Material To be Valuated in Project System

[Lala]

Hi All,

We are implementing PS,MM,SD,FI &CO for a companay which works essentially on engineer to order scenario and using vlauated projec stock & actvity account assigned networks

Inhouse production is through typical assembly processing process - Where input & output materials are transferred through BOM PS Transfer from WBS BOM.

Input materials are issued to activity; work performed by work centers are entered by confirmation; at completion of work out put materials is 'Received from activity'. Both material issue and receipt are done wrt reservation.

When this is done, as per standard process, the cost addition (and hence value addition) is to activity and thereby to WBS element. The output material is not valuated. All the cost(or values) become project value which will reflect in WIP calculation. WIP is calculated as month end process.

At month end if the company wants to know the current asset from project and relevant stocks:

= WIP of project + Inventory value of the mmaterials.

Pl. note that only input materials i.e. raw materials and Bought out materials will have inventory value; the output material will not have any value.

The process is alright and I think we are alos complying to Accounting stanadard for project system - directive from Institute of Chartered accounts - India.

This process was first aceeptable to customer; but now they say - the out put materials should be valuated. So that, when inventory value is taken - it is RM+BO and valuated semifinished +valuaed finished materials

One big reason they say is that they have to show inventory value to the Banks.

Now I need clarification in following points

1. How to valuate the out put material when working only with project system. (apart from using user exit )
2. If this is done, the project cost/WIP calculations will show ups amd downs - as goods receipt with valuated value will be with (-) sign - this will reduced the cost. This will cause variuos problems - almost no standard SAP PS cost report will reflect the reality - WIP can not go up and down...This is illogical.
3. Have you faced similar situation in implementation - that - Banks can not be conviced about this PSway of WIP calculation? Taking into consideration that project implementation is in India - an experienced reply can be very helpful

Thanks and regards,
Lala

[Golfi]

Hi Lala,

You have mentioned "Assembly Process" is followed in your client. If it is assembly process system defaultly activates GR Non-valuataed tick in Production order goods receipt tab, this means no FI document generates in this case until delivery and invoice is done from SD.

For the above point i am assuming " Assembly process" means you are creating projects automatically from SD, am i right.

Now if you want the FG(finished product) to be valuated then assign the material components to the project directly and run MRP and carryout subsequent production/procurement process, this all willl be account assigned to project only. when u run RA also you will not face any problem.

The GR non-valuated is controlled through the requirement class settings., Requirement class is assigned to requirement type and requirement type is determined from the MM strategy , MRP Type or setting can be done in SD " determination of requirement type". why i am mentioning about this point is you change these settings and check whether the result you are expenting will attain.

But for sure GR-Non valuated cannot be avoided in Assembly process, as in production order settlement rule will be defaulted to WBS. If GR to be valuated then assign the materials to project directly. Or follow assembly process till Planed order creation and create Production order manually with account assigned to WBS using CO10 transaction code, in this case FG settlement rule will be created as Mateial MTL.

Hope this helps you.

Regards,
Golfi

[Lala]

Thanks Golfi!

A clarification on the process:

We are not creating project automatically from sales order - that is generally done for Make-to-order Scenario. This is Engineer to order. So, Here a project spefic BOM is created and this is assigned to activities - in SAP a network is an order type like production order - hence here an actvity functions like a production order - Released activity is athorisation to execute that activity which can be production as in this case.

Thanks and regards,
Lala