Project Management with SAP R/3

Teaching Material for the Department of

Production Management

Vienna University of Economics and

Business Administration

Andreas Mild

Alfred Taudes

V.1.0

1Introduction3

2Basics & Keywords4

3Getting ready for the workshop7

4Case Study13

4.1Case description13

4.2Data for Project Realization14

5Planning the project structure15

5.1General15

5.2Implementation in SAP17

6Scheduling26

6.1General26

6.2Basic calculations29

6.3Implementation30

6.4The project planning board41

7Cost planning & Controlling47

7.1General47

7.2Implementation48

8Looking up the costs61

9Capacity Planning64

9.1General64

9.2Implementation in SAP65

10Earned Value Analysis69

10.1General69

10.1.1Measurement techniques69

10.1.2Calculation of Earned-Value and Deviation Analysis73

10.1.3Aggregation74

10.2Implementation74

11Execution77

11.1Implementation77

11.1.1Confirming network activities77

11.1.2Invoices79

11.1.3Material83

12Information System86

12.1Implementation86

12.1.1Cost reports86

12.1.2Earned-Value Analysis92

13Literature98

1. Introduction

This script serves as a basis for the workshop "Project Management with SAP R/3". This workshop is part of a series of SAP-related workshops which are held by the Department of Production Management of the Vienna University of Economics and Business Administration, headed by Prof. Dr. Alfred Taudes. The workshop was developed by Andreas Mild.

The goal of this Project Management Workshop is that, after having attended it, each student should be familiar with the theoretical backgrounds and be able to plan and control a project. The project manager has the task of ensuring that the project is executed efficiently, on time, and within the budget - which he/she achieves by making certain that the required resources and funds are available when needed. Every student should then be able to put his/her SAP knowledge into action.

To make the continuous improvement of this script possible, please report mistakes found or ideas for further development to andreas.mild@wu-wien.ac.at.

2. Basics & Keywords

SAP R/3 is an integrated and industry-independent standard software which covers, integrates and connects all functional areas in a business. SAP AG defines integration as "defined communication".^[1] Although R/3 is designed for complete integration, it can also be used for a couple of business areas.^[2]

SAP is the abbreviation for “Systeme, Anwendungen, Produkte”, the German words for “Systems, Applications, Products”.^[3]

Information about the company can be found at: http://www.sap.com.

Projects are tasks with special characteristics. Attributes of  a project are the following issues:

• complexity, non-repetitivity, high risk

• detailed goals to be achieved
• time restrictions
• high cost and capital expenditure
• quality requirements
• often strategic significance

To be able to plan, monitor, control, and carry out a project as a whole, the project goals must be precisely described and the activities to be performed have to be structured.

A project can be described as follows:

• according to how it is organized, i.e. by explaining the project structure,
• according to the processes involved.

A project starts out as a statement of work which is either a written description of the objectives to be achieved and the desired rough schedule like start and end dates. In the description one could include also performance metrics and budget constraints.

A project is further subdivided into meaningful pieces, referred to as tasks. Tasks take usually less than a few months. The task can be further subdivided into subtasks.

A work package can be defined as “a group of activities combined to be assignable to a single organizational unit.” ^[4]

The project tasks, subtasks, and work packages are brought into a hierarchy by defining a work breakdown structure.

The individual elements represent activities within the work breakdown structure and are called work breakdown structure elements (WBS elements).

WBS elements can be:

• tasks
• partial tasks which are subdivided further
• work packages

WBS can be structured according to

• object
• function
• phase

Which kind of structuring is used depends on the focus of the project. Objects orientation is often used, if the main part of the project is a physical object like a power plant. Functional organisation is preferred, if many different parts of an organisation or many organisations are involved.

In practice, all three kinds of structuring are used within one WBS.

“Project Management can be defined as planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost and time constraints of the project.”^[5] The primary reason why projects fail is insufficient effort in the planning phase.^[6] Project Management thus is considered as very important.

The SAP Project System enables close and constant monitoring of all aspects of a project by having constant access to data in all the departments involved.

Project management can be subdivided into project planning, i.e. the task which will be undertaken before the project starts, and project controlling during the implementation of the project.Planning must include:

• organization – service
• process – dates
• costs
• capacity

There are many possible project goals such as, for example, to realize a positive net present value, to achieve a high imputed interest, to minimize costs, to cover costs, to maximize gross profit, or simply to finish as early as possible. However, it is important, that goals are defined operationally, thait is when it is possible to measure to which extent the goal has been achieved.

The project manager breaks the project down into a set of activities. Then he also defines the relationships among these activities. The outcome is a guideline regarding the activities that can be performed in parallel and those that have to be done in a sequential order. This task is done via planning by network.

Now, there are activities that require capacities and resources like personnel and material. Such resources are limited and these requirements have to be considered in order to be able to develop a feasible, sound plan. Information from other modules as e.g. the material planning module is required.

The system calculates the material requirements for each step of the project and organizes that materials are bought in time to avoid delays. When purchasing material, the system takes into account order sizes, inventory policies as well as other information.

To prepare the financial statements, the value of work in progress (including project work) has to be calculated. This also requires interaction of some R/3 modules.

Thus, the system needs information from all business areas simultaneously. And this is exactly what integration does.

The project module is part of the integrated concept of SAP R/3 providing interfaces to other modules like Accounting, Distribution, Material Management and Production Planning and Control. Each area within the organization has its own structure and its own view of the project, but data has to be entered only once.

3. Getting ready for the workshop

This chapter provides information on the first use of the system.

Logging on R/3

Logging off

SAP R/3 is a client/server application. Therefore, you have to cancel the connection with the server by telling it that you want to log off.

Create Session

Often it is useful to open more screens. You can do this by creating a new session, like a new document in a word processor.

SAP Help

If you want to get some basic information about a specific field, focus this field with your mouse and press <F1>.The dialog box indicates what the field is for. Sometimes even dependencies are explained.

Match codes

Match codes are useful for finding data, because it is difficult to know/remember the identification number of a line posit