For a customer project with billing type 'fixed price' and Recog. key SPFC. When a first posting is made on a project before Run Revenue Recognition (or manual revaluation) has been executed, the Planned Cost and Planned Revenue seems to be empty (or not updated).
This causes EBRR posting for revenue adjustment much too high. And it is above the contract value (billing plan) of the project.
Even if the project revaluation at the end of month solves the erroneous posting and the planned cost/revenue update, you cannot rely the figures during the period until month-end closing.
SAP S/4HANA Cloud
Here is explanation:
- You are using CPM fix price project - RA key = SPFC
- This key is using strategy 306 - it means it is using different computation for real-time posting and for PEC(Period end closing) run.
Here is definition for the strategies:
- -306: Strategy: real time = 305, closing = 301 Real time processing use the plan source 305, closing apps are using plan source 301
- -305: Confirmed EAC cost CPM project, revenue SD billing schedule Confirmed EAC from the CPM planning tools, revenues from the actual SD billing schedule, assign condition types to source
- -301: EAC cost from CPM project, revenue from SD billing schedule Actual estimation of completion (EAC) from CPM planning tools, revenues from actual SD billing schedule, assign condition types
Strategy 305 uses the confirmed EAC (costs estimated at completion of a project as confirmed by the project manager) while strategy 301 uses the dynamic EAC which is based on the actually posted costs on a project. The values for the planned costs based on confirmed EAC and dynamic EAC can be different. In such cases also the revenues calculated on a cost-based PoC will be different. If, for instance, you post more than the total planned hours based on which the planned costs were confirmed the cost based PoC based on confirmed EAC exceeds 100%. In such cases the calculated revenue in real time postings may be much larger than the planned revenue. This is illustrated in example below.
- You have planned cost (confirmed EAC) = 1.000 EUR
- You have Fix Price billing item = 40.000 EUR. This means you have planned revenue = 40.000 EUR
- You post costs of 35.000 EUR (e.g. travel expenses or 350 hrs with cost rate of 100 EUR/hr)
- In this real- time posting the accrued revenue based on strategy 305 would be calculated as follows:
- Accrued Revenue = cost based PoC x planned revenue = (actual posted costs/ confirmed EAC) x planned revenue = (35.000/1.000) x 40.000 EUR = 1.400.000 EUR
If you will run period end closing run - then it will correct values based on strategy (301). The cost based PoC is now calculated based based on the dynamic EAC, which in this case is 35.000 EUR. This means that in period end close we calculate with a cost-based PoC of 100%. This results in the following EBRR correction postings in EBBR period end close, so that after period end closing the unbilled revenue is adjusted to the planned revenue.
It is mean that there will be these postings:
- Accrued revenues/contract assets: -1.400.000EUR
- Unbilled revenues: 40.000EUR
- Revenues: 1.360.000EUR => Final SUM will be then = -40.000EUR
It is the standard system behavior.
EBRR, revenue recognition, CPM, customer project, recognition key, RA key, revenue adjustment. , KBA , CO-PC-OBJ-EBR , Event-Based Revenue Recognition , Problem