Capital Expenses and Capitalizations

Capital Expenditure is one of the big ticket item in the spend analytics so the tracking, budgeting and capitalizations should be very systematic and there should be no manual work involved in this processes

In the Capital expenses tracking the most important requirement is to track the expenses which has been capitalised right from the PO stage to GRN to Invoicing to Settlements and Capitalizations all these will help to estimate the leakage in the spend.

Budgeting of the Capital expenditure to track the actual spends against the budgetd is must for the high value items.

Capital work in progress should be clearly visible to the accounts team during the closing of the books and accounts.

Basic FI and Costing Module should be there for the Implementation of the SAP Project System module

End to end tracking of the Capital Expenditure and capitalizations of the same on timely basis would give the benefit of Depreciation cost and also the CAPEX Tracking would save lot of value

Approach :
Implementation of the SAP PS module with budgeting of the Capital Expenditure
For each of the Running projects separate project code with WBS Element would be created and cutover processes to be carried out
All the open purchase order either to be short closed or changed for the WBS Elements in the account assginments

Assumptions:
All the open live projects would be migrated to the Project system,
Capital work in progress balance would be loaded to the balance sheet GL Account as balance upload
Remaining budget to be computed and uploaded in the respective WBS elements in the running projects.

At any point of time since lot of Capital projects are in progress so it would be challenging to migrate all the projects to SAP PS Module, in terms of the data migrations and cutover.

Creation of all the running projects in the SAP System at the start of the PS module as Migration of data
Transfer of the remaining budget to the running projects as per the data and confirmation by the Business Team
Transfer of teh opening CWIP Balance to the GL Accounts in the Balance sheet category
SOP for creation of the new projects and upload of the budget data and posting the transaction with the WBS elements

We first understand the complexity of the running capital projects and the volume of the same and also the requriements w.r.t. the capital expenditure booking,
Based on the requirements the elements of the Project system can be finalized: i.e. WBS Elements , Network order and Activity types.
After that the budgeting and actual capital expenses booking processes to be established (in line with current process)
Solution document and realization of the solutions after the sign off
Testing of the CAPEX Solution in the Development and Quality system
After the UAT sign off will move the changes to Production system
Migration activities and Post go live support

2 weeks for understanding the current process, account grouping and format discussion
2 week for preparing the solution documents based on the understanding and sign off
4 weeks for Realization and Testing the solutions in the DEV and Quality system of SAP
2 week for moving the TR To Production system and generate financial statement report in Production system

Capital expenditure is one of the big ticket item in the spend analytics so the tracking, budgeting and capitalizations should be very systematic and there should be no manual work involved in this processes

Once the processes is automated with implementation of the SAP Project system the Inventory tracking for the Running or New Projects would be very easy and helpful, though there are multiple benefits and value impact for the Project system, Still to quantify the benefits only the saving in the project inventory tracking can save atleast 10 to 15 Crore on quarterly basis.

8 weeks of implementations and 2 weeks of post go live support for the SAP project system : 2 Functional resources

M1 – Project start
M2 – Solution Document sign off
M3- UAT Sign off
M4- First month end closing

INR 7,00,000/-

Capital expenses tracking and capitalizations is not negotiable item for SAP system