Results Analysis Method 7, POC Method Based On Project Progress Value Determination - SAP Blogs

5/30/23, 10:32 AM Results Analysis Method 7, POC Method Based On Project Progress Value Determination | SAP Blogs
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Technical Articles
Vinod Anand Sharma

January 25, 2021 | 4 minute read
Results Analysis Method 7, POC

Method Based On Project Progress
Value Determination
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This blog is the last in the trilogy of the more advanced Results Analysis
Techniques, where the POC (percentage of completion) is based on project
progress.
In my previous blogs I had detailed, RA Valuation Method 14, how Cost Of Sales is
determined based on the cost mapping from GL accounts to the Sales Order line
item using the DIP (Dynamic Insertion Profile) and RA Valuation Method 15,
Derive Revenue from Resource-Related Billing and Simulation of Dynamic Items
https://blogs.sap.com/2021/01/25/results-analysis-method-7-poc-method-based-on-project-progress-value-determination/ 1/11
You can refer to the detail around RA Valuation Method 14 “derive cost of sales
from resource related billing of dynamic items” here
https://blogs.sap.com/2020/10/27/results-analysis-using-method-14-derive-
cost-of-sales-from-resource-related-billing-of-dynamic-items/
To recap RA Valuation Method 15 “derive revenue from resource-related billing

and simulation of dynamic items” you can look at the link below
https://blogs.sap.com/2020/11/13/how-to-configure-and-setup-results-
analysis-valuation-method-15-derive-revenue-from-resource-related-billing-and-
simulation-of-dynamic-items/
In Results Analysis Method 7, Cost of Sales is calculated and Revenue is adjusted

– revenue in excess of billing are calculated as a % (of actual/plan progress
version) of planned costs and revenues. This method is used in tandem with PS
where the progress calculation is setup in PS and recorded on individual WBS
elements.
Details
For SAP customers in the E&P business or where a significant portion of the
business comes from executing contracts, large volumes and where accounting
policy dictates that cost and revenue need to be matched results analysis
method 7 can be used.
When the RA key for this method is setup some additional elements need to be
included in the setup, e.g. progress version.
Progress version is controlling area specific and defines the control data for POC
and earned values. For progress to be recorded and checked against planned
progress. It is mandatory to maintain progress version along with method of
calculation. The system records progress analysis data in the progress version.
Statistical Key Figures (SKF) for POC results analysis needs to be created if it not
created and assigned to the value category ‘030’
Progress version setup typically done by the PS team.
SKF setup
Mapping SKF to Value Categories and GL account determination
A Typical requirement that can be addressed by the RA Valuation Method 7 is

detailed below by way of an elementary example.
We have a project for two months with planned revenue of 80,000 Euro and
Planned Costs of 44,000 Euro. There are two WBS elements, one for Design
which is to be finished in the first month and the other for Build & Finish which is
planned to start the first month and is planned to be 35% complete at
the end of the first month and completed by the end of second month .
First month
At the end of the first month planned Vs actual costs
At the end of the first month progress – design activity
At the end of the first month progress – build and finish activity
At the end of the first month – RA calculation display

POC for both design and build & finish is 40.9 %
Cost of sale = POC % X Planned cost ; 40.9% X 44,000 = 17,999.96
Revenue affecting net income = POC% X Planned revenue ; 40.9% X 80,000 =

32,727.20
At the end of the first month RA FI posting
Net cost recognized = cost of sales from RA calculation – actual costs incurred
for the month ; 17,999.96 – 7,000 = 10,999.96
The second FI entry captures the profit which is settled to an Internal Order
since CO-PA is not active.
Second Month
At the end of the second month planned Vs actual
At the end of the second month progress – build and finish activity
At the end of the second month – RA calculation display
POC for both design and build & finish is 81.82 %
Cost of sale = POC % X Planned cost ; 81.82 % X 44,000 = 35,999.92
Revenue affecting net income = POC% X Planned revenue ; 81.2 % X 80,000 =

65,454.40
At the end of the second month RA FI posting
Conclusion
The RA method 7 which is used to calculate revenue based on Project Progress

where POC is the Project Progress. There are multiple ways of calculating the
project progress, I have considered the manual method. In any case, how the
project progress is setup is not the focus of the blog. What really is key,is to setup
the config to integrate the project progress calculation with the Results Analysis
functionality. This requires the FICO consultant to work closely with the PS team.
This blog should get you a jump start and will hopefully help you to quickly setup
and test this solution when you need to address the requirement to matching
costs and revenues for typical E& P customers.
In case you do have questions, I would be more than happy to answer them.
Please post them here in Q&A.
Alert Moderator
Assigned Tags
SAP S/4HANA Finance
SAP Production and Revenue Accounting
Progress Based RA
result analysis
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4 Comments
You must be Logged on to comment or reply to a post.
Amarender Challa
January 25, 2021 at 2:09 pm
Thanks Vinod. Its a very useful blog
Like 0 | Share
Mayumi Lacerda Blak

March 25, 2021 at 10:56 pm
Hi Vinod!
Thanks for the blog!
Can you detail how did you get to the POC percentages?
kind regards
Mayumi
Like 0 | Share
Penghong Jiang
February 22, 2022 at 9:30 am
Thanks Vinod,
It is a very good blog. Can you please help to demo method 10 for PS RA?
Regards
Fisher
Like 0 | Share
Rai Sohaib Amjad

August 17, 2022 at 6:42 am
Hi Vinod,
Thanks for sharing this information. Could you please elaborate how you arrive at the POC pop up screen
shown in the below screenshot. Thanks in advance
Like 0 | Share
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5/30/23, 10:32 AM Results Analysis Method 7, POC Method Based On Project Progress Value Determination | SAP Blogs

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Vinod Anand Sharma

Results Analysis Method 7, POC

To recap RA Valuation Method 15 “derive revenue from resource-related billing

In Results Analysis Method 7, Cost of Sales is calculated and Revenue is adjusted

Progress version setup typically done by the PS team.

Mapping SKF to Value Categories and GL account determination

A Typical requirement that can be addressed by the RA Valuation Method 7 is

At the end of the first month planned Vs actual costs

At the end of the first month progress – design activity

At the end of the first month – RA calculation display

POC for both design and build & finish is 40.9 %

Cost of sale = POC % X Planned cost ; 40.9% X 44,000 = 17,999.96

Revenue affecting net income = POC% X Planned revenue ; 40.9% X 80,000 =

At the end of the first month RA FI posting

At the end of the second month planned Vs actual

At the end of the second month – RA calculation display

POC for both design and build & finish is 81.82 %

Cost of sale = POC % X Planned cost ; 81.82 % X 44,000 = 35,999.92

Revenue affecting net income = POC% X Planned revenue ; 81.2 % X 80,000 =

At the end of the second month RA FI posting

The RA method 7 which is used to calculate revenue based on Project Progress

SAP S/4HANA Finance

SAP Production and Revenue Accounting

Similar Blog Posts 

By Manohar MVRK Jan 10, 2023

RAR revenue recognition vs Results Analysis

Deployment Scenarios for S/4 Simple Finance (different methods)

You must be Logged on to comment or reply to a post.

Thanks Vinod. Its a very useful blog

Mayumi Lacerda Blak

Thanks for the blog!

Rai Sohaib Amjad

Privacy Terms of Use

Legal Disclosure Copyright

Trademark Cookie Preferences

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