Resource Related Billing (RRB) Configuration And Usage

Resource Related Billing (RRB) Configuration And Usage

Resource Related Billing (RRB) Configuration And Usage

Resource Related Billing (RRB) Configuration And Usage Page 1 Welcome to Dassian International Is your business project-centric in nature, or do projects rank highly in importance to your organization? Are you realizing the maximum potential from your SAP investment? Dassian is an International company with over 3000 customers across 4 continents, founded in November 2000 and headquartered in Arizona, USA. Our Focus Dassian are experts in Program and Contract Management including compliance with US Government requirements and Cost Accounting Standards. In addition we provide thought leadership and design for SAP's product roadmap.

Our affordable product applications are available to bridge the known functionality gaps with a low cost support model.

Our people have in-depth industry expertise coupled with a broad and rich SAP knowledge that has been acquired through many successful project lifecycles. We take a 'why not SAP' approach which enables our customers to leverage their SAP investment. We have the experience and track record to help you get the best from your SAP systems. Please take a moment to look at our capabilities ranging from SAP certified Add-On products and support through to expert consulting services. You can browse by industry or Dassian competency. For more detailed information on the value Dassian can bring to your company, please contact us.

Knowledge Base To assist our current customers and future customers, Dassian is offering this document as a knowledge source. Through this document our customers should be better able to make informed decisions about the appropriate resources, tools, and solutions in regards to the topic discussed in this paper.

Contact Information Erik C. Hayes, Partner Ehayes@dassian.com Barb McElnea, Partner bmcelnea@dassian.com 6900 E. Camelback Rd, Suit 805 Scottsdale, Arizona 85251 www.dassian.com (480)922-1700

Resource Related Billing (RRB) Configuration And Usage

Resource Related Billing (RRB) Configuration And Usage Page 2 TABLE OF CONTENTS INTRODUCTION . . 3 RESOURCE RELATED BILLING (RRB) PROCESS FLOW DIAGRAMS . . 4 Configuration Process Flow . . 4 Contract Setup, Maintenance and Billing Process Flow . . 5 CONFIGURATION STEPS . . 6 1. CREATE SALES DOCUMENT TYPE . . 6 2. CREATE ITEM CATEGORY . . 8 3. ASSIGN ITEM CATEGORY TO SALES DOCUMENT TYPE .

. 11 4. CREATE BILLING REQUEST TYPE . . 14 5. ASSIGN THE DMR TYPE TO THE CONTRACT DOCUMENT . . 17 6. CREATE COPY CONTROL FOR BILLING DOCUMENT ITEMS . . 18 7. CREATE CONTRACT ITEM TARGET PRICE CONDITION . . 20 8. CREATE PERCENTAGE FEE CONDITION TYPE . . 24 9. CREATE THE CONTRACT PRICING PROCEDURE . . 27 10. CREATE DMR PRICING PROCEDURE . . 29 11. UPDATE ZRRB DMR PRICE PROCEDURE . . 31 12. CREATE DOCUMENT PRICE PROCEDURE . . 32 13. ASSIGN DOCUMENT PRICE PROCEDURE TO ORDER TYPE . . 34 14. CREATE PRICE PROCEDURE DETERMINATION . . 35 15. ASSIGN COST CONDITIONS TO SALES AND DISTRIBUTION DOCUMENTS .

. 36 16. CREATE DYNAMIC ITEM PROCESSOR (DIP) PROFILE . . 37 17. COSTING SHEETS - DEFINE CALCULATION BASE FOR OVERHEADS . . 46 18. COSTING SHEETS – CONFIGURE OVERHEAD RATES . . 48 19. COSTING SHEETS – DEFINE CREDITS FOR OVERHEAD . . 51 20. CREATE COSTING SHEET . . 54 MASTER DATA REQUIREMENTS . . 58 The Customer Master . . 58 Service Materials . . 58 Sets and Cost Element Groups . . 60 Project Systems Requirements . . 62 CONTRACT SETUP . . 65 Contract Period of Performance . . 65 Control of Resource-Related Billing and Creation of Quotations . . 65 Item Account Assignment . . 66 Contract Line Item Pricing .

. 66 USING PRICING CONDITIONS . . 68 RESOURCE RELATED BILLING . . 70 Resource-Related Billing . . 70 Generate Invoice . . 77

Resource Related Billing (RRB) Configuration And Usage

©2008 Dassian Inc all rights reserved Page 3 of 80 INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION Purpose of this guide Resource Related Billing (RRB) is the SAP term for its functionality whereby billings can be generated based upon the resources (hours, costs etc) consumed. These types of billings are common in both the commercial and government business sectors and appear in many forms: Time and Material Services, Cost Type (Cost Plus Fee etc) Billings, Development Programs, Power by the Hour Support Contracts etc.

This document is designed to be a step by step guide to successfully configure and execute a simple resource related billing (RRB) model.

While each user’s actual business requirements will vary, the fundamental processes within SAP are fairly standard. By following the steps within this guide, users can create a working RRB solution based upon standard configuration settings that can be tailored to meet their specific requirements. While this document is not intended to be a detailed reference guide on SAP functionality, the following topics are covered in sufficient detail to build the RRB model discussed herein. • RRB Solution Requirement Considerations • RRB Configuration in the IMG • Sales and Billing Documents • Pricing Procedure Design • RRB requirements from Project Systems • Simple Costing Sheet Development • Executing Resource Related Billing (DP91) Who should use this guide This guide is designed for people in the following roles: • Contract Administrators • Contract Billers • Consultants • System Administrators What you should know before using this guide The guide is really intended to be a step by step walk through of a simple RRB solution model.

While quite a bit of detail specific to the model is presented, it is not intended to be a reference for general SAP configuration or functionality. It is therefore helpful to possess a good understanding of the SAP Project System, SAP Sales & Distribution, and the integration of these modules with SAP Controlling. You should also have a good understanding of your internal business processes for Contract Management, Contract Billings, and the tracking of costs associated with your projects.

Resource Related Billing (RRB) Configuration And Usage

©2008 Dassian Inc all rights reserved Page 4 of 80 RESOURCE RELATED BILLING RESOURCE RELATED BILLING RESOURCE RELATED BILLING RESOURCE RELATED BILLING (RRB) (RRB) (RRB) (RRB) P P P PROCESS FLOW DIAGRAMS ROCESS FLOW DIAGRAMS ROCESS FLOW DIAGRAMS ROCESS FLOW DIAGRAMS The following flow diagram illustrates the configuration steps that are required to set up the RRB model described within this document. It may be useful to refer back to it while using this document to understand how the process step fits. Configuration Process Flow

Resource Related Billing (RRB) Configuration And Usage

©2008 Dassian Inc all rights reserved Page 5 of 80 Contract Setup, Maintenance and Billing Process Flow The following is a top level process flow that provides a high level, step by step illustration for the contracts and billing process.

This will be useful to better understand the timing and dependencies of the steps described in this document.

Resource Related Billing (RRB) Configuration And Usage

©2008 Dassian Inc all rights reserved Page 6 of 80 Configuration Steps Configuration Steps Configuration Steps Configuration Steps 1. Create Sales Document Type Since RRB is a billing function, it relies on some sort of customer sales document as its source. This sales document defines the customer, the payment terms, shipping information etc to facilitate the sale. Within SAP, there are several different documents types that can be used for this purpose, such as Contracts, Sales Orders, Service Orders, Plant Maintenance Orders etc. Although these document types vary a bit in logistics functionality, for RRB purposes they all behave pretty much the same.

For more detailed information of the differences in these document types, see the SAP Help. For purposes of this guide, we will use a Contract as our document type. The following steps guide through the creation of a basic a basic Contract.

Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Sales and Distribution>Sales>Sales Document Header> Select: Define Sales Document Types SAP will open a window with a list of all the currently defined Sales Order Types. A new Sales Order type can either be entered from scratch or created by using an existing document as a template. We will use the document type CQ as a template and use the “Copy” functionality. The advantage in copying an existing document type is that it will bring along a lot of configuration that likely already meets many of your requirements.

In many cases, only a little editing will be required. On the down side, it may bring along more than you really need. This is usually not a real problem as you can easily delete what is not needed.

Resource Related Billing (RRB) Configuration And Usage

©2008 Dassian Inc all rights reserved Page 7 of 80 c) Select the sales order type (SaTy): CQ = Quantity Contract as the source document to copy. d) Press the “Copy” icon. Pressing the copy icon will open CQ contract in change mode. The user can then make the required changes to the document definition and rename it: e) Rename the document type. For this document example, we will call it ZRRB = Resource Rel Contr. That is really all that needs to be done at this time. The configuration that comes along will be sufficient for now.

The Billing Request document type (LV) that is assigned by default will need to be changed, but we will need to first go create a new request type and then come back and assign it.

Resource Related Billing (RRB) Configuration And Usage

©2008 Dassian Inc all rights reserved Page 8 of 80 f) Save doc type ZRRB Notice that during saving, that the copy control configuration was also created. 2. Create Item Category Once our Contract type is created, we are ready to create the item category. The item category is very important. The item category defines how sales items on the sales document will behave in terms of logistics, pricing and billing . For our RRB example, we want an item category that identifies our Dynamic Item Processor (DIP) and our price procedure. These two ingredients are really all that we need from the item category that will be unique.

We therefore want to again find a suitable “template” item category that we can use to copy from. Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Sales and Distribution>Sales>Sales Document Item> Select: Define Item Categories

Resource Related Billing (RRB) Configuration And Usage

©2008 Dassian Inc all rights reserved Page 9 of 80 The Define Item Categories button will open a list of all the existing item categories. This will probably be a very long list and there will be many very subtle variations between them if any at all. Still, it is usually a good idea to create a new item category if it can be logically identified to a specific business process. This will make it much easier to change later without causing an impact in other business processes. For our purposes we will use the item category TAD as our template. c) Press the “Copy” icon.

Pressing the copy icon will open the item category in change mode.

The user can then make the required changes and rename it:

Resource Related Billing (RRB) Configuration And Usage

©2008 Dassian Inc all rights reserved Page 10 of 80 d) Rename the item category. For this document example, we will call it ZRRB = RRB Service. The only items that are required to be set are the Pricing and Business item selections in the Business Data block and the DIP profile in the Control of Resource-related Billing and Creation of Quotations block (at the bottom). e) Set the Dynamic Item Processor (DIP) profile. The DIP is the key to resource related billing. It establishes the rules for how the costs will be gathered and categorized for billing.

Since we are creating this item category from a template, it already has a DIP profile assigned.

We will need to create a new DIP profile in configuration and then come back to assign it to our item category. f) Save the new item category.

©2008 Dassian Inc all rights reserved Page 11 of 80 Notice again that the copy control comes along from our template item category. 3. Assign Item Category to Sales Document Type A sales document, (our contract in this case), is capable of having many different item categories useable. In order to utilize the item category that we created in the prior step, there are some assignments that must be made. SAP uses a combination of keys to reconcile which item category to propose on a sales document. These relationships must be established in configuration first. Later in this document we will discuss the role that the Service Material has in determining the item category.

Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Sales and Distribution>Sales>Sales Document Item> Select: Assign Item Categories

©2008 Dassian Inc all rights reserved Page 12 of 80 The Assign Item Categories button will open a list of all the existing item category assignments. The assignment table has the following keys: SaTy : Sales Document Type ItCGr: Item Category Group Usg: Usage HLevICa: Higher Level Item Category DfltC: Default Item Category MltCa: Manual Item Categories Allowed For purposes of this document, we will only need to worry about the relationship between: SaTy>ItCGr>DfltC This will propose an item category based on our new document type and the type of material that is entered (We will be using a Service Material).

c) Find a suitable entry to copy. Because we have been creating everything from copies of existing configuration, there is already an entry for our new document type. Select a ZRRB entry a) Press the “Copy” icon.

©2008 Dassian Inc all rights reserved Page 13 of 80 When we press the copy icon, the selected assignment opens in change mode. We can now change the Item cat group and default Item category. b) Change Item Category Group to LEIS The item category group is a characteristic that is associated with the material that will be sold. We are going to be selling a service in our example and will use the standard ItCGr LEIS.

LEIS = Service w/o delivery. This code will be entered onto our Service Material that we will create later in this document.

c) Change Default Item Category to ZRRB The default item category is the item category that the system will propose. In this case, we want it to propose the ZRRB item category that we created earlier. d) Save the new item category assignment.

©2008 Dassian Inc all rights reserved Page 14 of 80 4. Create Billing Request Type During the billing a process, a debit memo request (DMR) is generated with billing line items as proposed by the DIP profile. In RRB, a billing request or DMR can be thought of as a pre-billing document. The purpose of the DMR is to show how the billed resources/costs have been handled and provide a way for the user to review and approve the billing prior to final invoice.

Once approved, the DMR is billed and an invoice is created.

We referred to the need to create a new billing request earlier in this document in the “Create Sales Document Types” section. To better understand the relationship between the contract and DMR, consider the following example: Contract Item 010 Deliver Prototype Target Price = $1,000,000 Billing Request (RRB billing) Item 010 Labor Price=$100,000 Item 020 Material Price=$250,000 Item 030 ODC Price=$75,000 Total Billing $425,000 The above example illustrates that the contract identifies what is being sold while the DMR is the product of the RRB process and contains the billing line items derived from the DIP profile.

In our ZRRB document, the Billing Request type LV defaulted in since we used a template to create our document type.

We must now create a new billing request type by copying LV and assign it to the ZRRB document. Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Sales and Distribution>Sales>Sales Document Item> Select: Define Sales Document Types

©2008 Dassian Inc all rights reserved Page 15 of 80 SAP will open a window with a list of all the currently defined Sales Order Types. We will use the document type LV as a template and use the “Copy” functionality. g) Select the sales order type (SaTy): LV = Deb.MemoReq.

f.Ctrct as the source document to copy. h) Press the “Copy” icon. Pressing the copy icon will open LV contract in change mode. The user can then make the required changes to the document definition and rename it:

©2008 Dassian Inc all rights reserved Page 16 of 80 There really are just a couple of changes required to the LV for our example. The standard LV document will suite our model just fine, but we will need to change the document pricing procedure to one that is specific to our RRB model. This key field helps identify what pricing procedure to use (and therefore how to calculate price) on the sales order. By creating a new document price procedure, it will be easier to assign the actual price procedure later in this document. For now just note where the assignment is made. We will create a new document price procedure in the IMG and come back to this field later.

i) Rename the document type.

For this document example, we will call it ZLV = Resource Rel Contr.

©2008 Dassian Inc all rights reserved Page 17 of 80 Note the default billing type (the invoice that will be ultimately created from the DMR) is assigned to type L2. This is sufficient for most needs. If not, then a copy of L2 should be created and entered into the order related billing field on the DMR type. This is located near the bottom of the document in the Billing section. j) Save the new Debit Memo Request 5. Assign the DMR type to the Contract Document In this step, we will assign the new DMR (billing request) that we just created to the sales document (contract) that we created earlier.

Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Sales and Distribution>Sales>Sales Document Type> Select: Define Sales Document Types c) Choose document type (SaTy) ZRRB d) Press magnifying glass icon. This will open the existing document in change mode. e) Enter “ZLV” (our new DMR type) in the field labeled Billing request

©2008 Dassian Inc all rights reserved Page 18 of 80 f) Save the document by pressing the save icon The new billing request is now associated with our contract 6. Create Copy Control for Billing Document Items The new DMR type ZLV has a default billing type of L2 because it was copied from the LV document.

The item category ZRRB needs to be added to the copy control so that it is brought in during billing later. Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Sales and Distribution>Billing>Billing Documents Select: Maintain Copy Control For Billing Documents c) Choose Copy control: Sales document to billing document d) Enter Data: Billing Type = L2 SalesDocType=ZLV

©2008 Dassian Inc all rights reserved Page 19 of 80 e) Select the Entry and Press the Item Folder to see the current entries. f) Create Entry for ZRRB by copying and existing entry:

©2008 Dassian Inc all rights reserved Page 20 of 80 g) Save the addition to copy control by pressing the save icon 7. Create Contract Item Target Price Condition Now that all the document types have been created, it is time to develop the pricing rules that will be applicable in the contract document and in the billing request. Each will have its own pricing rules and therefore its own pricing procedure.

To review, in Resource Related Billing, the DMR is really the document where the individual resources are priced and sold. The contract (or sales order if applicable) pricing procedure therefore only needs information that is applicable to the Service Material being sold such as the item target price etc. It is not actually billed.

We will need to create two pricing procedures: One for the contract and one for the DMR. Before we can create these pricing procedures, we need to create the pricing conditions that will be used within the procedures. Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Sales and Distribution>Basic Functions>Pricing>Pricing Control> Select: Define Condition Types

©2008 Dassian Inc all rights reserved Page 21 of 80 A popup menu will appear with some additional choices. c) Choose Maintain Condition Types This will display the existing conditions and provide an opportunity to create new ones.

We are going to first create a condition called “ZCON” to represent the contract item target price. We will then add it to a contract price procedure in a follow on step. d) Select condition type (CTyp) PPSV=Service Price Item This condition type will provide all the functionality that is required for this example. We will therefore use it as a template to copy from and create a new condition type. e) Press the copy icon The condition type PPSV will open in change mode. This will need to be modified slightly for our requirements, however not much functionality is required.

©2008 Dassian Inc all rights reserved Page 22 of 80 f) Update PPSV Condition Type. Resave as ZCON condition Type Change Condition Type to “ZCON” Remove “PPPV” access sequence. It will not be required for our model. Change Description to Contract Item Price Change Calculation type to “C” = Quantity

©2008 Dassian Inc all rights reserved Page 23 of 80 No other changes are required for this condition. This will be sufficient to hold the contract item target price.

©2008 Dassian Inc all rights reserved Page 24 of 80 8.

Create Percentage Fee Condition Type: When we create the pricing procedure for the DMR later in this document, our model will require a percentage fee to be applied to the incurred costs. We will therefore need another condition type which we will call “ZFE1” that will serve as a percentage fee condition and allow us to create a “cost plus fee” billing. We will use the “ZCON” condition type created in the previous step as a template. If you skipped that step then use the standard “PPSV” condition type as the template. Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Sales and Distribution>Basic Functions>Pricing>Pricing Control> Select: Define Condition Types A popup menu will appear with some additional choices.

c) Choose Maintain Condition Types This will display the existing conditions and provide an opportunity to create new ones. We are going to first create a condition called “ZFE1” to serve as a surcharge on the DMR billing items that will be generated during RRB. We will then add it to a DMR procedure in a follow on step.

©2008 Dassian Inc all rights reserved Page 25 of 80 d) Select condition type (CTyp) “ZCON”= Contract Item Price We will use this as our template, but several changes will need to be made. e) Press the copy icon The condition type ZCON will open in change mode. This will need to be modified in several places. f) Create ZFE1 Condition Type from ZCON • Change Condition Type to “ZFE1” • Change Description to Cost Type Fee Item • Enter access sequence if required. The access sequence is simply a way to establish various condition values within master data and then determine which one will come into the pricing procedure.

There are a lot of standard ones available that can be used or custom access sequences can be developed for specific requirements. The creation of these is beyond the scope of this document, but can be easily found within SAP Online Help. We will use a custom access in this example called ZAPR which allows our fee to be assigned to a specific contract number.

©2008 Dassian Inc all rights reserved Page 26 of 80 • Change Calculation type to “A” = Percentage • Enter “C” for Manual Entries. This will allow us to override the calculation if desired. After all the entries have been made, the condition must be saved.

©2008 Dassian Inc all rights reserved Page 27 of 80 9. Create the Contract Pricing Procedure As mentioned earlier, we will need two pricing procedures for our RRB model. The first procedure will be assigned to our contract document and utilize the ZCON price condition to hold our line item target price.

Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Sales and Distribution>Basic Functions>Pricing>Pricing Control> Select: Define and Assign Pricing Procedures A popup box will appear when the selection is made. Within this box are several options related to price procedure configuration. We will perform several of these functions in the next few steps.

c) Choose Maintain pricing procedure The contract price procedure requires very little functionality for our model. We will therefore not need to use a template to create it as we have done on other areas in this document. The following workbench will open. The left side of the screen controls the navigation to the various levels within the procedures. The right side of the screen shows the existing procedures.

©2008 Dassian Inc all rights reserved Page 28 of 80 d) Press New Entries button A blank line will appear where a new procedure can be entered.

e) Create ZCONT Pricing Procedure Procedure = “ZCONT” Description =”Contract Pricing” No other information is need at this level, However, we will need to click on the “Control Data” icon to enter the details. f) Select ZCONT and Press Control data The control data is just the steps within the price procedure that determines what the price will be.

Since it is a new procedure and not copied from a template, there will not be any rows until we create them.

©2008 Dassian Inc all rights reserved Page 29 of 80 g) Press New Entries button The rows will change from grey to white and allow entry h) Create the Contract Item Pricing Steps Step CTyp Description Stat Reqt BasTy AccK 10 ZCON Contract Item Price 2 ERL 20 Total Contract Value X 2 This procedure will use the pricing condition ZCON to allow the user to manually enter a contract item price. The requirement is set to 2. This just checks to make sure that the condition is actually a price condition in this step.

The BasType is set 2. This setting controls how the base is calculated for the step. In this case, the total contract item value is the net value that is calculated in the procedure. If additional surcharges or discounts are later added, this entry will keep the Total Contract Value statistic accurate. 10. Create DMR Pricing Procedure

©2008 Dassian Inc all rights reserved Page 30 of 80 In addition to the contract pricing procedure that we just created, we will need a price procedure for the DMR. This procedure will be more complicated than the ZCON because it will need read costs from our source (Project Structure) and add a percentage fee (condition ZFE1).

It may be desirable to find a template procedure to use. A good procedure to use as a template is PREP01 because it has the basic elements required for resource related billing. Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Sales and Distribution>Basic Functions>Pricing>Pricing Control> Select: Define and Assign Pricing Procedures A popup box will appear when the selection is made. Within this box are several options related to price procedure configuration. We will perform several of these functions in the next few steps.

a) Choose Maintain pricing procedure As before, a workbench will open. The left side of the screen controls the navigation to the various levels within the procedures. The right side of the screen shows the existing procedures. b) Select the PREP01Repairs price procedure. This will be the template for our DMR price procedure. c) Press the copy icon

©2008 Dassian Inc all rights reserved Page 31 of 80 d) Change the Procedure name to “ZRRB” and press the save icon Our new price procedure ZRRB is now created. It will need to be modified however to include a surcharge for preparing cost plus fee billings.

11. Update ZRRB DMR Price Procedure For our example we will need to delete the condition type PRRP because it will not be needed. Additionally, we will need to add a percentage fee that will be applied to the actual posted costs for billing purposes.

Configuration Steps: Reopen the ZRRB price procedure in change mode. Refer to earlier screenshots if necessary. a) With the ZRRB procedure open in change view, select the Control data tab to the left.

©2008 Dassian Inc all rights reserved Page 32 of 80 a) Delete PRRP Condition. This is not needed for the model. • Select step 10. Press the delete icon b) Add a Percentage Fee ZFE1 condition (created earlier in this document). This condition will allow a fee to be added to the incurred costs. • Press New Entry button • Enter the following Data o Step = 250 o CTyp =ZFE1 o From =100 o Print = X o AcctK=ERL c) Optional: Delete unnecessary rows in the procedure.

For purposes of simplifying the example, all but the bare essentials have been deleted from the procedure. Note: In this model, the percentage fee would be applied to all billing items. If this is not desired, a requirement (Reqt) should be created based on the materials that are to appear in the DMR. For instance if the fee was not applicable to material, but is applicable to labor. 12. Create Document Price Procedure

©2008 Dassian Inc all rights reserved Page 33 of 80 The document procedure is simply a key that will help during pricing procedure determination. This was discussed earlier in this document. Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Sales and Distribution>Basic Functions>Pricing>Pricing Control> Select: Define and Assign Pricing Procedures A popup box will appear when the selection is made. Within this box are several options related to price procedure configuration.

Choose Define document pricing procedure c) Press New Entries Button and Enter Data • DoPr = Enter an unused character to be used as the new Document Price Procedure • Description

©2008 Dassian Inc all rights reserved Page 34 of 80 d) Press the save icon 13. Assign Document Price Procedure to Order Type Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Sales and Distribution>Basic Functions>Pricing>Pricing Control> Select: Define and Assign Pricing Procedures A popup box will appear when the selection is made. Within this box are several options related to price procedure configuration. Choose Assign document pricing procedure to order types c) Assign the New Document Price Procedure to the ZLV Document d) Press the save icon

©2008 Dassian Inc all rights reserved Page 35 of 80 This document price procedure is now assigned. This can also be seen by viewing the document type itself. 14. Create Price Procedure Determination This step will establish criteria underwhich our previously created price procedures will be utilized in our sales order types (both the contract and the DMR). Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Sales and Distribution>Basic Functions>Pricing>Pricing Control> Select: Define and Assign Pricing Procedures A popup box will appear when the selection is made.

Within this box are several options related to price procedure configuration.

Choose Define Pricing Procedure Determination c) Press New Entries and Enter Data • Sales Org = Sales Organization • DChl = Distribution Channel • Div = Division • DoPr = Document Price Procedure created earlier • Price Procedure = ZRRB • CTyp = This is the Condition that will be displayed on the sales order line item. Choose EK01.

©2008 Dassian Inc all rights reserved Page 36 of 80 d) Press the save icon The ZLV DMR will now have the correct price procedure assigned to it (ZRRB). It is a good idea to validate that the contract document will bring in the correct price procedure also.

In our model, the ZRRB document (the contract) has the document price procedure “1” . The correct entry for Price Procedure Determination of this document is therefore: The pricing procedure determination is now complete. 15. Assign Cost Conditions to Sales and Distribution Documents In this step we will tell identify which condition used within the price procedure represents cost. In our case, we want EK01 to be identified as a cost condition and to hold the value of the actual costs from the project during pricing.

Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Project Systems>Revenues and Earnings>Integration with SD Documents>>Creating Quotations and Project Billing> Select: Assign Cost Conditions to Sales and Distribution Document Types

©2008 Dassian Inc all rights reserved Page 37 of 80 c) Choose New Entries and Enter Data • SD document type = ZLV • Condit type = EK01 d) Press the save icon 16. Create Dynamic Item Processor (DIP) Profile The DIP profile contains the rules for how the resources (incurred costs and hours) will be grouped for billing.

It is simply taking those costs and putting them into the applicable billing buckets. This step will create a simple DIP profile that would be applicable for our model. For our purposes, we will need a profile that includes the following: Direct Costs • Labor • Material

©2008 Dassian Inc all rights reserved Page 38 of 80 • Travel • Other Direct Costs Non direct costs • Labor and Material Overhead Burdens • Cost of Money Burden • General and Administrative Expense Application There are a couple of different paths to the configuration of DIP profiles. In our case we will go through the Project Systems Menu path since we will be using a project as our cost collector anyway. Alternatively the transaction ODP1 will also open the configuration window for DIP. Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Project System>Revenues and Earnings>Integration with SD Documents>Creating Quotations and Project Billing Select: Maintain Profiles for Project Billing Alternatively: Transaction ODP1 will go to the same location This selection will open the DIP profile workbench.

c) Press New Entries button and enter new profile name and text:

©2008 Dassian Inc all rights reserved Page 39 of 80 Alternatively, the copy function could be used if a reasonable template exists. Press the save icon to create the profile. d) Select the new profile (while in change mode) and press the “Usage” tab The usage tab controls how the profile will be utilized in processing. It identifies the documents and functionality. Pressing the usage tab will display the current usage. Since this is new and not copied from a template, no items will appear.

e) Press the “New Entries” button

©2008 Dassian Inc all rights reserved Page 40 of 80 f) Enter Usage For this model, only one usage is required.

Select the pulldown box on the first line item to see the available choices. Choose “Billing and results analysis” Enter “ZLV” in the Sales Doc. Type field. This will allow the newly created DMR to be utilized during resource related billing. The next step will be to determine the behavior of the DIP profile during RRB. g) Press the Characteristics button The characteristics button will show all the possible entries on the right hand pane. Additional characteristics can be added, but it is not the topic of this document. See SAP Online Help.

In the table, make settings that:

©2008 Dassian Inc all rights reserved Page 41 of 80 • Determine if the characteristic is relevant during creation of dynamic items • Determine whether the relevant characteristic is used in material determination (used to identify billing items) • Determine whether to summarize material determinants For this simple RRB model and for the typical usage, the following settings should be sufficient. Press Save icon. Next we will need to determine the “sources” of posted costs and resource usage. h) Press the Sources button and enter data The sources button identifies the types of resources that will be used during dynamic item processing.

Press the New Entries button

©2008 Dassian Inc all rights reserved Page 42 of 80 For our purposes, we will want to pull actual costs as opposed to planned costs or some other source. Choose Actual costs – Total records Either of the Actual cost entries would be fine. The Total records choice however is much faster to process than using Line item records and should be used if possible. It of course depends on how the dynamic items are going to be created and the level of structuring needed. In most cases, Actual costs-Total records is sufficient Enter 100% in the Percentage field: This is simply the proposed percentage of resources to be billed.

This is changeable during processing.

Enter ZRRB in the Cstg sheet field. The costing sheet was created earlier in this document and is used to calculate our burdens which we want to appear as line items on the billing document. Press save icon i) Choose Selection Criteria icon and enter data The selection criteria button is used to limit the records that are considered for dynamic item processing. The available choices for criteria comes from the characteristics which were chosen as “relevant” earlier.

©2008 Dassian Inc all rights reserved Page 43 of 80 This step is actually optional, but it is recommended as a way to reduce the population of data that will be processed.

This will help limit the billing of resources to only those which are billable. For this model, we will enter a selection criteria for cost elements. In the field Set Name enter RRB_All. This is the SET ID for all the cost elements which are applicable to our model. The SET ID must exist before it can be added as an entry in this field.

See the Master Data section for creation of the SET IDs Press the save icon j) Press the Material Determination Icon and New Entries Blank lines will appear to allow input of material determinants. The Material Determinants are the billing items generated during RRB and represent the resources processed through the DIP profile.

©2008 Dassian Inc all rights reserved Page 44 of 80 For this model, we will enter a typical set of material determinants for a cost plus fee billing. k) Enter Material Determinants Important: The material determinants that are entered into the table MUST have material records created before they can be entered.

The Master Data section of this document discusses creating these materials. Line Material/Service Transfer Quantity/Costs 1 RRB_LABOR Transfer Costs and Quantity 2 RRB_MATERIAL Transfer Costs Only 3 RRB_LABOR_BURDEN Transfer Costs Only 4 RRB_MATL_BURDEN Transfer Costs Only 5 RRB_ODC Transfer Costs Only 6 RRB_TRAVEL Transfer Costs Only 7 RRB_GENERALADMIN Transfer Costs Only 8 RRB_COM Transfer Costs Only Notice that the RRB_LABOR material transfers costs and quantity. This is not strictly necessary for a cost type billing, but it is very useful to facilitate reconciliation of costs later. Press save icon These Material Determinants are the items that will show up on the DMR during RRB.

Each of these buckets must now be defined as to what costs roll into them. The next step is to establish the rules for sorting the costs into the Material Determinants (cost buckets) that were just created.

l) Enter Criteria for Material Determinants This step will establish the criteria for the Material Determinants (how costs will be sorted into the buckets established in the previous step). Important: The criteria will be based on cost element groups. This provides a convenient way to organize costs. These cost element groups must first be created. See the Master Data section of this document for information on how these are used. Select Line 1 (RRB_LABOR) and Press the Criteria icon

©2008 Dassian Inc all rights reserved Page 45 of 80 Earlier, we established that Activity Type and Cost Element were relevant characteristics for Material Determination.

These now appear as possible entries. We will use Cost element for all the material determination since all the labor costs can be grouped together. If the labor costs needed to be broken out by labor activity type for purposes of applying different fees etc, then the Activity Type criteria could be used. Enter Cost Element Group in Cost Element field: Criteria can be entered as single values, ranges or as Sets. A set is nothing more than a named group of criteria. These are discussed in the Master Data section. We will use Cost Element Groups as Sets.

Enter Cost Element Group RRB_LAB. This cost element group contains all the cost elements that are billable under our model scenario. Repeat this step for each Material Determinant and Cost Element Group Material Determinant SET (Cost Element Group) Value (Single Cost Element) RRB_LABOR RRB_LAB RRB_MATERIAL RRB_MAT RRB_LABOR_BURDEN 0000620500 (See Below) RRB_MATL_BURDEN 0000620100 (See Below) RRB_ODC RRB_ODC RRB_TRAVEL RRB_TRAVEL RRB_GENERALADMIN 0000620990 (See Below) RRB_COM 0000620991 (See Below)

©2008 Dassian Inc all rights reserved Page 46 of 80 Enter Single Value Cost Elements for Costs Derived From Costing Sheet: Some of the costs that will be billable, are calculated costs and not pulled directly from the project.

In this model, the labor and material burdens as well as G&A and cost of money are calculations. These will use a single cost element instead of cost element groups. These cost elements must be set up prior to configuration. See the Master Data section and the Create Costing Sheet section in this document for more information. Press save icon The DIP Profile is complete. 17. Costing Sheets - Define Calculation Base for Overheads The costing sheet when used in RRB is a very powerful tool that allows us to perform calculations (for overheads in our case) and then pass them to RRB in the form of line items.

Before we can create the costing sheet, we need to complete some preliminary configuration steps. In this step, we will configure the calculation base for overheads. This will identify the base upon which the overheads are calculated.

Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Project System>Costs>Automatic and Periodic Allocations>Overhead >Costing Sheets Select: Define Calculation Bases Referring to Cost Element and Origin

©2008 Dassian Inc all rights reserved Page 47 of 80 This selection will open the Calculation Base workbench. a) Press New Entries button and enter the Calculation Base and Descriptions: Calculation Base Name ZRLA RRB Labor ZRMA RRB Material ZROD RRB ODC ZRTR RRB Travel a) Select ZRLA and Press Details icon Enter Details: • Controlling Area

©2008 Dassian Inc all rights reserved Page 48 of 80 Enter whatever is applicable. In this case the model has been created in controlling area 1000 • Cost Elem. Group = RRB_LAB The cost element group must have already been created prior to this step. See Master Data section of this document. Press save icon ZRLA is now complete. Repeat steps for the remaining bases that need to be created using the following data: Calculation Base Name Cost Element Group ZRLA RRB Labor RRB_LAB ZRMA RRB Material RRB_MAT ZROD RRB ODC RRB_ODC ZRTR RRB Travel RRB_TRAVEL Press save icon The calculation bases are now complete.

In the next step, we will create the overhead rates that will be used in the costing sheet. 18. Costing Sheets – Configure Overhead Rates In the previous step, the overhead bases were configured that will be used within the costing sheet. In this step, we will configure the overhead rates.

Configuration Steps: c) Enter Implementation Guide (IMG)

©2008 Dassian Inc all rights reserved Page 49 of 80 Transaction SPRO d) From the IMG Follow menu path : Project System>Costs>Automatic and Periodic Allocations>Overhead >Costing Sheets Select: Define Percentage Overhead This selection will open the Overhead Rates workbench.

©2008 Dassian Inc all rights reserved Page 50 of 80 b) Press New Entries button and enter the Overhead Rate and Descriptions: The actual Rate name will vary depending upon existing configuration.

Create rates ZBXX, where XX is a number not already assigned. O/H Rate Name Dependency Description ZBXX Indirect Labor D000 Overhead Type ZBXX Material OH D000 Overhead Type ZXXX G&A D000 Overhead Type ZXXX COM D000 Overhead Type a) Select each rate, press the Details icon to enter data a) Press New Entries Button and Enter Data: • Valid From = Starting Date for the Rate • To = Ending Date of the rate • CO Area = Enter Applicable CO Area • Overhead Type = “1” Actual • Percentage = Applicable Burden for Overhead Type

©2008 Dassian Inc all rights reserved Page 51 of 80 Repeat for Each Overhead Rate. Press save icon The OH rates are now complete. These will be used in the costing sheet in later in this document. 19. Costing Sheets – Define Credits For Overhead In this step, we will configure the Credits for Overheads. The keys defined in this step dictate how the overheads will be posted. This is critical because the overheads that are calculated will be placed into cost elements that will then be processed by the DIP profile during RRB. Note that the cost elements must be created before they can be used in configuration.

See the Master Data section regarding creation of the cost elements.

Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path : Project System>Costs>Automatic and Periodic Allocations>Overhead >Costing Sheets Select: Define Credits

©2008 Dassian Inc all rights reserved Page 52 of 80 This selection will open the Overhead Credits workbench. c) Press New Entries button and enter Data: The actual credit name will vary depending upon existing configuration. Enter ZBXX, where XX is a number not already assigned. Credit Name ZBXX Labor OH ZBXX Material OH

©2008 Dassian Inc all rights reserved Page 53 of 80 ZBXX G&A ZBXX COM d) Select each Credit individually and Press the Details icon e) Press New Entries Button and Enter Data: Enter detailed cost element posting information.

The following shows the cost elements for the model. • Valid To: Validity date when no longer applicable. • Cost Element: Enter cost element where the calculated OH will be posted. • Fxd %: Enter “*” • Cost Center: Applicable Cost Center for posting Repeat for each Credit Key

©2008 Dassian Inc all rights reserved Page 54 of 80 Press save icon All preliminary set up has been completed. The next step is to build the Costing Sheet. 20. Create Costing Sheet The costing sheet when used in RRB is a very powerful tool that allows us to perform some calculations (for overheads in our case) and then pass them to RRB in the form of line items. This step will create a simple Costing Sheet that would be applicable for our model. For our purposes, we want a Costing Sheet that will work in conjunction with our DIP profile to calculate billable overhead rates. These will then be added as line items into our DMR once processed through the RRB.

: There are a couple of different paths to the configuration of Costing Sheets. In our case we will go through the Project Systems Menu path since we will be using a project as our cost collector anyway.

Configuration Steps: a) Enter Implementation Guide (IMG) Transaction SPRO b) From the IMG Follow menu path: Project System>Costs>Automatic and Periodic Allocations>Overhead >Costing Sheets Select: Define Costing Sheets

©2008 Dassian Inc all rights reserved Page 55 of 80 This selection will open the Costing Sheet workbench. b) Press New Entries button and enter Costing Sheet name and Description: Alternatively, the copy function could be used if a reasonable template exists.

©2008 Dassian Inc all rights reserved Page 56 of 80 Press the save icon to create the Costing Sheet.

c) Select the new costing sheet (while in change mode) and press the “Costing sheet rows” tab A blank costing sheet will be opened where new entries can be added. Enter Data: Row Base Overhead Description From To Credit 10 ZRLA RRB Labor 20 ZB01 Labor OH 10 Z10 30 ZRMA RRB Material 40 ZB02 Material OH 30 Z11 50 ZROD RRB ODC 60 ZRTR RRBTRAVEL 70 All Base and OH 10 60 80 ZB10 G&A 70 Z13 90 ZB11 COM 80 Z14 Press the save icon

©2008 Dassian Inc all rights reserved Page 57 of 80 Note: that the Base, Overhead and Credits already have the correct detail information because they were done in the previous steps. They can be modified in this workbench or from the individual configuration areas as desired. The Costing Sheet is now complete.