How Internal Orders Differs from Project System in Overseeing Capital Projects

  • by Tony Rogan, Consultant, SAP America
  • January 15, 2004
Often managers are unsure whether to use Internal Orders or Project System (PS) for managing capital projects. The author compares the two methods so that you can make your own decision about which is best suited for your capital project. For example, did you know that PS allows you to create multiple versions of a project structure so that you can compare different scenarios?

Often managers are unsure whether to use Internal Orders or Project System (PS) for managing capital projects. Organizations widely use Internal Orders as a quick answer to capture expenses because the component is easy to implement and manage. However, they are not as familiar with the R/3 PS component and its ability to provide reporting on capital project expenditures and other details. Generally, companies for which I have consulted either considered PS too complex or they were not well versed about its functionality. They used Internal Orders for capital project management by default.

I’m going to compare the two methods, both of which are part of CO, so that you can make your own decision about which is best suited for your capital project. For example, did you know that PS allows you to create multiple versions of a project structure so that you can compare different scenarios?

First, however, I’m going to make a distinction between capital project management and capital project tracking. Capital project management involves all aspects of managing a project. Such activities can include expense planning and tracking, date or deadline planning, project structure planning and execution, resource planning and tracking, milestone reporting, and progress billing and analysis. Project tracking is usually only concerned with a subset of these functions and focuses more on planning and capturing expenses, as well as reporting on this data.

To compare the features and functionality of PS and Internal Orders, I’m going to examine the key steps in the capital projects planning and tracking processes that occur within any company. The steps of the capital projects planning and tracking process are: project structure planning and tracking, expense and revenue planning and capturing, date and time planning and tracking, billing scenarios, and analysis and reporting.

Project Structure Planning and Tracking
Before you create the capital project budget, the project itself must be broken down into a set of manageable steps. The project management team must decide how the project is to be budgeted and tracked — what are the major phases, if any, that require the planning and tracking of dates, costs, and resources?

Tony Rogan

Tony Rogan is a certified FI/CO consultant at SAP with eight years of SAP consulting experience. He began his SAP career with a Big 5 consulting firm and over the years has worked in various industries, including utilities, non-profit, high-tech, consumer goods, and process manufacturing. Tony’s expertise lies in the Financial and Controlling modules, with emphasis on Cost Center Accounting, Profitability Analysis, Internal Orders, Profit Center Accounting, Special Purpose Ledger, Project Systems, and Product Costing. He also has experience working with Enterprise Consolidations, LIS, and Business Information Warehouse.

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