Reducing Contract Target Value – When, How, and What to Check Before Releasing

Module: MM // Process: Business Process document explaining how to check the Contract Target Value before Releasing.
Transactions Used: ME33K, ME32K, ME35K, ME22N, ME23N, BOBJ-MM03, XK03, ZVLIST.

Overview:
Roles:
Contract target value can be reduced when the scope of a contract is reduced, Contract Administrator or Central Buyer
when the legal status of a vendor changes (i.e., tax identification number Contract Approver
changes), or when a contract is reassigned. There should be a contract Bureau Buyer
amendment prepared before reducing the contract target value in SAP.

In the two latter situations, the value reduced from the current contract may be
assigned to a new contract. If the vendor’s legal status changes (e.g., sole
proprietor incorporates, two companies merge, etc.) you may have to submit a
vendor master request to Operational Accounting with a W-9 so that a new
vendor record can be created for the new legal entity. Use transactions XK03
(display vendor) or ZVLIST (vendor list) to search for a existing vendor record.
Never reduce contract target value below contract net value (i.e., the value of
all the contract’s purchase orders). Reducing target value will not reduce
the value of existing purchase orders nor will it prevent receiving and/or
invoicing against existing purchase orders.
If contract target value will be reduced below current net value to an amount
equal to the quantity received and/or amount invoiced, then you must first
reduce the quantity on open purchase order line items and/or close open
purchase order line items. This will reduce the contract net value.
Reduce the contract target value after reducing the contract net value.
Contract approvers should only approve the contract after reviewing contract
target value and net value. Verify that target value is equal to or greater than
net value. If not, reject the contract.
The steps that follow explain how to identify contract target value, contract net
value, and the quantity received/amount invoiced on purchase orders; how to
reduce net value, if needed; and how to check target value and net value
before releasing.
Transactions:
ME33K – Display Contract
ME23N – Display Purchase Order
ME32K – Change Contract
ME22N – Change Purchase Order
ME35K – Release Contract
BOBJ-MM03 – Contract Balance Report – FI
Hints / Tips:
To close an open purchase order line item, first
reduce the line item quantity to equal the quantity
received, then check the Delivery Complete
Indicator, and finally, change the Latest GR Date
to a prior date.
If contract target value is reduced below net value
and the contract is reviewed and released then
buyers will not be able to reduce quantity or close
purchase order line items. Changing the
purchase order is prevented by the target value is
exceeded error message. In these instances, the
contract target value has to be increased. The
contract has to be re-released. The buyer can
then reduce or close purchase order line items.
Then the contract target value can be re-reduced
and the contract re-released.

Document Owner: Phil Marchbanks, SAP Business Analyst, FILO

PAGE 1
Creation: 11/10/2015 // Updated: New Document, N/A
Reducing Contract Target Value – When, How, and What to Check Before Releasing
Module: MM // Process: Business Process document explaining how to check the Contract Target Value before Releasing.
Transactions Used: ME33K, ME32K, ME35K, ME22N, ME23N, BOBJ-MM03, XK03, ZVLIST.

01
Contract Administrator - Before
reducing contract target value,
determine the current target value
and net value of the contract and
the amount received/invoiced on
purchase orders.

Execute ME33K. Enter the

Agreement number and then click
on the Header Details

01A
Click Header  Statistics 
NOTE: The Processing General
Statistics section lists
the Target Value and
Net Value.
Net Value equals the
value of all contract
purchase orders held or
saved. It does not equal The Header Statistics screen
displays. In this example, the
quantity received nor
target value is $700,000 and the
amount invoiced nor net value is $575,000.
payments.

Document Owner: Phil Marchbanks, SAP Business Analyst, FILO

PAGE 2
Creation: 11/10/2015 // Updated: New Document, N/A
Reducing Contract Target Value – When, How, and What to Check Before Releasing
Module: MM // Process: Business Process document explaining how to check the Contract Target Value before Releasing.
Transactions Used: ME33K, ME32K, ME35K, ME22N, ME23N, BOBJ-MM03, XK03, ZVLIST.

01B
Contract Administrator - Click
Overview to display the Item
Overview.

01C
Contract Administrator - Highlight
Item 10 and click Release
Documentation

NOTE: The purchase

orders created for this
contract line item are
listed. Repeat for each
contract line item so
that you can review all
the purchase orders for
this contract.

Document Owner: Phil Marchbanks, SAP Business Analyst, FILO

PAGE 3
Creation: 11/10/2015 // Updated: New Document, N/A
Reducing Contract Target Value – When, How, and What to Check Before Releasing
Module: MM // Process: Business Process document explaining how to check the Contract Target Value before Releasing.
Transactions Used: ME33K, ME32K, ME35K, ME22N, ME23N, BOBJ-MM03, XK03, ZVLIST.

01D
Contract Administrator - Double
click on a purchase order. Go to
the Item Header Status tab to
determine how much of the order
has been received and invoiced.
Also, check for down payment
requests. In this example,
$450,000 has been receive and
invoiced.
NOTE: If there is a down payment then you must leave an amount equal to the down
payment open on the appropriate purchase order line item. The down payment must
either be cleared (i.e., received and invoiced) or the vendor must return the down
payment. For either, the purchase order line item must retain sufficient value to post
the entries.

01E
Contract Administrator - Repeat
previous two steps until all the
NOTE: If there are many purchase orders listed consider using the BOBJ MM03 contract items and all the
report. The Contract Balance Report – FI displays all the purchase orders for a purchase orders have been
contract along with the quantity/value received and invoiced. Currently, the reviewed. In this example there
BOBJ contract reports do not include down payments. are only two purchase orders.
The total quantity received and
amount invoiced is $475,000.

Document Owner: Phil Marchbanks, SAP Business Analyst, FILO

PAGE 4
Creation: 11/10/2015 // Updated: New Document, N/A
Reducing Contract Target Value – When, How, and What to Check Before Releasing
Module: MM // Process: Business Process document explaining how to check the Contract Target Value before Releasing.
Transactions Used: ME33K, ME32K, ME35K, ME22N, ME23N, BOBJ-MM03, XK03, ZVLIST.

02
Bureau Buyer - If the contract
target value will be reduced below
the current contract net value then
execute Step 2. Otherwise,
proceed to Step 3. For this
example, contract target value is
to be reduced to the $475,000
quantity received and invoiced.

ME22N – Click Other Purchase

Order . Enter the number of
the first purchase order to be
changed and then click Other
Document

Document Owner: Phil Marchbanks, SAP Business Analyst, FILO

PAGE 5
Creation: 11/10/2015 // Updated: New Document, N/A
Reducing Contract Target Value – When, How, and What to Check Before Releasing
Module: MM // Process: Business Process document explaining how to check the Contract Target Value before Releasing.
Transactions Used: ME33K, ME32K, ME35K, ME22N, ME23N, BOBJ-MM03, XK03, ZVLIST.

02A
Open the Item Details. Go to the
Purchase Order History tab.
Check the quantity and amounts
of GR and IR entries to verify that
the line item PO Quantity can be
reduced. Verify that there are no
open Down Payments.

02B
Go to the Details tab. Verify that
the Delivery Complete Indicator is
unchecked.

02C
Reduce the line item PO Quantity.
If the line item also needs to be
closed, go to step 2D, otherwise,
click Check . View messages.
NOTE: Do not reduce the line item PO Quantity to less than the quantity received and invoiced If there are no hard stops, click
plus the amount of any open down payment. If the PO Quantity is still greater than the quantity Save .
received then additional receiving and invoicing can occur. This would be the case if there were
an open down payment. Don’t close the line item, in this case.

Document Owner: Phil Marchbanks, SAP Business Analyst, FILO

PAGE 6
Creation: 11/10/2015 // Updated: New Document, N/A
Reducing Contract Target Value – When, How, and What to Check Before Releasing
Module: MM // Process: Business Process document explaining how to check the Contract Target Value before Releasing.
Transactions Used: ME33K, ME32K, ME35K, ME22N, ME23N, BOBJ-MM03, XK03, ZVLIST.

02D
Close purchase order line items.
Got to Item Details Delivery tab.
Check the Delivery Complete
Indicator .
Change the Latest GR Date to a
prior date .
Click Check . View
messages. If there are no hard
stops, click Save . In this
example, the quantity is being
reduced to 450,000. This is the
quantity received and invoiced.

NOTE: If necessary, repeat the

previous steps for additional
purchase order line items.

02E
Notify the Contract Administrator
when work is complete.

Document Owner: Phil Marchbanks, SAP Business Analyst, FILO

PAGE 7
Creation: 11/10/2015 // Updated: New Document, N/A
Reducing Contract Target Value – When, How, and What to Check Before Releasing
Module: MM // Process: Business Process document explaining how to check the Contract Target Value before Releasing.
Transactions Used: ME33K, ME32K, ME35K, ME22N, ME23N, BOBJ-MM03, XK03, ZVLIST.

03
Contract Administrator – Verify
that the contract net value has
been reduced to an amount equal
to or less than the intended
reduction in contract target value.
Execute ME32K. Enter the
Agreement number and then click
on the Header Details . Click
Continue.

03A
Click Header  Statistics 
General

The Header Statistics screen

displays. In this example, the
target value is $700,000 and the
net value has been reduced to
$475,000.

Document Owner: Phil Marchbanks, SAP Business Analyst, FILO

PAGE 8
Creation: 11/10/2015 // Updated: New Document, N/A
Reducing Contract Target Value – When, How, and What to Check Before Releasing
Module: MM // Process: Business Process document explaining how to check the Contract Target Value before Releasing.
Transactions Used: ME33K, ME32K, ME35K, ME22N, ME23N, BOBJ-MM03, XK03, ZVLIST.

03B
Click Header  Details to return
to the Header Details screen.

Document Owner: Phil Marchbanks, SAP Business Analyst, FILO

PAGE 9
Creation: 11/10/2015 // Updated: New Document, N/A
Reducing Contract Target Value – When, How, and What to Check Before Releasing
Module: MM // Process: Business Process document explaining how to check the Contract Target Value before Releasing.
Transactions Used: ME33K, ME32K, ME35K, ME22N, ME23N, BOBJ-MM03, XK03, ZVLIST.

03C
Reduce Target Value. In this
example, the target value is being
reduced to $475,000. Click Save
Click Continue.

NOTE: Do not reduce target

value below net value.

03D
Contract Administrator – Verify
that contract target value has
been reduced but is not less than
contract net value.

Execute ME32K. Enter the

Agreement number and then click
on the Header Details . Click
Continue.

Document Owner: Phil Marchbanks, SAP Business Analyst, FILO

PAGE 10
Creation: 11/10/2015 // Updated: New Document, N/A
Reducing Contract Target Value – When, How, and What to Check Before Releasing
Module: MM // Process: Business Process document explaining how to check the Contract Target Value before Releasing.
Transactions Used: ME33K, ME32K, ME35K, ME22N, ME23N, BOBJ-MM03, XK03, ZVLIST.

03E
Click Header  Statistics 
General

The Header Statistics screen

displays. In this example, the
target value is $475,000 and the
net value has been reduced to
$475,000.

04
Contract Approvers – Before
releasing the contract, verify that
the contract target value is the
correct amount and that target
value is greater than or equal to
net value.

Execute ME35K. Enter your

Release Code and the Document
Number. Click Execute .

04A
Highlight the contract and click
Details .

Document Owner: Phil Marchbanks, SAP Business Analyst, FILO

PAGE 11
Creation: 11/10/2015 // Updated: New Document, N/A
Reducing Contract Target Value – When, How, and What to Check Before Releasing
Module: MM // Process: Business Process document explaining how to check the Contract Target Value before Releasing.
Transactions Used: ME33K, ME32K, ME35K, ME22N, ME23N, BOBJ-MM03, XK03, ZVLIST.

04B
Click Header  Statistics 
General

The Header Statistics screen

displays. In this example, the
NOTE: Do not release the
target value is $475,000 and the
contract if target value is net value has been reduced to
less than net value. $475,000.

04C
Click Back . If everything is
ok, click Release . Click
Back .

04D
Notify the next approver. The
next approver should repeat step
4A through 4D

– END –

Document Owner: Phil Marchbanks, SAP Business Analyst, FILO

PAGE 12
Creation: 11/10/2015 // Updated: New Document, N/A