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Madhusudhan T C
February 25, 2021
| 5 minute read

SAP Result Analysis – Concept

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Follow 1. Introduction

This blog starts with explaining a reporting issue faced in some given scenarios.
 Like And then in general will explain the possible solution. In the later part will see how
SAP Result Analysis addresses these issues and provide some basic
configuration details relating to Result Analysis.
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2. Scenario

Let’s start with a scenario where in REV Ltd., a construction company gets into a
customer project to build a plant. Terms of the contract are as below;

The contract is of 10 million. Which means REV Ltd. gets revenue of 10 million
from the contract.
Invoice of 5 million will be raised at the beginning of the contract and the
remaining 5 million will be raised upon completion of the contract which is
after 4 months.

REV Ltd. has estimated that it would cost 8 million to complete this project. It
means a profit of 2 million (i.e., 25% profit on the cost).

Below is the impact of this contract over the period (of contract) on Profit and
Loss of REV Ltd.,

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An investor looking at the above financials at the end of period 1 with no other
details, finds the business to be highly profitable and may take a wrong
investment decision.

Even when we look at the financials throughout the contract period, anyone will
certainly interpret the business to be highly volatile and risky, though it is not as
it looks by numbers.

To overcome the scope for interpretation and to keep a more stable and
appropriate profit and loss statement, it requires adjustment in the reporting
revenue or corresponding costs (as the case may be) in each period. In most
cases, this exercise is also required to get complied with accounting
regulators/standards.

So, how do we do this?

Indeed, there are multiple approaches. An appropriate one can be picked based
on the nature or the business, internal policies, available information, regulations
or any other influential aspects. Nevertheless, for our discussion and
understanding we will limit our self to below two approaches;

1. Percentage of Completion Method (POC) – Cost Based

Under this method;

Calculate POC of a project based on how much has been already spent on the
project in comparison with the planned cost, i.e., POC = (Actual Cost/Planned
Cost) * 100
Recognize revenue only to the extent of POC, i.e., Calculated Revenue =
Planned Revenue * POC
If there is difference between Actual Revenue and Calculated Revenue, it must
be adjusted.

When Actual Revenue > Calculated Revenue (Revenue Surplus), then reduce
the revenue.

When Actual Revenue < Calculated Revenue (Revenue in Excess of Invoiced),

then increase the revenue.
There will be no change in reported cost.

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2. Revenue Based Method

Under this method;

We keep revenue as it is; but do adjust the expenditure/cost to bring it in

proportion to revenue.
Calculated Cost = (Actual Revenue/Planned Revenue) * Planned Cost
If there is difference between Actual Cost and Calculated Cost, it must be
adjusted.

When Actual Cost > Calculated Cost (Work in Process), then reduce the cost.

When Actual Cost < Calculated Cost (Reserves for Unrealized Costs), then
increase the cost.
There will be no change in reported revenue.

Now with adjusted financials as above under both approaches, profit is evenly
distributed over the period and business doesn’t look volatile and risky. This is
also called as principle of matching cost and revenue or ‘matching principle’.

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In SAP, the ‘Result Analysis’ feature helps in automatically calculating and

adjusting the financials as above.

3. SAP Result Analysis

3.1 Process

In SAP, a project is created with required Work Breakdown Structure (WBS) for
each customer project. Planned cost and revenue of the project is also
maintained. All expenses relating to the project are posted on WBS (cost object).
Revenue relating to the project is also posted from SD (billing) on the WBS. (It is
to be noted that when revenue is posted on WBS, COPA documents are not
generated.)

During period end, Result Analysis (Transaction KKA2) is performed on the

project to match cost and revenue. It is performed at WBS level while it considers
all the sub level WBS and Network Activities under it. To calculate and propose
accounting adjustment entries as per matching principle, Result Analysis
considers various data like planned cost, planned revenue, actual cost, actual
revenue, method to be used to match cost and revenue, and GL accounts to be
posted. Result Analysis does not post any accounting entries. The calculated
results should be saved to get considered for settlement run.

Result Analysis screen shows summary of inputs considered for calculation along
with adjustment calculation;

The next step is Settlement (Transaction CJ88) of the project. Settlement of the
project happens based on the settlement rule assigned. Normally in case of
customer projects, settlement happens on COPA. Settlement will post
settlement accounting entries as well as result analysis entries.

Image below depicts overview of Result Analysis;

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3.2 Configuration

Let’s try to understand some of the important configuration which help Result
Analysis work.

Maintain Result Analysis Keys (Transaction OKG1)

Result Analysis Key (RA Key) is a control parameter for Result Analysis. It is
assigned to a WBS. When a RA Key is present in WBS it becomes Result Analysis
relevant. The method assigned to RA Key will be considered when Result Analysis
is executed.

Define Valuation Methods for Results Analysis (Transaction OKG3)

Valuation Method specify the method by which results analysis is carried out.
Whether it is Cost-Based POC Method or Revenue-Based Method or so on. It is
assigned to RA Key in combination to controlling area and RA Version.

Valuation Method can be assigned in Simplified Customizing or in Expert Mode.

With Expert Mode lot of settings can be made in the valuation method. It is
recommended to user Expert Mode only when necessary.

Below is the list of Result Analysis Methods available in SAP; (More details on
Results Analysis Methods can be found in SAP Help)

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Define assignment of Cost Elements (GL Account) for Results Analysis

(Transaction OKG5)

Cost Elements are assigned to Line IDs defined. Line IDs structure the results
analysis data according to the requirements of Financial Accounting. Postings to
these cost elements (GLs) will be considered for actual data (cost and revenue)
while calculating result analysis.

Define Posting Rules for Settlement to Accounting (Transaction OKG8)

This configuration helps us to define the GL accounts which needs to be posted

as part of result analysis adjustments upon settlement. For example, GLs for
Revenue in Excess of Invoiced or Reserves for Unrealized Costs. Result Analysis
Alert
Category is the key for account determination. It is defined with Moderator
origin of Result
Analysis data. For Ex. RA Category POCI (Revenue in Excess of Billings) is
referred for posting when calculated Revenue in Excess of Billings.
Assigned Tags
This configuration is maintained mainly in combination of CO Area, Company
FIN (Finance) Code, RA Version and RA Category.

poc 4. Conclusion
RA
Hope you find the blog helpful. The intention of this blog is to give an overview of
result analysis the Result Analysis concept. Result Analysis has lot of methods and options and
please do further reading to know and utilize the full potential of Result Analysis.
SAP Result Analysis

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By
Former Member Sep 11, 2007

13 Comments

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RSSV Prasad Atmakuri

February 25, 2021 at 2:33 pm

NIce Blog Madhu, Very well explained.

Thanks for sharing your knowledge 🙂

Regards

Prasad

Like 0 | Share

Aulia Rasyidi
February 25, 2021 at 3:07 pm

Thanks Madhu.

A very enlightening knowledge about RA for me.

Regards,

Aulia

Like 0 | Share

yongchen Teng

https://blogs.sap.com/2021/02/25/sap-result-analysis-concept/ 7/13
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June 11, 2021 at 6:56 am

Thanks Madhu.

It's really helpful for us .

For the example you have given, I try to implement it in my system,

But I was confused by the following issue:

As the cost is settled through CJ88/CJ8G,and  we can get  the corresponding profitability segment, 
through billing we can get the revenue ,  but there is no COPA segment for the revenue.

So I would like to know is it reasonable or is there any specific configuration points in COPA or anywhere in
the part?

Thanks in advance  for your support!

Best Regards

Qiuya

Like 0 | Share

Madhusudhan T C | Blog Post Author

June 11, 2021 at 7:57 am

Hi Qiuya,

I am glad that you found the blog helpful.

Please check the settlement rule assigned in the WBS. Make sure the settlement is to PSG.

Regards,

Madhusudhan

Like 0 | Share

yongchen Teng
June 17, 2021 at 12:50 am

Dear Madhusudhan,

Thanks for your reply.

We can get the COPA segment when posting the COST document by CJ8G,

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But is no COPA segment when posting revenue document by tcode vf01，is it also
relevant to the settlement of the WBS ？

Looking forward to your reply!

Best Regards

Qiuya

Like 0 | Share

NICOLAS THEVENIN
September 15, 2021 at 12:56 pm

Hey really nice blog. I really enjoy reading it.

However, in a S/4 HANA configuration, you can import the budget with a Fiori app. It is not like the
controlling version (CJR2). How an you link the planned revenue/cost to this result analysis?

Many thanks

Like 0 | Share

Atul Rajmane
October 5, 2021 at 7:50 am

Hi...

It's a really nice and helpful blog.

I have one recommendation. Can we mention here that when plan cost and the revenue it's should be done
at cost element level in CJ40 or via CJR2 either case to run the RA as one of a mandatory thing? Let me
know if it's correct and if it's helpful do include this point in the blog so it may helpful for PS guys.

Regards

Atul Rajmane

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Like 1 | Share

SMS FICO
November 20, 2021 at 11:21 am

Thank you for the Blog, It's really helpful for us .

We have done all the configuration related to WIP and run full cycle ( KKA2 ), We got expected result in
KKA2. But Planned Quantity is not showing in Plan data of valuation tab.

Is there any solution to bring Planned Quantity.

Please suggest what to do? I am new in SAP.

Regards,

Swapnil C

*chaudharis44@gmail.com

Like 0 | Share

Norasfanita Md Ali
December 7, 2021 at 4:31 am

Hi Madhu,

Thanks for the explanation on the RA. Right now I'm having an issue on displaying the value for Plan
complaint and commission in the RA for project(KKA2). I have done some configuration to add the
complaint and commission via OKG4 and OKG5, the actual actual amount complaint and commission
appear in the screen but for plan it was zero. Below is the screen shot,

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Appreciate if anyone can advice how to show the amount for plan cost comission/complaint.

Regards,

Nora

Like 0 | Share

Weiyu Chen
March 7, 2022 at 6:04 am

Hi Madhu,

Thank you for your detail blog makes me very clear.

I would like to ask in terms of POC Method, Period 1, Revenue Surplus should be 4.375 not 4.9375 right?

Best

Weiyu

Like 0 | Share

Madhusudhan T C | Blog Post Author

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March 7, 2022 at 6:40 am

Thanks Weiyu for bringing it to the notice. I have updated it now.

Like 1 | Share

srinivas rao
June 22, 2022 at 12:18 pm

Dear Madhu,

Thank you for your detail blog makes us very clear on result analysis. However we are not sure how to
integrate the result analysis with revenue accounting and reporting.

Could you kindly assist on result analysis integration with revenue accounting and reporting, especially for
POC based billing for the projects ?

Like 0 | Share

Pralhad Deo
September 14, 2022 at 6:18 am

How does RA method 16 & 17 work please

Like 0 | Share

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