How do you plan a project if it’s not yet a project?
You have an idea for a project. And now? Projects wouldn’t usually start out of the blue, but typically there is a proposal process in place during which a project idea is evaluated from different angles e.g. to check if the required financial or capacity resources are available to execute this project. This is not only true for internal projects such as IT projects but also for large investment projects, new product development projects or external customer projects.
It’s clear that throughout the lifecycle of a project you may not always have the need to capture all the details in your estimations. E.g. At the time when you enter a request for an IT project you will provide some rough estimates for the total effort. Once the project is evaluated by the corresponding experts they will certainly come up with much more detailed estimations including now resource roles, rates, services and equipment. Typically the experts will do their effort estimations by breaking down the overall effort into smaller work-packages and thus will gain much better insights into the individual efforts that are required for the project.
The challenge for many project driven organizations is the question how to keep track of cost and effort estimations throughout the entire project lifecycle and while the project proceeds through the different stages how to ensure that the new effort estimations are based on the preceding versions.
Throughout the last years SAP developed a set of project management solutions consisting of SAP Project System, SAP Portfolio Management (PPM) and SAP Commercial Project Management (CPM) providing dedicated financial planning applications for projects. Each of them is designed for a specific stage in the project lifecycle and thus it is also targeting different end-user roles. Whereas PPM’s planning screens will cover the planning activities specifically in a portfolio process, the financial planning capabilities in Commercial Project Management are rather designed for the project managers and experts who need support for planning efforts and financial costs based on material quantities, resource types and individual costs rates
The integration between PPM and CPM allows customers to hand-over the financial plan and effort estimates for a project from one stage to the other while they enhance and refine the plan with each iteration cycle. Thus everybody involved in the planning and decision process has full insight how project estimations developed throughout the time.
The following examples illustrates how the mentioned solutions handle project estimations in different stages of a project and how the input from the proceeding stage is available to refine the financial plan for the next stage.
Project Proposal Stage
A project proposal usually exists at the beginning of the project lifecycle and it is the first stage where the requester will need to provide a draft version of expected project costs. The following picture shows a SAP Fiori App available for PPM to initiate the project approval process.
Image 1: SAP Fiori App for Project Proposals (SAP Portfolio and Project Management)
If a project proposal qualifies for further assessment and therefore proceeds to next decision stage it will be required to provide much more detailed estimations. In this case PPM provides spreadsheet-like planning screens which will allow to break down the initial estimates into further cost categories.
The overall result is seen in the Financial Information Screen in PPM.
Image 2: Financial Planning in SAP Portfolio and Project Management
Image 3: Summary of Financial Planning in PPM and initial estimates from the project proposal stage (image 1)
Once a pre-approval has been reached in the portfolio process, a more detailed planning along the project structure and work packages is required. In this stage project experts and engineers will break down the project overall effort into smaller work packages and estimate the efforts and costs for them.
Image 3 shows the planning screen in CPM which takes the project structure from PPM and enhances it with planning fields. Project experts use them to plan activities, material costs and service costs and to consolidate the costs into a summary line. The result of the financial planning in CPM is fed back to PPM where it is used to monitor actual costs against planned costs and project budget.
Image 4: Detailed Financial Planning in CPM based on the project structure imported from PPM
This example shows how important it is to gain a complete view of the financial planning process during a project lifecycle, so a project organization can better decide which level of financial planning they need to provide. Based on this they will better understand in which stage they will need either SAP Commercial Project Management or SAP Portfolio and Project Management to complete their financial planning tasks.