Deciding between Orders and Projects

Use

The advantage of using internal orders or WBS elements as investment measures is that you have the full functionality of Overhead Cost Controlling - Overhead Orders (CO-OM-OPA) and Project System (PS) at your disposal.

Features

Some of the fundamental functions of these two objects are outlined below. For more detailed information, see the documentation for the two components CO-OM-OPA - Internal Orders and PS - Project System .

Overhead Cost Orders

Overhead cost orders assist in planning, collecting and settling the costs of relatively uncomplicated internal activity. The system enables you to manage overhead cost orders throughout their life – starting when they are created, through planning and posting of all actual costs, to the final settlement.

The master data maintenance functions assist you in making assignments of overhead cost orders within your enterprise.

Status management makes it possible to control the different accounting transactions that can be carried out on the order during each phase of its life.

Integrated planning functions enable you to make rough cost estimates before the order goes into affect, and to make exact calculations afterward. You can choose between several planning approaches, in order to compare the profitability of various methods of implementation.

You can check the planned and assigned costs of the order in reporting during each phase.

Projects

Projects are activities with special features. For example, they:

  • Are normally very complex, one-time undertakings

  • Have precisely defined goals

  • Are limited in duration and are cost and capacity intensive

  • Are subject to certain quality requirements

  • Often have strategic importance for the enterprise

Projects are generally part of the internal processes of a company. To be able to control all tasks in project execution, you need an organizational form that is specific to the project and which is shared by all departments involved.

To be able to carry out a project in its entirety, the project goals must be precisely described and the project activities to be carried out must be structured. A clearly and unambiguously structured project is the basis for its planning, monitoring, control and success. A project is structured:

  • According to how it is organized : This organizational planning specifies the structures for organizing and monitoring the project, and organizes the project in hierarchical elements. The criteria for structuring the project can differ according to the type of project and its complexity. For example, it can be based on the responsibility for the project and the structure of the departments or groups involved, or it can be based on requirements of the manufacturing or assembly process.

This planning is represented in the Project System by the work breakdown structure and the work breakdown structure (WBS) elements.

  • According to the processes involved : This process planning specifies the elements from organizational planning in a chronological sequence. It specifies, for example, the events in the project that are dependent on each other, and which additional activities are required or which require more detail.

This planning is represented in the system by a network.

Note Note

An asset under construction is assigned at the level of the WBS element, not at the level of the project as a whole. Therefore, you can create a single project that has WBS elements of both types: those that will primarily be capitalized and have an accompanying asset under construction, and those that do not have an assigned asset under construction.

An asset under construction can be created at any level of the work breakdown structure. SAP recommends that you manage assets under construction at the same level in the work breakdown structure at which you later expect to show your completed assets, when the project is completed. Placing your assets under construction at this level makes it considerably more simple to settle the WBS elements at their completion (full settlement) (refer to Account Assignment for Settlement ).

End of the note.

Deciding between Orders and Projects

In order to determine whether you should use orders or projects to manage your capital investments, you should consider some of the differences between them:

  • Only projects enable you to create a hierarchical structure for the objects that collect costs.

  • Orders are always one-dimensional. For example, it is not possible to distribute budgets for several orders in a structured form from top to bottom.

  • Projects also offer the advantage of their integration with networks and the functions of logistics. With orders, for example, it is not possible to carry out capacity and resource planning.