Project-Based Services in SAP S/4HANA

Project-Based Services in SAP S/4HANA

Part 1: Introduction & Key Concepts

This section sets the stage, introducing the core business scenario and defining the key concepts you’ll encounter throughout the guide.

1.1 The Business Scenario: Project-Based Services (Quote-to-Cash)

This guide focuses on a common business model for professional services firms, engineering companies, and consulting organizations. The end-to-end process, often called “Quote-to-Cash for Project-Based Services,” covers the complete lifecycle from the initial customer inquiry to the final payment.

The core of our scenario involves a customer project that has two distinct billing methods:

Fixed Price (FP): A portion of the project is billed at a predetermined, fixed amount, regardless of the actual hours or costs incurred. This is common for well-defined deliverables, like an initial project setup or a specific report.Time & Materials (T&M): Another portion is billed based on the actual resources consumed. This includes employee time (labor), travel expenses, and any materials used. This is also known as Resource-Related Billing.

This hybrid model gives customers a predictable cost for some services while providing flexibility for work that is harder to scope upfront.

1.2 Key Concepts Explained 🧐

Understanding these terms is essential for navigating the process.

Work Breakdown Structure (WBS): The heart of a project in SAP. It’s a hierarchical model of all the tasks and deliverables required to complete a project. Each node in this structure is a WBS Element, which acts as a bucket to collect costs, plan resources, and track revenues.Sales Order: A contractual document between your company and a customer that specifies the services or products to be delivered, at what price, and under which conditions. In our S/4HANA scenario, the Sales Order is the trigger that automatically creates the customer project.Dynamic Item Processor (DIP) Profile: This is the magic engine behind Time & Material billing. The DIP Profile is a configuration object that defines rules for how actual costs (like time recordings and expenses) are converted into billable items on a billing request. It tells the system which costs to select, how to group them, and what service materials to use on the invoice.Resource-Related Billing: The process of creating a billing request (invoice proposal) based on the actual costs posted to a project or sales order, using the rules defined in the DIP Profile.CATS (Cross-Application Time Sheet): The standard SAP tool for employees to record their working hours. In our scenario, employees will record time directly against project WBS elements, making those hours available for T&M billing.Settlement: A periodic process where the costs and revenues collected on a project are “settled” to other controlling or financial objects. For customer projects, this is typically settled to an Profitability Segment in CO-PA (Controlling – Profitability Analysis) to analyze the project’s profitability.1.3 Business Roles in SAP S/4HANA

The following business roles are involved in our end-to-end process. These roles are assigned to users to give them access to the necessary Fiori apps.

Sales Manager (Internal Sales Representative): Creates the initial quotation and the final sales order that kicks off the project.Project Manager: The owner of the project. Responsible for planning the project structure, staffing resources, monitoring costs and progress, and initiating the billing process.Employee (Project Team Member): Records time and expenses against the project tasks they are assigned to.Billing Clerk: Processes the billing requests generated by the Project Manager and creates the final invoices for the customer.Travel Accountant: Approves travel expense reports and ensures they are posted correctly to accounting.Part 2: Master Data Setup (Test Plan Prerequisites)

Before you can run the end-to-end scenario, you need to create the foundational master data. This section provides a complete, step-by-step guide to setting up all the necessary data for our business case. This is your blueprint for a successful test plan.

2.1 Organizational Structure

This scenario assumes a standard organizational structure is in place. The key elements used throughout our examples are:

Company Code: 1000Sales Organization: 1000Distribution Channel: 10 (Direct Sales)Division: 10Plant: 1000Controlling Area: 1000Cost Center (for Consulting): 13212.2 Creating the Customer

First, we need a customer to bill the project to. In S/4HANA, customers are managed as Business Partners (BP).

Fiori App: Manage Business Partner Master Data (App ID: F3163)Action:Launch the app and click Create -> Organization.Select the BP Role Customer (FLCU00).Enter the customer’s name (e.g., Customer Services Inc.) and address details.Navigate to the Sales and Distribution tab. Click Create.Enter the Sales Organization (1000), Distribution Channel (10), and Division (10).Fill in key fields like Shipping Conditions and Billing information (e.g., Payment Terms).Navigate to the Company Code tab. Click Create.Enter Company Code 1000 and the Reconciliation Account (e.g., 12100000).Save the Business Partner. Note down the BP Number (e.g., 100100).2.3 Creating Service Materials

We need materials to represent our services on sales documents. We’ll create two: one for the fixed-price component and one for the time and materials component.

Fiori App: Create Material (App ID: MM01)Action for Fixed-Price Material:Material: D313 (e.g., Consulting PS FP CPI)Industry Sector: S (Service)Material Type: DIEN (Service)Select the following views: Basic Data 1, Sales: Sales Org. 1, Sales: Sales Org. 2, Sales: General/Plant, Accounting 1.In Basic Data, enter a Description (e.g., Fixed Price Project Consulting), Base Unit of Measure (EA – Each).In the Sales views, assign the Delivering Plant (1000) and the Tax classification (1). Set the Item category group to LEIS.In Accounting 1, set the Valuation Class to 3100 (for services) and Price control to V (Moving average).Save the material.Action for T&M Material:Repeat the process for a second material.Material: D314 (e.g., Consulting PS T&E CPI)Description: Time & Material Project ConsultingAll other settings can be the same, but for T&M services, the Item category group is often set to AUM to allow for resource-related billing.Save the material.2.4 Creating Employees as Business Partners

To record time and expenses, employees must exist in the system as Business Partners with links to their HR personnel record.

Fiori App: Manage Business Partner Master Data (App ID: F3163)Action:Click Create -> Person.Select the BP Role Employee (BUP003).Enter the employee’s name (e.g., Jennifer Stein).On the Identification tab, go to the Employee Data section.Enter the Personnel Number from the HR system (e.g., 999102). This links the BP to the HR master data, which contains information like the employee’s Cost Center (1321).Save the BP.User Assignment (Consultant’s Corner):To allow a system user to record time for this employee, a link must be maintained.Transaction: PA30 (Maintain HR Master Data)Enter Personnel Number 999102.Enter Infotype 0105 (Communications) and Subtype 0001 (System user name).Enter your SAP User ID in the ID/Number field.Save. This allows you to use the My Timesheet app as if you were Jennifer Stein.2.5 Setting Up Activity Types and Rates

To value the time recorded by employees, we need to define activity types for different kinds of work and set their prices.

Fiori App (or GUI):KL01 – Create Activity TypeKP26 – Change Activity Type/Price PlanningAction:In KL01, create an Activity Type (e.g., 8 – Consulting). Assign it to a cost element and set the activity unit to H (Hours).In KP26, for the combination of Cost Center 1321 and Activity Type 8, plan a rate for the current fiscal year (e.g., $150 per hour). This rate will be used to calculate the cost of time recordings.Part 3: The End-to-End Business Process Flow

Now that the master data is ready, let’s walk through the complete business process step-by-step.

Step 1: Create a Sales Quotation

The process begins when a customer requests a quote for a new project.

Business Role: Sales ManagerFiori App: Create Quotation (App ID: VA21)Objective: Provide the customer with a formal, time-limited offer for the project, detailing both the fixed-price and estimated T&M components.

How-To Instructions:

Launch the app and enter the Quotation Type. For a project quotation, a standard type is PQS.Enter the Sales Area data: Sales Org (1000), Distr. Channel (10), Division (10).Enter the Sold-To Party (100100) and a PO Number for reference (e.g., PROJECT_QUOTE_TEST).Set the Valid To date for the quotation.Line Item 10 (Fixed Price):Enter Material D313 (Fixed Price Project Consulting).Enter Quantity 1.Navigate to the item’s conditions and enter a fixed Price (Condition Type PPR0), for example, $40,000.Line Item 20 (Time & Materials):Enter Material D314 (Time & Material Project Consulting).Enter an estimated Quantity, for example, 1. The price for this item will be determined later by the actual work performed.Save the Quotation. Note the Quotation Number.

Consultant’s Corner (Customizing): The system’s ability to handle project quotations is determined by the Item Category (e.g., PFP for Fixed Price, PTM for T&M). This is configured in SPRO under Sales and Distribution -> Sales -> Sales Documents -> Sales Document Item. The determination rules link the Sales Document Type + Item Category Group to the correct Item Category.

Step 2: Create a Sales Order & Auto-Create the Project

Once the customer accepts the quote, you create a legally binding sales order. In our S/4HANA setup, this single action will automatically create the entire project structure in the background. ✨

Business Role: Sales ManagerFiori App: Create Sales Orders (App ID: VA01)Objective: Formalize the customer agreement and trigger the creation of the WBS structure for project execution.

How-To Instructions:

Launch the app and enter the Order Type. For a project order, a standard type is PSO1.Click the Create with Reference button.Select the Quotation tab and enter the Quotation Number from Step 1. Click Copy.The system copies all data from the quotation into the sales order. Review the items, quantities, and prices.Enter a unique PO Number from the customer (e.g., CUST-PO-196).Crucial Step: Save the Sales Order.Upon saving, you’ll receive a message that the Sales Order was saved, and another message indicating that a Project has been created (e.g., Project C/XXXX created, where XXXX is based on the sales order number). Note down this Project ID.

Key Concept Explanation: How did this happen? The item categories (PFP, PTM) used in the sales order are configured to require an account assignment to a WBS element. Furthermore, the configuration points to a standard Project Template. When the order is saved, the system copies this template to create a new, operative project and automatically links the sales order line items to the corresponding WBS elements for billing.

Consultant’s Corner (Customizing): This automation is controlled via the Requirements Class assigned to the item categories. In SPRO (Sales and Distribution -> Basic Functions -> Account Assignment/Costing), the requirements class specifies the account assignment category and contains a setting for “Project Acct Assgmt,” which points to the project template to be used.

Step 3: Plan and Staff the Customer Project

Now the Project Manager takes over to refine the project plan and assign resources.

Business Role: Project ManagerFiori App: Plan Customer Projects (App ID: F1642)Objective: Review the auto-generated project structure, adjust dates, assign team members, and release the project to make it ready for execution.

How-To Instructions:

Launch the app and search for your Project ID from Step 2.You will see the WBS hierarchy that was copied from the template. It might look something like this:C/XXXX – Main ProjectC/XXXX-0010 – Fixed Price PhaseC/XXXX-0020 – T&M PhaseReview and Edit:Click on each WBS element to view its details.Change the Description of the top-level WBS to something meaningful, like Project ABC Consulting.Adjust the planned Start and Finish dates for each phase.Staffing:Select the T&M Phase WBS element.Go to the Team or Resource section.Add team members by searching for their name or role (e.g., add Jennifer Stein). This assignment makes the project visible in the employee’s timesheet.Release the Project:Select the top-level WBS element.Change the Status from Created (CRTD) to Released (REL). This is critical, as costs and time can only be posted to released projects.Save your changes.Step 4: Record Time Against the Project

The project is now live, and team members can begin their work and record their hours.

Business Role: EmployeeFiori App: My Timesheet (App ID: F0399)Objective: Capture the actual hours worked on project tasks to enable T&M billing and accurate cost tracking.

How-To Instructions:

Launch the My Timesheet app. The app shows a calendar view.Click on the appropriate day you performed the work.The system will show a list of available work items. Because Jennifer Stein was staffed to the project, the WBS element C/XXXX-0020 (T&M Phase) will be available for selection.Select the correct WBS element.Enter the number of hours worked (e.g., 8).You can add a short note or description of the work performed.Click Submit. The timesheet is sent for approval (if an approval workflow is active) or is posted directly.

Key Concept Explanation: When time is submitted and approved, the system generates a Controlling (CO) document in the background. This document posts the cost of the labor (Hours x Rate from KP26) to the WBS element. This cost is now “sitting” on the project, waiting to be billed back to the customer during the T&M billing process.

Step 5: Record Travel Expenses

If a team member travels for the project, those expenses also need to be captured and billed to the customer.

Business Role: EmployeeFiori App: My Travel and Expenses (App ID: F0409)Objective: Record travel costs and assign them to the project so they can be included in T&M billing.

How-To Instructions:

Launch the app and click Create Expense Report.Enter the trip details: dates, destination (Paris), and reason (Consulting).Crucially, go to the Cost Assignment section.By default, it may assign costs to the employee’s home cost center. Change this to assign costs to the WBS Element C/XXXX-0020.Add individual expense items:Expense Type: Rental Car, Amount: $100Expense Type: Fuel, Amount: $50Submit the expense report. It will go through an approval process.

Consultant’s Corner (Customizing): The available expense types and their GL account determination are configured in SPRO under Financial Accounting -> Travel Management. The integration with Project System is standard, allowing any cost object (like a WBS element) to be assigned.

Step 6: Monitor Project Costs

Throughout the project, the Project Manager needs to keep an eye on costs and progress.

Business Role: Project ManagerFiori App: Customer Project Analysis (App ID: F3259)Objective: Get a real-time overview of planned vs. actual costs, revenues, and project margins.

How-To Instructions:

Launch the app and search for your Project ID.The app provides a dashboard view with key performance indicators (KPIs).You can drill down into different reports:Cost Report: You will see the actual costs posted from the time recordings (Step 4) and travel expenses (Step 5).Revenue Report: This will show the planned revenue from the sales order.Profitability Analysis: The app calculates the project margin in real-time.Step 7: Create Billing Proposals (T&M Billing)

At the end of a billing period (e.g., end of the month), the Project Manager initiates the T&M billing process.

Business Role: Project ManagerFiori App: Create Billing Document Requests (App ID: F3498) (This is the modern successor to DP91)Objective: Run the Dynamic Item Processor (DIP) to convert the posted costs (time and expenses) into a draft invoice, or a “Billing Document Request.”

How-To Instructions:

Launch the app.Enter the selection criteria. The key field is the WBS element that collects the T&M costs: C/XXXX-0020.Enter the posting dates for the period you wish to bill.Execute the run.The system displays a list of the costs it found (the time and expense postings). It uses the DIP Profile to translate these into billable line items.For example, the 8 hours of consulting time will become a line item on the invoice.The $150 in travel expenses will become another line item.Review the proposed items. You can choose to accept, postpone, or write off specific costs.Once satisfied, save the run. This creates a Billing Document Request (BDR), which is an internal document that acts as a request to the billing department to create the final customer invoice. Note the BDR Number.Step 8: Create the Final Invoices

The Billing Clerk now takes the BDR and the fixed-price items from the sales order and creates the official invoices for the customer.

Business Role: Billing ClerkFiori App: Create Billing Documents (App ID: F0798)Objective: Generate the final, legally-compliant customer invoices for both the fixed-price and T&M portions of the project.

How-To Instructions:

Billing the T&M Portion:Launch the app.In the “Documents to be Processed” list, you will find the Billing Document Request created in Step 7.Select the BDR and click Create Billing Documents.The system generates an invoice with line items corresponding to the hours and expenses recorded.Save the billing document. A financial document is posted automatically, debiting the customer’s accounts receivable and crediting revenue. Note the Invoice Number.Billing the Fixed-Price Portion:In the same app, search for the original Sales Order (C/XXXX).The system will show that Line Item 10 (D313) is ready for billing.Select the sales order and click Create Billing Documents.An invoice for the fixed amount ($40,000) is created.Save the billing document. Note the Invoice Number.Step 9: Project Period-End and Closure

At the end of each month, and upon completion of the project, closing activities must be performed.

Business Role: Project Manager / ControllerFiori App(s): Run Settlement – Projects (Actuals), Project BuilderObjective: Calculate project results, settle costs and revenues to Profitability Analysis, and formally close the project to prevent further postings.

How-To Instructions (Simplified):

Results Analysis: The system calculates Work-in-Process (WIP) or reserves for unrealized costs based on the project’s progress and billing status.Settlement: The Project Manager or a Controller runs the settlement process. The net value of costs and revenues on the project is settled to a Profitability Segment (CO-PA), allowing for detailed profitability reporting.Technical Closure: Once all work is done and billed, the Project Manager sets the project status to Technically Completed (TECO) in the Plan Customer Projects app. This prevents any further cost postings.Final Closure: After a final settlement run, the status is set to Closed (CLSD). The project is now closed from a financial perspective and is archived.Part 4: Comprehensive Business Case Test Plan

This section provides a structured test plan for you to execute the entire end-to-end scenario. Follow these steps in your SAP S/4HANA system to practice and validate the process.

Test Case ID: Z_PROJ_SERV_E2E_001 Test Case Title: End-to-End Project-Based Services with FP and T&M Billing

Objective: To validate the complete Quote-to-Cash process for a customer project, including quotation, sales order with automatic project creation, time and expense recording, resource-related billing for T&M, fixed-price billing, and financial posting.

Prerequisites: All master data from Part 2 of this guide has been successfully created.

Customer: 100100Materials: D313 (FP), D314 (T&M)Employee: 999102 (assigned to user ID)Activity Rate: Set for Cost Center 1321 / Activity Type 8.

Step

Test Action

Expected Result

Actual Result

Pass/Fail

Create Quotation (App: VA21): – Type: PQS – Customer: 100100 – Item 10: Material D313, Qty 1, Price $40,000 – Item 20: Material D314, Qty 1

Quotation is created and saved successfully. A unique quotation number is generated.

Create Sales Order (App: VA01): – Type: PSO1 – Create with reference to the quotation from Step 1. – Enter a PO Number. – Save the order.

Sales Order is saved. A system message confirms that a Project (e.g., C/XXXX) has been created.

Plan Project (App: F1642): – Open the Project ID from Step 2. – Change the project description. – Assign Employee 999102 to WBS element …-0020 (T&M). – Set the project status to Released (REL).

Project is updated and released successfully.

Record Time (App: F0399): – As the user linked to employee 999102. – Record 8 hours against the T&M WBS element. – Submit the timesheet.

Time is recorded successfully. The entry is approved (or auto-approved).

Record Expenses (App: F0409): – Create an expense report. – Assign the costs to the T&M WBS element. – Add expenses for Rental Car ($100) and Fuel ($50). – Submit for approval.

Expense report is created and submitted.

Monitor Costs (App: F3259): – Open the Project ID. – Check the actual costs.

Actual costs reflecting the labor (8 hrs * rate) and travel expenses ($150) are visible on the T&M WBS element.

Create BDR (App: F3498): – Run the process for the T&M WBS element for the relevant date range.

The system finds the labor and expense costs and proposes them as billable items. A Billing Document Request (BDR) is created upon saving.

Create Invoices (App: F0798): – Part A (T&M): Find and process the BDR from Step 7. – Part B (FP): Find and process the original Sales Order (Item 10).

Two separate invoices are created and posted to accounting. Invoice numbers are generated for both. The customer’s A/R account is debited.

Close Project (App: F1642): – After period-end closing activities (settlement). – Set the project status to Technically Completed (TECO).

Project status is successfully changed to TECO. No further time or cost postings are possible.

Part 5: Reporting & Analytics

Monitoring project performance is crucial. SAP S/4HANA provides a suite of powerful real-time analytical Fiori apps that replace traditional GUI reports.

Project Profitability (App ID: F3333): This is the ultimate overview app for Project Managers and Controllers. It provides a real-time P&L view of your projects, showing revenues, costs, and margins. You can slice and dice the data by customer, project manager, service organization, and more.Customer Project Analysis (App ID: F3259): As used in our test plan, this app gives a detailed financial status report on a single project, comparing planned vs. actual figures for costs, revenues, and billing.Project Cost Line Item Report (App ID: F3341): Use this app to drill down to the individual postings on a project. You can see every single time recording, expense posting, or material purchase that has hit your WBS elements. This is invaluable for detailed analysis and troubleshooting.Part 6: Appendix6.1 Process Reversals

Mistakes happen. Here’s how to reverse the key steps in the process.

Cancel Billing Document: Use the Manage Billing Documents Fiori app (App ID: F0797). Search for the invoice, select it, and choose the “Cancel” option. This creates a cancellation document and re-opens the original item (BDR or Sales Order) for billing.Reject Billing Proposal: If the BDR has not been invoiced, the Project Manager can go back into the billing proposal (or use an app like Manage Debit Memo Requests) and reject the items. This sends the costs back into the pool to be billed later.Cancel Time/Expense Posting: A posted CATS or Travel document creates a CO document. This can be reversed using transaction FB08 if necessary, but the correct procedure is typically to enter a correcting entry in the source application (e.g., negative hours in the timesheet).6.2 Glossary of TermsBDR: Billing Document Request. An internal SD document used to request the creation of a customer invoice, typically generated from a T&M billing run.CO-PA: Controlling – Profitability Analysis. The module where project costs and revenues are settled for profitability reporting.DIP Profile: Dynamic Item Processor Profile. Configuration that controls resource-related billing.FP: Fixed Price.T&M: Time and Materials.TECO: Technically Completed. A project status.WBS: Work Breakdown Structure.

Part 7: Alternative Scenario – Sales Order Based Services (Scenario 195)

While a full project structure is perfect for complex, multi-phase engagements, many professional services are more straightforward. For smaller consulting jobs, short-term support, or simple service delivery, creating an entire project can be overkill.

SAP S/4HANA provides a leaner, more direct approach: Sales Order Based Services. In this scenario, the Sales Order itself acts as the central object for collecting costs and revenues. This simplifies the process significantly while still offering powerful Fixed-Price and Time & Material (T&M) billing capabilities.

7.1 Key Differences: Project-Based vs. Sales Order-Based

Choosing the right scenario is a key design decision. Here’s a simple comparison to guide you:

Feature

Project-Based Services (Scenario 196)

Sales Order-Based Services (Scenario 195)

Primary Cost Object

Work Breakdown Structure (WBS) Element

Sales Order Line Item

Structure

Hierarchical and detailed (WBS, Networks, Activities). Excellent for complex task management.

Flat. The sales order contains the line items for services. Simple and direct.

Planning & Scheduling

Advanced capabilities for dates, resources, and dependencies using the Project Builder.

Limited to the delivery dates on the sales order line items.

Cost Collection

Costs are collected on various WBS elements, allowing for granular reporting by project phase or task.

All costs for a specific service are collected directly on one sales order line item.

Best For

Large, long-term, complex projects like engineering, construction, or large-scale consulting.

Smaller, short-term engagements, simple service delivery, or “bucket of hours” consulting.

S/4HANA Scope Item

Primarily related to J11 (Customer Project Management).

Primarily related to J14 (Service Order Management) or sales-item-based scenarios.

7.2 The End-to-End Business Process Flow

The flow is similar to the project-based scenario, but the account assignment for all costs is directed to the sales order item.

Step 1: Create a Sales Quotation

The initial step is identical to the project-based scenario.

Business Role: Sales ManagerFiori App: Create Quotation (App ID: VA21)Objective: Create an offer for the customer with both fixed-price and T&M service items.How-To Instructions:Use Quotation Type YBQ1 (a custom type for service quotes, similar to the standard QT).Enter the Customer (100100) and a reference PO Number.Line Item 10 (Fixed Price): Enter Material D300 (Consulting Fixed Price), Quantity 1, and a fixed price (e.g., $1,500).Line Item 20 (Time & Materials): Enter Material D301 (Consulting T&M), and an estimated quantity (e.g., 25 hours). The price here is often based on a rate, but the final billing will be based on actuals.Save the Quotation and note the Quotation Number.Step 2: Create a Sales Order (as Cost Object)

This is the most critical difference. When creating the sales order, the system will not create a project. Instead, it will configure the T&M line item to behave as a cost collector.

Business Role: Sales ManagerFiori App: Create Sales Orders (App ID: VA01)Objective: Create the sales order from the quotation, where the T&M line item is enabled to receive cost postings directly.

How-To Instructions:

Use Order Type YBC1 (a custom type for service orders, similar to standard TA with the right item categories).Click Create with Reference and use the Quotation number from the previous step.The system copies all data. Verify the details.Save the Sales Order.Expected Result: The system saves the Sales Order. No project is created. Instead, the T&M line item (Item 20) is now an active cost object. Note the Sales Order Number.

Consultant’s Corner (Customizing): The magic here is again the Item Category (e.g., TAD for a standard service) and its associated Requirements Class. In SPRO, the Requirements Class for this item category is configured to make the sales order the cost object. The “Account Assignment Category” is set to ‘E’ (Sales Order), and the “Valuation” is set to ‘M’ (Separate valuation with ref. to sales doc./project). This tells the system to collect all costs and revenues for this service directly on the sales order item.

Step 3: Record Time Against the Sales Order

When the employee records time, they will now see the Sales Order as their assignment instead of a WBS element.

Business Role: EmployeeFiori App: My Timesheet (App ID: F0399)Objective: Post labor hours directly to the sales order T&M line item.

How-To Instructions:

Launch the My Timesheet app.When adding a time entry, search for the Receiver Object.Instead of a WBS Element, search for the Sales Order number and the specific Item Number (e.g., XXXXXX / 20).Enter the hours worked (e.g., 8).Submit the timesheet.

Key Concept Explanation: The CO posting generated from this time recording is now posted directly against the sales order item. If you check the costing data for the sales order item, you will see these labor costs accumulating.

Step 4: Record Expenses Against the Sales Order

Travel expenses are also assigned directly to the sales order item.

Business Role: EmployeeFiori App: My Travel and Expenses (App ID: F0409)Objective: Post travel costs directly to the sales order T&M line item.How-To Instructions:Create a new Expense Report.In the Cost Assignment section, change the assignment from the employee’s cost center to the Sales Order (XXXXXX) and Item (20).Add your expenses and submit the report.Step 5: Billing (Fixed Price and T&M)

The billing process remains largely the same, but the source of the T&M data is different.

Business Role: Billing Clerk / Sales ManagerFiori App(s): Create Billing Document Requests (F3498), Create Billing Documents (F0798)

How-To Instructions:

T&M Billing:Launch the Create Billing Document Requests app.Instead of a WBS element, enter the Sales Order and Item Number (XXXXXX / 20) as the selection criteria.The system runs the DIP Profile, finds the labor and travel costs posted directly to the sales order item, and creates a Billing Document Request (BDR).Save the BDR.Creating the Final Invoices:Launch the Create Billing Documents app.Process the BDR to create the T&M invoice.Process the original Sales Order (Item 10) to create the Fixed-Price invoice.7.3 Business Case Test Plan for Sales Order Based Services

Use this test plan to execute the simplified scenario.

Test Case ID: Z_SLS_ORD_E2E_001 Test Case Title: End-to-End Sales Order Based Services with FP and T&M

Prerequisites: All master data from Part 2 is available.

Step

Test Action

Expected Result

Actual Result

Pass/Fail

Create Quotation (App: VA21): – Type: YBQ1 – Customer: 100100 – Item 10: D300 (FP), Price $1,500 – Item 20: D301 (T&M), Qty 25

Quotation is created and saved successfully.

Create Sales Order (App: VA01): – Type: YBC1 – Create with reference to the quotation. – Save the order.

Sales Order is saved. NO project creation message appears. The sales order number is generated.

Record Time (App: F0399): – Record 8 hours, assigning the cost to the Sales Order / Item 20. – Submit the timesheet.

Time is recorded successfully. Costs are posted to the sales order item’s controlling data.

Record Expenses (App: F0409): – Create an expense report. – Assign the costs to the Sales Order / Item 20. – Submit the report.

Expense report is submitted. Costs will be posted to the sales order item upon approval.

Create T&M BDR (App: F3498): – Run the process for the Sales Order / Item 20.

The system finds the labor and travel costs and creates a Billing Document Request.

Create Invoices (App: F0798): – Part A (T&M): Process the BDR from Step 5. – Part B (FP): Process the Sales Order (Item 10).

Two separate invoices are created and posted to accounting successfully.

Project-Based Services in SAP S/4HANAPart 1: Introduction & Key ConceptsThis section sets the stage, introducing the core business scenario and defining the key concepts you’ll encounter throughout the guide.1.1 The Business Scenario: Project-Based Services (Quote-to-Cash)This guide focuses on a common business model for professional services firms, engineering companies, and consulting organizations. The end-to-end process, often called “Quote-to-Cash for Project-Based Services,” covers the complete lifecycle from the initial customer inquiry to the final payment.The core of our scenario involves a customer project that has two distinct billing methods:Fixed Price (FP): A portion of the project is billed at a predetermined, fixed amount, regardless of the actual hours or costs incurred. This is common for well-defined deliverables, like an initial project setup or a specific report.Time & Materials (T&M): Another portion is billed based on the actual resources consumed. This includes employee time (labor), travel expenses, and any materials used. This is also known as Resource-Related Billing.This hybrid model gives customers a predictable cost for some services while providing flexibility for work that is harder to scope upfront.1.2 Key Concepts Explained 🧐Understanding these terms is essential for navigating the process.Work Breakdown Structure (WBS): The heart of a project in SAP. It’s a hierarchical model of all the tasks and deliverables required to complete a project. Each node in this structure is a WBS Element, which acts as a bucket to collect costs, plan resources, and track revenues.Sales Order: A contractual document between your company and a customer that specifies the services or products to be delivered, at what price, and under which conditions. In our S/4HANA scenario, the Sales Order is the trigger that automatically creates the customer project.Dynamic Item Processor (DIP) Profile: This is the magic engine behind Time & Material billing. The DIP Profile is a configuration object that defines rules for how actual costs (like time recordings and expenses) are converted into billable items on a billing request. It tells the system which costs to select, how to group them, and what service materials to use on the invoice.Resource-Related Billing: The process of creating a billing request (invoice proposal) based on the actual costs posted to a project or sales order, using the rules defined in the DIP Profile.CATS (Cross-Application Time Sheet): The standard SAP tool for employees to record their working hours. In our scenario, employees will record time directly against project WBS elements, making those hours available for T&M billing.Settlement: A periodic process where the costs and revenues collected on a project are “settled” to other controlling or financial objects. For customer projects, this is typically settled to an Profitability Segment in CO-PA (Controlling – Profitability Analysis) to analyze the project’s profitability.1.3 Business Roles in SAP S/4HANAThe following business roles are involved in our end-to-end process. These roles are assigned to users to give them access to the necessary Fiori apps.Sales Manager (Internal Sales Representative): Creates the initial quotation and the final sales order that kicks off the project.Project Manager: The owner of the project. Responsible for planning the project structure, staffing resources, monitoring costs and progress, and initiating the billing process.Employee (Project Team Member): Records time and expenses against the project tasks they are assigned to.Billing Clerk: Processes the billing requests generated by the Project Manager and creates the final invoices for the customer.Travel Accountant: Approves travel expense reports and ensures they are posted correctly to accounting.Part 2: Master Data Setup (Test Plan Prerequisites)Before you can run the end-to-end scenario, you need to create the foundational master data. This section provides a complete, step-by-step guide to setting up all the necessary data for our business case. This is your blueprint for a successful test plan.2.1 Organizational StructureThis scenario assumes a standard organizational structure is in place. The key elements used throughout our examples are:Company Code: 1000Sales Organization: 1000Distribution Channel: 10 (Direct Sales)Division: 10Plant: 1000Controlling Area: 1000Cost Center (for Consulting): 13212.2 Creating the CustomerFirst, we need a customer to bill the project to. In S/4HANA, customers are managed as Business Partners (BP).Fiori App: Manage Business Partner Master Data (App ID: F3163)Action:Launch the app and click Create -> Organization.Select the BP Role Customer (FLCU00).Enter the customer’s name (e.g., Customer Services Inc.) and address details.Navigate to the Sales and Distribution tab. Click Create.Enter the Sales Organization (1000), Distribution Channel (10), and Division (10).Fill in key fields like Shipping Conditions and Billing information (e.g., Payment Terms).Navigate to the Company Code tab. Click Create.Enter Company Code 1000 and the Reconciliation Account (e.g., 12100000).Save the Business Partner. Note down the BP Number (e.g., 100100).2.3 Creating Service MaterialsWe need materials to represent our services on sales documents. We’ll create two: one for the fixed-price component and one for the time and materials component.Fiori App: Create Material (App ID: MM01)Action for Fixed-Price Material:Material: D313 (e.g., Consulting PS FP CPI)Industry Sector: S (Service)Material Type: DIEN (Service)Select the following views: Basic Data 1, Sales: Sales Org. 1, Sales: Sales Org. 2, Sales: General/Plant, Accounting 1.In Basic Data, enter a Description (e.g., Fixed Price Project Consulting), Base Unit of Measure (EA – Each).In the Sales views, assign the Delivering Plant (1000) and the Tax classification (1). Set the Item category group to LEIS.In Accounting 1, set the Valuation Class to 3100 (for services) and Price control to V (Moving average).Save the material.Action for T&M Material:Repeat the process for a second material.Material: D314 (e.g., Consulting PS T&E CPI)Description: Time & Material Project ConsultingAll other settings can be the same, but for T&M services, the Item category group is often set to AUM to allow for resource-related billing.Save the material.2.4 Creating Employees as Business PartnersTo record time and expenses, employees must exist in the system as Business Partners with links to their HR personnel record.Fiori App: Manage Business Partner Master Data (App ID: F3163)Action:Click Create -> Person.Select the BP Role Employee (BUP003).Enter the employee’s name (e.g., Jennifer Stein).On the Identification tab, go to the Employee Data section.Enter the Personnel Number from the HR system (e.g., 999102). This links the BP to the HR master data, which contains information like the employee’s Cost Center (1321).Save the BP.User Assignment (Consultant’s Corner):To allow a system user to record time for this employee, a link must be maintained.Transaction: PA30 (Maintain HR Master Data)Enter Personnel Number 999102.Enter Infotype 0105 (Communications) and Subtype 0001 (System user name).Enter your SAP User ID in the ID/Number field.Save. This allows you to use the My Timesheet app as if you were Jennifer Stein.2.5 Setting Up Activity Types and RatesTo value the time recorded by employees, we need to define activity types for different kinds of work and set their prices.Fiori App (or GUI):KL01 – Create Activity TypeKP26 – Change Activity Type/Price PlanningAction:In KL01, create an Activity Type (e.g., 8 – Consulting). Assign it to a cost element and set the activity unit to H (Hours).In KP26, for the combination of Cost Center 1321 and Activity Type 8, plan a rate for the current fiscal year (e.g., $150 per hour). This rate will be used to calculate the cost of time recordings.Part 3: The End-to-End Business Process FlowNow that the master data is ready, let’s walk through the complete business process step-by-step.Step 1: Create a Sales QuotationThe process begins when a customer requests a quote for a new project.Business Role: Sales ManagerFiori App: Create Quotation (App ID: VA21)Objective: Provide the customer with a formal, time-limited offer for the project, detailing both the fixed-price and estimated T&M components.How-To Instructions:Launch the app and enter the Quotation Type. For a project quotation, a standard type is PQS.Enter the Sales Area data: Sales Org (1000), Distr. Channel (10), Division (10).Enter the Sold-To Party (100100) and a PO Number for reference (e.g., PROJECT_QUOTE_TEST).Set the Valid To date for the quotation.Line Item 10 (Fixed Price):Enter Material D313 (Fixed Price Project Consulting).Enter Quantity 1.Navigate to the item’s conditions and enter a fixed Price (Condition Type PPR0), for example, $40,000.Line Item 20 (Time & Materials):Enter Material D314 (Time & Material Project Consulting).Enter an estimated Quantity, for example, 1. The price for this item will be determined later by the actual work performed.Save the Quotation. Note the Quotation Number.Consultant’s Corner (Customizing): The system’s ability to handle project quotations is determined by the Item Category (e.g., PFP for Fixed Price, PTM for T&M). This is configured in SPRO under Sales and Distribution -> Sales -> Sales Documents -> Sales Document Item. The determination rules link the Sales Document Type + Item Category Group to the correct Item Category.Step 2: Create a Sales Order & Auto-Create the ProjectOnce the customer accepts the quote, you create a legally binding sales order. In our S/4HANA setup, this single action will automatically create the entire project structure in the background. ✨Business Role: Sales ManagerFiori App: Create Sales Orders (App ID: VA01)Objective: Formalize the customer agreement and trigger the creation of the WBS structure for project execution.How-To Instructions:Launch the app and enter the Order Type. For a project order, a standard type is PSO1.Click the Create with Reference button.Select the Quotation tab and enter the Quotation Number from Step 1. Click Copy.The system copies all data from the quotation into the sales order. Review the items, quantities, and prices.Enter a unique PO Number from the customer (e.g., CUST-PO-196).Crucial Step: Save the Sales Order.Upon saving, you’ll receive a message that the Sales Order was saved, and another message indicating that a Project has been created (e.g., Project C/XXXX created, where XXXX is based on the sales order number). Note down this Project ID.Key Concept Explanation: How did this happen? The item categories (PFP, PTM) used in the sales order are configured to require an account assignment to a WBS element. Furthermore, the configuration points to a standard Project Template. When the order is saved, the system copies this template to create a new, operative project and automatically links the sales order line items to the corresponding WBS elements for billing.Consultant’s Corner (Customizing): This automation is controlled via the Requirements Class assigned to the item categories. In SPRO (Sales and Distribution -> Basic Functions -> Account Assignment/Costing), the requirements class specifies the account assignment category and contains a setting for “Project Acct Assgmt,” which points to the project template to be used.Step 3: Plan and Staff the Customer ProjectNow the Project Manager takes over to refine the project plan and assign resources.Business Role: Project ManagerFiori App: Plan Customer Projects (App ID: F1642)Objective: Review the auto-generated project structure, adjust dates, assign team members, and release the project to make it ready for execution.How-To Instructions:Launch the app and search for your Project ID from Step 2.You will see the WBS hierarchy that was copied from the template. It might look something like this:C/XXXX – Main ProjectC/XXXX-0010 – Fixed Price PhaseC/XXXX-0020 – T&M PhaseReview and Edit:Click on each WBS element to view its details.Change the Description of the top-level WBS to something meaningful, like Project ABC Consulting.Adjust the planned Start and Finish dates for each phase.Staffing:Select the T&M Phase WBS element.Go to the Team or Resource section.Add team members by searching for their name or role (e.g., add Jennifer Stein). This assignment makes the project visible in the employee’s timesheet.Release the Project:Select the top-level WBS element.Change the Status from Created (CRTD) to Released (REL). This is critical, as costs and time can only be posted to released projects.Save your changes.Step 4: Record Time Against the ProjectThe project is now live, and team members can begin their work and record their hours.Business Role: EmployeeFiori App: My Timesheet (App ID: F0399)Objective: Capture the actual hours worked on project tasks to enable T&M billing and accurate cost tracking.How-To Instructions:Launch the My Timesheet app. The app shows a calendar view.Click on the appropriate day you performed the work.The system will show a list of available work items. Because Jennifer Stein was staffed to the project, the WBS element C/XXXX-0020 (T&M Phase) will be available for selection.Select the correct WBS element.Enter the number of hours worked (e.g., 8).You can add a short note or description of the work performed.Click Submit. The timesheet is sent for approval (if an approval workflow is active) or is posted directly.Key Concept Explanation: When time is submitted and approved, the system generates a Controlling (CO) document in the background. This document posts the cost of the labor (Hours x Rate from KP26) to the WBS element. This cost is now “sitting” on the project, waiting to be billed back to the customer during the T&M billing process.Step 5: Record Travel ExpensesIf a team member travels for the project, those expenses also need to be captured and billed to the customer.Business Role: EmployeeFiori App: My Travel and Expenses (App ID: F0409)Objective: Record travel costs and assign them to the project so they can be included in T&M billing.How-To Instructions:Launch the app and click Create Expense Report.Enter the trip details: dates, destination (Paris), and reason (Consulting).Crucially, go to the Cost Assignment section.By default, it may assign costs to the employee’s home cost center. Change this to assign costs to the WBS Element C/XXXX-0020.Add individual expense items:Expense Type: Rental Car, Amount: $100Expense Type: Fuel, Amount: $50Submit the expense report. It will go through an approval process.Consultant’s Corner (Customizing): The available expense types and their GL account determination are configured in SPRO under Financial Accounting -> Travel Management. The integration with Project System is standard, allowing any cost object (like a WBS element) to be assigned.Step 6: Monitor Project CostsThroughout the project, the Project Manager needs to keep an eye on costs and progress.Business Role: Project ManagerFiori App: Customer Project Analysis (App ID: F3259)Objective: Get a real-time overview of planned vs. actual costs, revenues, and project margins.How-To Instructions:Launch the app and search for your Project ID.The app provides a dashboard view with key performance indicators (KPIs).You can drill down into different reports:Cost Report: You will see the actual costs posted from the time recordings (Step 4) and travel expenses (Step 5).Revenue Report: This will show the planned revenue from the sales order.Profitability Analysis: The app calculates the project margin in real-time.Step 7: Create Billing Proposals (T&M Billing)At the end of a billing period (e.g., end of the month), the Project Manager initiates the T&M billing process.Business Role: Project ManagerFiori App: Create Billing Document Requests (App ID: F3498) (This is the modern successor to DP91)Objective: Run the Dynamic Item Processor (DIP) to convert the posted costs (time and expenses) into a draft invoice, or a “Billing Document Request.”How-To Instructions:Launch the app.Enter the selection criteria. The key field is the WBS element that collects the T&M costs: C/XXXX-0020.Enter the posting dates for the period you wish to bill.Execute the run.The system displays a list of the costs it found (the time and expense postings). It uses the DIP Profile to translate these into billable line items.For example, the 8 hours of consulting time will become a line item on the invoice.The $150 in travel expenses will become another line item.Review the proposed items. You can choose to accept, postpone, or write off specific costs.Once satisfied, save the run. This creates a Billing Document Request (BDR), which is an internal document that acts as a request to the billing department to create the final customer invoice. Note the BDR Number.Step 8: Create the Final InvoicesThe Billing Clerk now takes the BDR and the fixed-price items from the sales order and creates the official invoices for the customer.Business Role: Billing ClerkFiori App: Create Billing Documents (App ID: F0798)Objective: Generate the final, legally-compliant customer invoices for both the fixed-price and T&M portions of the project.How-To Instructions:Billing the T&M Portion:Launch the app.In the “Documents to be Processed” list, you will find the Billing Document Request created in Step 7.Select the BDR and click Create Billing Documents.The system generates an invoice with line items corresponding to the hours and expenses recorded.Save the billing document. A financial document is posted automatically, debiting the customer’s accounts receivable and crediting revenue. Note the Invoice Number.Billing the Fixed-Price Portion:In the same app, search for the original Sales Order (C/XXXX).The system will show that Line Item 10 (D313) is ready for billing.Select the sales order and click Create Billing Documents.An invoice for the fixed amount ($40,000) is created.Save the billing document. Note the Invoice Number.Step 9: Project Period-End and ClosureAt the end of each month, and upon completion of the project, closing activities must be performed.Business Role: Project Manager / ControllerFiori App(s): Run Settlement – Projects (Actuals), Project BuilderObjective: Calculate project results, settle costs and revenues to Profitability Analysis, and formally close the project to prevent further postings.How-To Instructions (Simplified):Results Analysis: The system calculates Work-in-Process (WIP) or reserves for unrealized costs based on the project’s progress and billing status.Settlement: The Project Manager or a Controller runs the settlement process. The net value of costs and revenues on the project is settled to a Profitability Segment (CO-PA), allowing for detailed profitability reporting.Technical Closure: Once all work is done and billed, the Project Manager sets the project status to Technically Completed (TECO) in the Plan Customer Projects app. This prevents any further cost postings.Final Closure: After a final settlement run, the status is set to Closed (CLSD). The project is now closed from a financial perspective and is archived.Part 4: Comprehensive Business Case Test PlanThis section provides a structured test plan for you to execute the entire end-to-end scenario. Follow these steps in your SAP S/4HANA system to practice and validate the process.Test Case ID: Z_PROJ_SERV_E2E_001 Test Case Title: End-to-End Project-Based Services with FP and T&M BillingObjective: To validate the complete Quote-to-Cash process for a customer project, including quotation, sales order with automatic project creation, time and expense recording, resource-related billing for T&M, fixed-price billing, and financial posting.Prerequisites: All master data from Part 2 of this guide has been successfully created.Customer: 100100Materials: D313 (FP), D314 (T&M)Employee: 999102 (assigned to user ID)Activity Rate: Set for Cost Center 1321 / Activity Type 8.StepTest ActionExpected ResultActual ResultPass/Fail1Create Quotation (App: VA21): – Type: PQS – Customer: 100100 – Item 10: Material D313, Qty 1, Price $40,000 – Item 20: Material D314, Qty 1Quotation is created and saved successfully. A unique quotation number is generated. 2Create Sales Order (App: VA01): – Type: PSO1 – Create with reference to the quotation from Step 1. – Enter a PO Number. – Save the order.Sales Order is saved. A system message confirms that a Project (e.g., C/XXXX) has been created. 3Plan Project (App: F1642): – Open the Project ID from Step 2. – Change the project description. – Assign Employee 999102 to WBS element …-0020 (T&M). – Set the project status to Released (REL).Project is updated and released successfully. 4Record Time (App: F0399): – As the user linked to employee 999102. – Record 8 hours against the T&M WBS element. – Submit the timesheet.Time is recorded successfully. The entry is approved (or auto-approved). 5Record Expenses (App: F0409): – Create an expense report. – Assign the costs to the T&M WBS element. – Add expenses for Rental Car ($100) and Fuel ($50). – Submit for approval.Expense report is created and submitted. 6Monitor Costs (App: F3259): – Open the Project ID. – Check the actual costs.Actual costs reflecting the labor (8 hrs * rate) and travel expenses ($150) are visible on the T&M WBS element. 7Create BDR (App: F3498): – Run the process for the T&M WBS element for the relevant date range.The system finds the labor and expense costs and proposes them as billable items. A Billing Document Request (BDR) is created upon saving. 8Create Invoices (App: F0798): – Part A (T&M): Find and process the BDR from Step 7. – Part B (FP): Find and process the original Sales Order (Item 10).Two separate invoices are created and posted to accounting. Invoice numbers are generated for both. The customer’s A/R account is debited. 9Close Project (App: F1642): – After period-end closing activities (settlement). – Set the project status to Technically Completed (TECO).Project status is successfully changed to TECO. No further time or cost postings are possible. Part 5: Reporting & AnalyticsMonitoring project performance is crucial. SAP S/4HANA provides a suite of powerful real-time analytical Fiori apps that replace traditional GUI reports.Project Profitability (App ID: F3333): This is the ultimate overview app for Project Managers and Controllers. It provides a real-time P&L view of your projects, showing revenues, costs, and margins. You can slice and dice the data by customer, project manager, service organization, and more.Customer Project Analysis (App ID: F3259): As used in our test plan, this app gives a detailed financial status report on a single project, comparing planned vs. actual figures for costs, revenues, and billing.Project Cost Line Item Report (App ID: F3341): Use this app to drill down to the individual postings on a project. You can see every single time recording, expense posting, or material purchase that has hit your WBS elements. This is invaluable for detailed analysis and troubleshooting.Part 6: Appendix6.1 Process ReversalsMistakes happen. Here’s how to reverse the key steps in the process.Cancel Billing Document: Use the Manage Billing Documents Fiori app (App ID: F0797). Search for the invoice, select it, and choose the “Cancel” option. This creates a cancellation document and re-opens the original item (BDR or Sales Order) for billing.Reject Billing Proposal: If the BDR has not been invoiced, the Project Manager can go back into the billing proposal (or use an app like Manage Debit Memo Requests) and reject the items. This sends the costs back into the pool to be billed later.Cancel Time/Expense Posting: A posted CATS or Travel document creates a CO document. This can be reversed using transaction FB08 if necessary, but the correct procedure is typically to enter a correcting entry in the source application (e.g., negative hours in the timesheet).6.2 Glossary of TermsBDR: Billing Document Request. An internal SD document used to request the creation of a customer invoice, typically generated from a T&M billing run.CO-PA: Controlling – Profitability Analysis. The module where project costs and revenues are settled for profitability reporting.DIP Profile: Dynamic Item Processor Profile. Configuration that controls resource-related billing.FP: Fixed Price.T&M: Time and Materials.TECO: Technically Completed. A project status.WBS: Work Breakdown Structure. Part 7: Alternative Scenario – Sales Order Based Services (Scenario 195)While a full project structure is perfect for complex, multi-phase engagements, many professional services are more straightforward. For smaller consulting jobs, short-term support, or simple service delivery, creating an entire project can be overkill.SAP S/4HANA provides a leaner, more direct approach: Sales Order Based Services. In this scenario, the Sales Order itself acts as the central object for collecting costs and revenues. This simplifies the process significantly while still offering powerful Fixed-Price and Time & Material (T&M) billing capabilities.7.1 Key Differences: Project-Based vs. Sales Order-BasedChoosing the right scenario is a key design decision. Here’s a simple comparison to guide you:FeatureProject-Based Services (Scenario 196)Sales Order-Based Services (Scenario 195)Primary Cost ObjectWork Breakdown Structure (WBS) ElementSales Order Line ItemStructureHierarchical and detailed (WBS, Networks, Activities). Excellent for complex task management.Flat. The sales order contains the line items for services. Simple and direct.Planning & SchedulingAdvanced capabilities for dates, resources, and dependencies using the Project Builder.Limited to the delivery dates on the sales order line items.Cost CollectionCosts are collected on various WBS elements, allowing for granular reporting by project phase or task.All costs for a specific service are collected directly on one sales order line item.Best ForLarge, long-term, complex projects like engineering, construction, or large-scale consulting.Smaller, short-term engagements, simple service delivery, or “bucket of hours” consulting.S/4HANA Scope ItemPrimarily related to J11 (Customer Project Management).Primarily related to J14 (Service Order Management) or sales-item-based scenarios. 7.2 The End-to-End Business Process FlowThe flow is similar to the project-based scenario, but the account assignment for all costs is directed to the sales order item.Step 1: Create a Sales QuotationThe initial step is identical to the project-based scenario.Business Role: Sales ManagerFiori App: Create Quotation (App ID: VA21)Objective: Create an offer for the customer with both fixed-price and T&M service items.How-To Instructions:Use Quotation Type YBQ1 (a custom type for service quotes, similar to the standard QT).Enter the Customer (100100) and a reference PO Number.Line Item 10 (Fixed Price): Enter Material D300 (Consulting Fixed Price), Quantity 1, and a fixed price (e.g., $1,500).Line Item 20 (Time & Materials): Enter Material D301 (Consulting T&M), and an estimated quantity (e.g., 25 hours). The price here is often based on a rate, but the final billing will be based on actuals.Save the Quotation and note the Quotation Number.Step 2: Create a Sales Order (as Cost Object)This is the most critical difference. When creating the sales order, the system will not create a project. Instead, it will configure the T&M line item to behave as a cost collector.Business Role: Sales ManagerFiori App: Create Sales Orders (App ID: VA01)Objective: Create the sales order from the quotation, where the T&M line item is enabled to receive cost postings directly.How-To Instructions:Use Order Type YBC1 (a custom type for service orders, similar to standard TA with the right item categories).Click Create with Reference and use the Quotation number from the previous step.The system copies all data. Verify the details.Save the Sales Order.Expected Result: The system saves the Sales Order. No project is created. Instead, the T&M line item (Item 20) is now an active cost object. Note the Sales Order Number.Consultant’s Corner (Customizing): The magic here is again the Item Category (e.g., TAD for a standard service) and its associated Requirements Class. In SPRO, the Requirements Class for this item category is configured to make the sales order the cost object. The “Account Assignment Category” is set to ‘E’ (Sales Order), and the “Valuation” is set to ‘M’ (Separate valuation with ref. to sales doc./project). This tells the system to collect all costs and revenues for this service directly on the sales order item.Step 3: Record Time Against the Sales OrderWhen the employee records time, they will now see the Sales Order as their assignment instead of a WBS element.Business Role: EmployeeFiori App: My Timesheet (App ID: F0399)Objective: Post labor hours directly to the sales order T&M line item.How-To Instructions:Launch the My Timesheet app.When adding a time entry, search for the Receiver Object.Instead of a WBS Element, search for the Sales Order number and the specific Item Number (e.g., XXXXXX / 20).Enter the hours worked (e.g., 8).Submit the timesheet.Key Concept Explanation: The CO posting generated from this time recording is now posted directly against the sales order item. If you check the costing data for the sales order item, you will see these labor costs accumulating.Step 4: Record Expenses Against the Sales OrderTravel expenses are also assigned directly to the sales order item.Business Role: EmployeeFiori App: My Travel and Expenses (App ID: F0409)Objective: Post travel costs directly to the sales order T&M line item.How-To Instructions:Create a new Expense Report.In the Cost Assignment section, change the assignment from the employee’s cost center to the Sales Order (XXXXXX) and Item (20).Add your expenses and submit the report.Step 5: Billing (Fixed Price and T&M)The billing process remains largely the same, but the source of the T&M data is different.Business Role: Billing Clerk / Sales ManagerFiori App(s): Create Billing Document Requests (F3498), Create Billing Documents (F0798)How-To Instructions:T&M Billing:Launch the Create Billing Document Requests app.Instead of a WBS element, enter the Sales Order and Item Number (XXXXXX / 20) as the selection criteria.The system runs the DIP Profile, finds the labor and travel costs posted directly to the sales order item, and creates a Billing Document Request (BDR).Save the BDR.Creating the Final Invoices:Launch the Create Billing Documents app.Process the BDR to create the T&M invoice.Process the original Sales Order (Item 10) to create the Fixed-Price invoice.7.3 Business Case Test Plan for Sales Order Based ServicesUse this test plan to execute the simplified scenario.Test Case ID: Z_SLS_ORD_E2E_001 Test Case Title: End-to-End Sales Order Based Services with FP and T&MPrerequisites: All master data from Part 2 is available.StepTest ActionExpected ResultActual ResultPass/Fail1Create Quotation (App: VA21): – Type: YBQ1 – Customer: 100100 – Item 10: D300 (FP), Price $1,500 – Item 20: D301 (T&M), Qty 25Quotation is created and saved successfully. 2Create Sales Order (App: VA01): – Type: YBC1 – Create with reference to the quotation. – Save the order.Sales Order is saved. NO project creation message appears. The sales order number is generated. 3Record Time (App: F0399): – Record 8 hours, assigning the cost to the Sales Order / Item 20. – Submit the timesheet.Time is recorded successfully. Costs are posted to the sales order item’s controlling data. 4Record Expenses (App: F0409): – Create an expense report. – Assign the costs to the Sales Order / Item 20. – Submit the report.Expense report is submitted. Costs will be posted to the sales order item upon approval. 5Create T&M BDR (App: F3498): – Run the process for the Sales Order / Item 20.The system finds the labor and travel costs and creates a Billing Document Request. 6Create Invoices (App: F0798): – Part A (T&M): Process the BDR from Step 5. – Part B (FP): Process the Sales Order (Item 10).Two separate invoices are created and posted to accounting successfully. Read More Technology Blog Posts by Members articles

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