Organizational Structures in Project System:

You create and manage your project structure in SAP R/3 Project System, by means of work
breakdown structures and networks. The WBS describes individual phases and functions of a
project. Network contains the individual project tasks and the dependencies between them in the
form of activities and relationships

Some important terms:

Project Definition
Project Definition is general description of the project that you want to manage. It is a framework laid
down for all the objects created within a project. It contains organizational data that is binding for the
entire project.

Work Breakdown Structure (WBS)

WBS is a hierarchical model of the tasks to be performed in the project. It provides overview of the
project and forms basis for the project organization and coordination. It shows work, time and money
spent on the project. You can use it to plan dates & costs and allocate budget. The Work Breakdown
Structure can be displayed according to:
 Phase
Function
Object
Individual tasks required to carry out the project is called WBS elements.

Network
The network describes project processing. Thus the Network contains instructions on how to carry
out activities in a specific way, in a specific order and in a specific time period. Main elements of
network are activities and relationships. It forms the basis for planning, analyzing and monitoring
time schedules, costs, & resources.

Activities
Activities are used to plan project staffing, capacity, material, PRTs, and service requirements. When
activities are assigned to WBS elements, detailed view of costs, dates, and capacities at WBS
element could be obtained. Its a task in a network which has a defined start and finish. An activity
can be broken down into activity elements. Three categories of activities in the Project System:

Internal Activities

External Activities

General Cost Activities

Activity element
Activity element is an activity which is subordinate to another activity. Activity elements contain the
same information as activities. Three categories of activity elements in the Project System:
Work elements
External Elements
General Cost Elements

Activity Type
Its a physical measure of activity output of a cost center .e.g. hours, number of units produced,
machine times, production times.

Milestones
Milestones are the events in the project to which particular importance is attached Or which trigger
predefined functions. In general they indicate transition between different departments or phases.
Milestones are assigned to activities and WBS elements: In PS milestones are used to:
Trigger predefined functions in network activities.
Carry out earned value analysis.
Determine dates in billing plan for sales orders.

Relationships
You use relationships to depict chronological and technical dependencies between activities. The
relationship determines the nature of the link between the individual activities. :
FS Relationship: An activity does not start until the preceding activity is completed.
SS Relationship: An activity cannot start unless another activity has started.
FF Relationship: An activity cannot be completed until another activity has been completed.
SF Relationship: An activity cannot be completed until another succeeding activity has
stared.

Confirmations
It is a part of network control. It documents the state of processing for the network activities and
activity elements. There are two types of confirmations Partial & Final Confirmations are used to
record:
The work center where the activity was carried out.
The person who carried out this activity.
The yield and scrap produced in an activity
The actual values for the duration and dates.
Settlement
As a rule, projects are used to collect and monitor costs, but are not usually the final cost object. For
this reason the costs in atypical project will be settled at the end of the period. To this end, you store
settlement rules in the activity / WBS element requiring settlement. They contain information on
settlement receivers, cost apportionment and control data. Settlement receivers could be cost
centers, G/L accounts. Etc.

Budget
The budget is the approved cost structure for an action or project in a particular period. Budgeting
differs from cost plan in that it is binding. In the approval phase you prescribe your project funds in
the form of budget. It is possible to allocate overall and annual budget in parallel.

Work Centers
Work center represents the resources responsible for executing an activity. In a work center, you can
enter the available capacity and an operating time. You can arrange the work centers in a hierarchy
for capacity evaluation purposes. Internal activities are assigned to work centers (resources) to be
completed. A work center is a physical unit within a company where an activity is performed.

Profit Center
It is subdivision of business organization which is set up for internal management control purposes.
Profit centers divide business up on a management basis. The basic aim of profit center accounting
is to present areas of the business as entities operating independently in the market.
Lots of jargons .let me site an instance of the construction project of a building..
Let say there is a construction company that is going to construct a Multi-Stored building.

The first thing that needs to be created in the system is Project Definition. The entire activity plan
for this project will come under this project definition. Overall budget needs to be estimated,
assigned and get approved for the project. Project timeline needs to be decided. Project could be
then subdivided into separate parts which are actually WBS elements lets say in this e.g. we have 4
main WBS elements:

1. Land Acquisition

2. Procurement

3. Construction

4. General

To every above WBS, budget and time line need to estimated.

Now to take an example we will drill down two WBS elements namely Land Acquisition and
Construction.
Land Acquisition could be sub divided into activities as in
Generation of request document for the land.
Soil testing
Approval for construction
Preparation of purchase order of the land
Above 4 activities should be done in sequence. As in second activity will start only after request
document for the land is completed and so on. Hence these activities have FS Relationship
between them.
Now take WBS element Construction.
It could be sub divided in to floor wise tasks. Let say, we have four story building and each floor has
4 flats. So under WBS element Construction we may create separate sub WBS element for each
floor. Each sub WBS element of floor may be divided further into last level of WBS elements one
for each flat on the floor. This way we will have hierarchy of the WBS elements. Finally last level of
WBS elements i.e. WBS elements of the flats will have activities like

1. Plumbing

2. Electrical work

3. Flooring

4. Painting

5. Furniture

These activities form the Network.

Let say Plumbing and Electricity work are the external activities as they are given to a outside
contractor. While the other activities are done by company labor so they are internal activities.
Plumbing and Electrical work could be started simultaneously. While flooring needs be done once
the plumbing and Electrical work is complete. Hence they have FS relationship and so on. Now if
we talk about milestones:
1. First milestone could be purchasing the land
2. Second could construct the base of the building.
3. Third could be construct the floors
4. Fourth could be completion of plumbing and electrical work for all the flats. And so on.
As I have said that Work center represents the resources responsible for executing an activity For
the above activities, work centers could be the company labor required for the construction, labor
provided by the external service center for plumbing and Electricity work. While Profit Centers could
be the finally constructed flats.
Sr Project Elements Examples

NO
1 Project Def. Constructing the Building
2 WBS
Generation of request document for the land
 Soil testing

Approval for construction

Preparation of purchase order of the land

3 Activities (Under
Plumbing( external Activities)
3rd WBS)

Electricity work( external Activities)

Flooring (internal activities)

Painting (internal activities)

Furniture

4 Relationship Flooring needs be done after the plumbing and Electricity

work. Hence they have FS relationship

5 Milestones
First milestone could be purchasing the land

Second could construct the base of the building

Third could be construct the floors

Fourth could be completion of plumbing and

electricity work for all the flats

6 Network Plumbing and Electricity installation are to be one

contractor each. Therefore, there exist a network within on

the activities of it under different WBSs.