion based upon planned costs and
revenue to calculate the values.
Key process flows covered
Execute
Results Analysis
Perform Settlement
Project Reporting for revenue posting and related KPI’s
Prerequisites
Essential
master and organizational data was created in your ERP system in the
implementation phase, such as the data that reflects the organizational structure of
your company and master data that suits its operational focus, for example, master
data for materials, vendors, and customers.
The pre-requisite for executing results analysis is that an appropriate RA key has
been assigned to the top level WBS element during the setup of the project.
447 Contract Billing for Engineering and
Construction
Purpose and Benefits:
Purpose
This scenario covers the three primary contract billing processes used by the
engineering construction and operations industries, the first is Lump-Sum Contract
with Milestone Billing, the second is Bill of Services – Unit Price Contract with
Service Entry Sheet and third is Cost Plus and Time and Material Billing (RRB)
Benefits
Project
Management
Contract Management
Milestone Billing according to performance of defined Milestones
Key process flows covered
Lump-Sum
Contract with Milestone Billing
Bill of Services – Unit Price Contract with Service Entry Sheet
Cost Plus and Time and Material Billing (RRB)
448 Project Reporting for Engineering and
Construction
Purpose and Benefits:
Purpose
Show basic reports for a project manager / project controller in a construction
environment. Custom reports developed using Report Painter tool. Standard
delivered project financial reports.
Benefits
View
of cost, revenue, cash flow, earned value, installed quantities, recognized
revenue, project forecast, budget as out of the box reporting capabilities
Key process flows covered
Budget (Project Overview) Report – Orginal Budget, Changes, Current
Budget, Actual Cost, Commitment, Forecast as main KPI
Project Progress & Productivity Report – PoC, EVA, Budgeted and Installed
Quantities, Productivity, Actual Cost as main KPI
Project
449 Time Entry for Construction
Purpose and Benefits:
Purpose
Record working hours for employees, installed quantities. Transfer hours and derived cost to project.
Assign prevailing wages against employee and the working hours. Maintain employee information as
new hires come onboard or employees leave the company. Maintain the company organization
structure – maintain organizational units, jobs and positions.
Benefits
Hours
and quantities (as statistical key figures) can be entered in an easy to use UI
Hours and Quantities can be transferred to the project as base for cost, productivity and progress
reporting
Key process flows covered
Entry
of Time and Quantities installed for one person
Timesheet approval process
Time
and Material Project - Transfer to Costing Object (Projects, FI/CO)
Maintenance of employee mini master records
Maintenance of the company organizational structure
756 Tender Process For Engineering and
Construction
Purpose and Benefits:
Purpose
 This scenario describes the tender processing in a standard EC&O environment.

SAP functionalities of Sales & Distribution (SD) and of Project System (PS) are used to control the
complete process, from customer inquiry to the handover to project construction (described in the
scenario 447, Contract Billing).
Benefits
Deep
integration to the project structuring and calculation allows for a consistent controlling of all steps
and values
 Copy functionalities – e.g. from inquiry to quotation – are facilitating compliance with the process rules
 Document management – feasibility study document, drawings are linked to WBS element
 Easy cost planning is used to estimate project cost roughly for quotation
Key process flows covered

Creation of inquiry with linkage to project
 Easy Cost Planning
 Creation of quotation with reference to the inquiry
 Integration to the project system including calculation costing and scheduling functionalities
 Assignment of technical documents