Relevant for SAP S/4HANA Cloud 2202 as our public cloud offering - this blog post is a successor of the former one Activity Types and Service Materials for Project Services of tobschmi74 based on Project Billing for Customer Projects
Co-authored by Janis Kaiser and Andreas Hammerschmidt
Introduction
In this blog post, Janis Kaiser and I would like to give an overview on how to create Activity Types and Service Materials to define a global role catalogue with specific cost rates and prices in SAP S/4HANA Cloud and how to integrate them in your planning and billing process. While in the past it was not possible to extend the predefined role catalogue, the Project Billing solution offers this possibility. The reason why Activity Types are used to derive Materials is that prices for customer-specific projects cannot always be calculated adequately before the contract is concluded and therefore the “resource-related billing” is used. In addition, effort is reduced through material determination based on Time & Expense postings so that the contract material is replaced by these materials in the bill automatically.
1. Activity Types
Activity Types are objects and represent an activity performed by a cost center, such as machine hours or consulting hours. To plan and allocate the activities, the system records quantities that are measured in activity units. Activity Types are used to define a global catalogue for your internally and externally used roles however they are not visible to any customer or external partner. The activity catalogue should reflect the way how the company structures their employees and services.
Example: T001 - Junior Consultant; U001 - Cloud Sales
To create a new Activity Type, open the App “Manage Activity Types”. The easiest way to create a new Activity Type is by choosing a similar and existing one and copy it. Before saving you can change the required fields. Please be aware that resource based and service based Activity Types have different Allocation Cost Elements.
2. Service Materials
Within SAP S/4HANA Cloud it is best practice that Service Materials have a 1:1 relationship with Activity Types and get the same description. This makes the process from project planning to billing smooth and reasonable. Only Service Materials are used externally and will be ultimately part of the invoice to the end customer.
Open the app “Create Material” to create a new Service Material. Use the same name for the Material as you gave for the Activity Type (1:1 relationship). For our use-case the Material Type is “Service Product”. With the “Copy from” box all information from another Material will be used for the creation of the new one.
In the following pop-up screen select the suitable views for which you want the material to configure. Views can also be added afterwards. Next step is to choose the plant, sales organization and distribution channel for which you are creating this material as they are necessary prerequisites for some views.
Despite having an already existing Material to copy from, there are still some entry fields that don't get copied e.g., Valuation Class in view Accounting 1. To make sure that the material is created correct go through the different views and fill out the missing fields.
3. Project Billing Profile
The Project Billing Profile (SSCUI ID: 103637) in the “Manage Your Solution” app is part of the new Project Billing solution and offers the opportunity to configure a flexible material determination based on the criteria that you define. In this profile you link the Activity Type with the desired Service Material that should be determined.
You can use the following fields to define the material determination criteria:
Example: By posting to a certain account with an indication of a certain Activity Type the determination will lead to a material.
Activity Type T001 + cost posting on account 94308000 => Billing material T001
Instead of adding a specific G/L account you can use a cost element group as superior object so that any account that is assigned to the cost element group is relevant for this material determination process.
To configure the material created in the previous step, first go to the section “Project Billing Material Determination” and create a new entry. Enter a not yet used number in the column “Line”. The logic of the SSCUI is that it searches from lowest to highest number. As soon as it finds a matching material determination, the runtime stops. Under the Qty/Costs column you can choose if costs to be billed, quantity to be billed or both should be processed for further billing. For correct billing of Service Materials both, costs and quantities need to be processed. Finish with entering the Material.
Second, select the new entry and go to section “Project Billing Material Determination Criteria”, and create a new entry here as well. Enter an Activity Type in the first section. Then for G/L Account, enter a cost element group in column Set Name.
4. Map Resources to Resource Types
App: Manage Your Solution / ID 103299
To be able to use the Activity Type for planning of resources in customer and internal projects, you need to map the resource to the suitable resource type. You can assign resources to one of the following resource types:
0ACT: to plan human resources e.g., consultants
0RSV: to plan services in work packages e.g., audit reports
0ADL: to plan additional resources that support the activities in a work package e.g., equipment
0EXP: to plan expenses in work packages e.g., accommodation
Use 0ACT to be able to see the Activity Type in the “Teams” section in the Plan Customer Projects app.
5. Cost Rate Maintenance for Activity Types
5.1 Internal Cost Rate (App: Manage Cost Rates-Services)
For planning and posting costs for a project, the Activity Type is used to find the maintained cost rate. The system always uses the most specific cost rate. In the table below you can see the access sequence for cost rate from most specific to most general:
SAP S/4HANA Cloud offers the possibility to maintain different cost rates in the following levels:
Example: As some groups of employees might have deviating cost rates, it is possible to map them using the cost center as a key combination field. The cost center attribute allows you to structure your cost rates according to the activities done by the employee.
Personnel Number Service Cost Level allow you to define even more specific cost rates for employee dependent attributes. For example, every employee can have a specific Service Cost Level which is maintained in the Manage Cost Rates app. Adding this dimension to the cost rate determination, it is possible to maintain different cost rates for two employees who do the same work and post their time with the same Activity Type but differ in their Service Cost Level.
5.2 Intercompany Cost Rate
If one company code delivers resources to another project hosted by a different company code, intercompany cost rates must be maintained. All accesses where the ICO flag is set can be used for cost rate maintenance in the intercompany scenario. This cost rate is used for planning and cost posting for the project as well for the intercompany billing between the two company codes.
For intercompany (ICO) postings the system uses only cost rates with ICO flag “yes”. Cost rates with explicitly maintained receiver company have a higher priority than cost rates with receiver company “blank”. If there is no cost rate with maintained receiver company, the “blank” entry will be used.
6. Price Rate Maintenance for Service Materials
For revenue planning and billing of performed service effort during a project, the material is used for sales price determination. Due to the direct relationship between Activity Type (internal view - cost) and the sales material (external view - revenue) the system finds out the cost and effort postings of the employee, the correct sales material finds the maintained sales price in one of the tables listed below:
PSP0 - Standard Price
PCP0 - Project-specific Price
In the first table, all supported combinations of attributes for standard price determination (PSP0) of a material are listed. The way how the system finds the correct and relevant selling price is via the access sequence of the table, starting with the most specific access (Number 10) and ending with the most generic access (Number 120). When the system finds a maintained price for a valid combination, it stops at this access number and hands over the price of the material to the invoice. It will then not further check the other following access numbers, as the most specific price for this material is already found.
The attributes to find the standard (list) price of a service performed are:
These access numbers and the underlying combination of attributes allow to maintain very specific price for specific employees, a group of employees or even tasks within a project. For example, the price of a Junior Consultant (Product) from India (Service Organization) for the project task testing (Work Item ID) supporting a project in Sales Organization 1010 can be different from the price for a resource from company code 1010 (Sales Organization) for the same project task (Work Item ID). Even prices on personnel level are possible.
With the PCP0 condition it is also possible to maintain project-specific prices which only apply for the project that is maintained in the access table. Within a project, different work packages may have different price rates for the same material, so it is possible to maintain for one project different price for the same material when they are assigned to different work packages.
The attributes to find the standard (list) price of a service performed are:
Additionally, prices can be adjusted using other pricing conditions. These can be created customer-specific or existing ones can be used, e.g. pricing condition DCM2 for customer surcharges or SOV2 for overtime categories.
The Pricing Schema defines which price is taken for invoicing. The standard pricing scheme looks first into the condition PSP0 to check what the standard price is (Step 20) – and always searches for the most specific price – for this material. It will then take this price and store it for condition PSP0. In step 30 it then checks if any project-specific price is maintained in condition PCP0. It again starts from the most specific and stops once a price is found. PCP0 is delivered as a statistical condition type and DPD0 posts the price difference to a different account with a different account key (ERS instead of ERL).
Conclusion
With this blog post you now have a better understanding of how to expand the existing activity types/service materials to meet your business process needs and improve your global role catalogue. Please use the comment section below if you have any comments or thoughts on this topic. To always stay up to date you can follow my profile and the community tag “SAP S/4HANA Cloud”.
Co-authored by Janis Kaiser and Andreas Hammerschmidt
Introduction
In this blog post, Janis Kaiser and I would like to give an overview on how to create Activity Types and Service Materials to define a global role catalogue with specific cost rates and prices in SAP S/4HANA Cloud and how to integrate them in your planning and billing process. While in the past it was not possible to extend the predefined role catalogue, the Project Billing solution offers this possibility. The reason why Activity Types are used to derive Materials is that prices for customer-specific projects cannot always be calculated adequately before the contract is concluded and therefore the “resource-related billing” is used. In addition, effort is reduced through material determination based on Time & Expense postings so that the contract material is replaced by these materials in the bill automatically.
1. Activity Types
Activity Types are objects and represent an activity performed by a cost center, such as machine hours or consulting hours. To plan and allocate the activities, the system records quantities that are measured in activity units. Activity Types are used to define a global catalogue for your internally and externally used roles however they are not visible to any customer or external partner. The activity catalogue should reflect the way how the company structures their employees and services.
Example: T001 - Junior Consultant; U001 - Cloud Sales
To create a new Activity Type, open the App “Manage Activity Types”. The easiest way to create a new Activity Type is by choosing a similar and existing one and copy it. Before saving you can change the required fields. Please be aware that resource based and service based Activity Types have different Allocation Cost Elements.
2. Service Materials
Within SAP S/4HANA Cloud it is best practice that Service Materials have a 1:1 relationship with Activity Types and get the same description. This makes the process from project planning to billing smooth and reasonable. Only Service Materials are used externally and will be ultimately part of the invoice to the end customer.
Open the app “Create Material” to create a new Service Material. Use the same name for the Material as you gave for the Activity Type (1:1 relationship). For our use-case the Material Type is “Service Product”. With the “Copy from” box all information from another Material will be used for the creation of the new one.
In the following pop-up screen select the suitable views for which you want the material to configure. Views can also be added afterwards. Next step is to choose the plant, sales organization and distribution channel for which you are creating this material as they are necessary prerequisites for some views.
Despite having an already existing Material to copy from, there are still some entry fields that don't get copied e.g., Valuation Class in view Accounting 1. To make sure that the material is created correct go through the different views and fill out the missing fields.
3. Project Billing Profile
The Project Billing Profile (SSCUI ID: 103637) in the “Manage Your Solution” app is part of the new Project Billing solution and offers the opportunity to configure a flexible material determination based on the criteria that you define. In this profile you link the Activity Type with the desired Service Material that should be determined.
You can use the following fields to define the material determination criteria:
- Activity Type
- G/L account number
- Material Number
Example: By posting to a certain account with an indication of a certain Activity Type the determination will lead to a material.
Activity Type T001 + cost posting on account 94308000 => Billing material T001
Instead of adding a specific G/L account you can use a cost element group as superior object so that any account that is assigned to the cost element group is relevant for this material determination process.
To configure the material created in the previous step, first go to the section “Project Billing Material Determination” and create a new entry. Enter a not yet used number in the column “Line”. The logic of the SSCUI is that it searches from lowest to highest number. As soon as it finds a matching material determination, the runtime stops. Under the Qty/Costs column you can choose if costs to be billed, quantity to be billed or both should be processed for further billing. For correct billing of Service Materials both, costs and quantities need to be processed. Finish with entering the Material.
Second, select the new entry and go to section “Project Billing Material Determination Criteria”, and create a new entry here as well. Enter an Activity Type in the first section. Then for G/L Account, enter a cost element group in column Set Name.
4. Map Resources to Resource Types
App: Manage Your Solution / ID 103299
To be able to use the Activity Type for planning of resources in customer and internal projects, you need to map the resource to the suitable resource type. You can assign resources to one of the following resource types:
0ACT: to plan human resources e.g., consultants
0RSV: to plan services in work packages e.g., audit reports
0ADL: to plan additional resources that support the activities in a work package e.g., equipment
0EXP: to plan expenses in work packages e.g., accommodation
Use 0ACT to be able to see the Activity Type in the “Teams” section in the Plan Customer Projects app.
5. Cost Rate Maintenance for Activity Types
5.1 Internal Cost Rate (App: Manage Cost Rates-Services)
For planning and posting costs for a project, the Activity Type is used to find the maintained cost rate. The system always uses the most specific cost rate. In the table below you can see the access sequence for cost rate from most specific to most general:
| ICO Rate | Company Code | WBS Element | Work Item ID | Personnel No. | Service Cost Level | Activity Type | Cost Center |
| no | X | X | X | X | X | ||
| no | X | X | X | X | |||
| no | X | X | X | X | X | X | |
| no | X | X | X | X | X | ||
| no | X | X | X | X | X | ||
| no | X | X | X | X | |||
| no | X | X | X | X | X | ||
| no | X | X | X | X | |||
| no | X | X | X | X | |||
| no | X | X | X | ||||
| no | X | X | X | X | X | ||
| no | X | X | X | X | |||
| no | X | X | X | X | |||
| no | X | X | X | ||||
| no | X | X | X | X | |||
| no | X | X | X | ||||
| no | X | X | X | X | |||
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| no | X | X | X | X | |||
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| no | X | X | X | ||||
| no | X | X | X | ||||
| no | X | X | |||||
| no | X | X | X | ||||
| no | X | X |
SAP S/4HANA Cloud offers the possibility to maintain different cost rates in the following levels:
- Company Code
- Company Code to be billed
- Cost Center
- Activity Type
- Service Cost Level
- Personal Number
- WBS Element
- Work Item
- ICO Rate
- Overtime Category
Example: As some groups of employees might have deviating cost rates, it is possible to map them using the cost center as a key combination field. The cost center attribute allows you to structure your cost rates according to the activities done by the employee.
Personnel Number Service Cost Level allow you to define even more specific cost rates for employee dependent attributes. For example, every employee can have a specific Service Cost Level which is maintained in the Manage Cost Rates app. Adding this dimension to the cost rate determination, it is possible to maintain different cost rates for two employees who do the same work and post their time with the same Activity Type but differ in their Service Cost Level.
5.2 Intercompany Cost Rate
If one company code delivers resources to another project hosted by a different company code, intercompany cost rates must be maintained. All accesses where the ICO flag is set can be used for cost rate maintenance in the intercompany scenario. This cost rate is used for planning and cost posting for the project as well for the intercompany billing between the two company codes.
| ICO Rate | Company Code | Receiving Company | WBS Element | Work Item ID | Personnel No. | Service Cost Level | Activity Type | Cost Center |
| yes | X | X | X | X | X | X | ||
| yes | X | X | X | X | X | |||
| yes | X | X | X | X | X | X | X | |
| yes | X | X | X | X | X | X | ||
| yes | X | X | X | X | X | X | ||
| yes | X | X | X | X | X | |||
| yes | X | X | X | X | X | X | ||
| yes | X | X | X | X | X | |||
| yes | X | X | X | X | X | |||
| yes | X | X | X | X | ||||
| yes | X | X | X | X | X | X | ||
| yes | X | X | X | X | X | |||
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| yes | X | X | X | |||||
| yes | X | X |
For intercompany (ICO) postings the system uses only cost rates with ICO flag “yes”. Cost rates with explicitly maintained receiver company have a higher priority than cost rates with receiver company “blank”. If there is no cost rate with maintained receiver company, the “blank” entry will be used.
6. Price Rate Maintenance for Service Materials
For revenue planning and billing of performed service effort during a project, the material is used for sales price determination. Due to the direct relationship between Activity Type (internal view - cost) and the sales material (external view - revenue) the system finds out the cost and effort postings of the employee, the correct sales material finds the maintained sales price in one of the tables listed below:
PSP0 - Standard Price
PCP0 - Project-specific Price
In the first table, all supported combinations of attributes for standard price determination (PSP0) of a material are listed. The way how the system finds the correct and relevant selling price is via the access sequence of the table, starting with the most specific access (Number 10) and ending with the most generic access (Number 120). When the system finds a maintained price for a valid combination, it stops at this access number and hands over the price of the material to the invoice. It will then not further check the other following access numbers, as the most specific price for this material is already found.
The attributes to find the standard (list) price of a service performed are:
- Sales Organization
- Distribution Channel
- Product
- Release Status
- Customer
- Service Organization
- Personnel Number
- Work Item ID
These access numbers and the underlying combination of attributes allow to maintain very specific price for specific employees, a group of employees or even tasks within a project. For example, the price of a Junior Consultant (Product) from India (Service Organization) for the project task testing (Work Item ID) supporting a project in Sales Organization 1010 can be different from the price for a resource from company code 1010 (Sales Organization) for the same project task (Work Item ID). Even prices on personnel level are possible.
With the PCP0 condition it is also possible to maintain project-specific prices which only apply for the project that is maintained in the access table. Within a project, different work packages may have different price rates for the same material, so it is possible to maintain for one project different price for the same material when they are assigned to different work packages.
The attributes to find the standard (list) price of a service performed are:
- Customer Project ID
- WBS Billing Element
- WBS Work Package
- Product
- Service Organization
- Personnel Number
- Work Item ID
- Release Status
Additionally, prices can be adjusted using other pricing conditions. These can be created customer-specific or existing ones can be used, e.g. pricing condition DCM2 for customer surcharges or SOV2 for overtime categories.
The Pricing Schema defines which price is taken for invoicing. The standard pricing scheme looks first into the condition PSP0 to check what the standard price is (Step 20) – and always searches for the most specific price – for this material. It will then take this price and store it for condition PSP0. In step 30 it then checks if any project-specific price is maintained in condition PCP0. It again starts from the most specific and stops once a price is found. PCP0 is delivered as a statistical condition type and DPD0 posts the price difference to a different account with a different account key (ERS instead of ERL).
Conclusion
With this blog post you now have a better understanding of how to expand the existing activity types/service materials to meet your business process needs and improve your global role catalogue. Please use the comment section below if you have any comments or thoughts on this topic. To always stay up to date you can follow my profile and the community tag “SAP S/4HANA Cloud”.
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