Using SAP PPM to manage projects and portfolios that have a Capex/Opex split
Some people may (and often do) argue that from a project management point of view the capex/opex split is not important; it’s the project manager’s job to deliver the project on time and within budget irrespective of whether or not its capex or opex. While this is true it is also very helpful for the portfolio manager to be able to check variances in capex AND opex budget vs. actual. Particularly in the regulated utility industries where capex adds to the asset base and is a key reporting requirement to the regulator and opex is expensed and has a direct impact on shareholder profitability. When balancing the selection of projects for a portfolio it would be necessary to ensure that the appropriate capex and opex spend is incurred and that the correct projects are delivered.
Within core SAP ERP it has traditionally been awkward to split capex and opex at the cost element level. What I mean by this is that the cost element can in some cases, but does not generally, represent capex or opex. So when consuming material, buying from 3rd parties or using internal labour the cost element that hits the cost object (order, network, etc.) doesn’t indicate if the spend is capex or opex. It’s only on settlement that the cost is ‘marked’ as capex or opex based on the receiving object. Cost centres (or other non-asset receivers) are opex and those settled to an asset (or an asset under construction) are capex receivers. What some organisations do to assist in identifying capex or opex before settlement is to create either project types in PS or order types in PM to indicate whether the expense is a capital or operational cost.
Now SAP PS is being used to collect actual costs and settled to either capital cost receivers (assets or assets-under-construction) or operational cost receivers (cost centres) and the question is: can SAP PPM be used to provide a portfolio wide view of both capex and opex. The answer is yes, but it’s tricky because the financial planning is shown by a combination of view/category/group and when feeding PPM with the costs from SAP PS the costs are characterised by, amongst other things, cost element, cost element type, version, value type, controlling area and date. None of the characteristics specifically allow us to mark the cost as capex or opex and hence on the portfolio item we cannot report by capex or opex. Although, from a portfolio management view, this is the requirement.
How did we do the ‘split’? Well before the project cost IDoc was sent to the PPM system the cost needed to be ‘marked’ as either capex or opex by manipulating one of the standard fields. The BAPI was used to change the contents of the IDoc based on the project type that the cost was incurred on, which was either of capex or opex type.
So with the correct configuration of the view/category/group structure in PPM5.0, a small enhancement on a standard BAPI to update the generated IDoc with a capex/opex indicator for all the costs and running the standard extract and roll-up programs, like magic, the capex/opex split will appear in the correct place within the portfolio item financial reporting. And one last point. This split is needed when costs come from SAP ERP (or another ERP system) but for top-down budget distribution the split is done within PPM in the correct capex or opex group.