Industry Use Cases of SAP Commercial Project Management That Deliver Results

The balancing act of commercial project management in the project-based Australian economy, driven by both the towering infrastructure projects and complex mining projects and custom-built engineering contracts, is a high-stakes game. The key to success is one clear perception of the costs, scope and progress. In its absence, businesses are in a constant struggle to manage budget overruns and missed due dates.

It is here that the strength of built-in project control comes in. SAP Commercial Project Management solution (CPM) was created with the sole purpose of uniting financial and operational data so that project profitability is not an optimistic projection but rather a quantifiable truth. Now, we are going to explore the significant industry applications in which SAP CPM is significantly transforming the bottom line.

Use Case 1: Engineering, Construction, and Operations (EC&O)

Projects in EC&O are enormous, protracted and risky. However, the major issue that must not be overlooked is the need to keep variations under control since they are an invariable part of this industry. A good project management tool could result in increased productivity & profits.

The Answer: The Project Issue and Change Management (PICM) element of SAP CPM is a game-changer. It offers a formal, auditable method of recording all change requests, their financial implications (both cost and revenue), and their approval and implementation.

The Solution: PICM can offer a real-time, financially integrated view instead of the approach of manually tracking changes on spreadsheets which causes delays in billing and revenue loss. With approved changes in scope, project managers can be confident of estimating the Estimate-to-Complete (ETC) that gives stakeholders the correct, single source of truth on the true profitability and the actual completion date of the project.

Use Case 2: Complex Manufacturing and Custom Equipment

With manufacturers of large, customised assets (such as industrial equipment, multifaceted tools or power generation plants), every single product is effectively its own project. Profitability is based on a strict control of the design and production costs against a firm’s customer contract.

The Solution: SAP CPM is connected to the main ERP system, which will enable the project workspace to interlink with procurement, logistics and production. This close connection assists in the most common manufacturing challenges and how to solve them, including proper tracking of cost against the Bill of Materials (BOM) back to the project budget. The project cost and revenue planning tool allows detailed financial planning, comparing the baseline budget of the contract with the actual committed and spent amounts.

The Outcome: The business will be able to spot cost overruns far earlier in the production lifecycle – not at the end of the month. This gives the team the ability to take a corrective action on the spot, negotiate new terms on the scope creep with the customer or even readjust the future sourcing plans to cushion the project margin.

Use Case 3: Professional Services and IT Consulting

Resource utilisation and dealing with fixed-price engagements are also the commercial drivers in the professional services world. With scope creep not under strict control, there is a high risk of the contract, which initially seemed to be profitable, becoming an exercise in losses.

The Solution: SAP CPM is the centralised cockpit of resource allocation, cost and billing management in a large number of client engagements. It offers an overall perspective of the master project, which is an epitome of the contract, but it is connected with the operational activities managed in the SAP Project System or other execution systems.

The Benefit: Firms have real-time insights into the rate of utilisation of their highly paid consultants and the precise cost of non-billable time. This allows proactive discussions on change requests with the client and ensures that any variance on the initial contract is duly captured and charged, which protects the estimated profit margin on the service engagement.

The True Value Proposition

In any industry, the fundamental usefulness of SAP project management is that it disaggregates data silos. It integrates project execution information and financial performance, which makes project management turn into a strategic commercial discipline rather than a logistical one. In Australian companies that are able to compete on both efficiency and size, this is the key driver of creating predictability and sustainable profitability across all projects that they are involved in.