Resource-Related BillingComplex Billing Environments

Amlan Sarkar

Role -SAP Functional Consultant

• What is Resource-Related Billing (RRB)?• The Power of Pricing• Cost Plus Billing Scenario• Fixed Price with Progress Payments Scenario• Conclusions• Questions

Agenda

Resource-Related Billing

Any company who bills their customers based on resources consumed

Industries include but not limited to:

Airline Operations Defense Contractors Engineering & Construction Service Industry Consulting Industry Public Sector

Contract Types with Complex Billings

Cost

Firm-fixed-price w/PP

Profit 0/100 Share

Cost-plus-fixed-fee

Estimated Cost

Fixed Fee

100/0 Share

Base Fee (0-3%)

Award Fee Pool

MaxFee

Base Fee

Estimated Cost

MultipleIncentive

TargetFee

Cost-plus-incentive-fee

Share Ratio

Target Cost

Max Fee

Min Fee

Fixed-price incentive w/PP

Target Cost

TargetProfit

CeilingPrice

Share Ratio

(PTA)

Billing Complexities

The amount to bill may depend on different calculations: Resource-Billing

Based on resources consumed Based on estimated resources to be consumed Based on labor hours consumed Disallowed costs Cost Funding Cost Withholds

Overheads G&A Material Production Cost of Money

Billing Complexities cont.

Fees Fixed

• Percentage of costs incurred given negotiated cost• Percentage of labor hours consumed• Fee Retention• Fee Funding

Award Incentive

Schedule Cost

How can we use SAP for RRB?

• The SAP R/3 system is a toolbox from which you can build and store many different things.

Our job is to build invoices and

store the data for future use

Resource-Related Billing Equation

Project System

Controlling/FI

Sales & Distribution

=

Invoice

Materials Management

Pricing ProcedurePricing Routines

Project Structures

Costing SheetsCost Tables

Material Master

Dynamic Item Processor

How does RRB Work?

Active Projectwith Postings

Proj

WBS-1 WBS-2

Resource-Related Billing is used when the amount to invoice the customer is based on the resources consumed by the project

Postings DTE Postings DTE Postings DTE Postings DTE

Sales Contract/Order

Line Item Qty10 Product A 1

WBS-1/DIP Profile20 Product B 1

WBS-2/DIP ProfileDynamicItemProcessor

Resource Bill

Processing FI&CO documents from postings

Sample Progress Pay DMR

Fixed Price Item Flow

Item 10ProgressPayment

Item 10ProgressPayment

HeaderHeader

Item 20 P/N12345

Item 20 P/N12345

Sales order

Bill

Bill

Deliver

Clear

DownPayment

$

Invoice PricingB

illB

ill Price

Liquidation

LESS

=

Questions

Thank you for attending!