andhra pradesh power sector reforms...• the caol is maintained work order wise, wherein the...

Andhra Pradesh Power Sector

Reforms

-Project Accounting-

Significance of Project Accounting

• Project accounting is the practice of creating financial reports

specifically designed to track the financial progress of projects,

which can then be used by managers to aid project management

• The relevance and significance of Project Accounting can be

attributed to three key factors, namely:-

• Long-term implications and consequences

• Substantial commitment of funds.

• Decisions once taken are irreversible

Project Cycle (Initiation, Sanction & Execution)

• Based on the technical requirements and load flow studies, the investment

plan is prepared

• Upon identification of projects are segregated as “To be funded” and “To be

executed out of internal resources”

• For the “To be funded” projects, the work of tying up of funds is initiated

• Based on the indication of sanction of loan provided by the lending

agencies, project report for each of the identified schemes is prepared in the

Corporate office and administrative approval is communicated

• For the schemes that to be funded internally, estimates

are prepared, sanctioned and works executed with in the

approved Budget Provision

• Project execution is taken up immediately after

administrative approval is obtained, the funding for the

project is tied-up simultaneously.

• Technical Sanction for the works to be taken up based

on the estimates submitted

Project Cycle….

• The Technical Sanction contains detailed estimate

covering:

• Head of sanction

• Cost of the materials,

• Cost of labour,

• Other expenses viz. transportation, establishment & general expenses

• Tree cut / crop compensation

• Taxes and levies,

• Land acquisition

• Contingencies etc.

• The material rates adopted in the estimate are the latest

procurement rates and the labour rates are based on the

latest Standard Schedule of Rates of the company

Project Cycle….

•In APCPDCL the capital expenditure incurred at field used to be recorded in a construction and operation ledger [CAOL] maintained for the purpose.

• The CAOL is maintained work order wise, wherein the expenditure incurred towards material and labour was recorded.

•Based on the monthly information received from the field in form of plan progress report, the capital expenditure was monitored.

•The capitlaisation of the expenditure incurred was done at corporate level based on the returns submitted by field officers along with the physical and financial completion reports.

•For better monitoring of the project expenditure APCPDCL has implemented project systems module in sap ECC 6.0 version.

Accounting for Projects

Project System: To control all tasks in project execution, you need an

organizational form that is specific to the project and which is shared by all departments involved. The main view of project structure based on the following.

By structures, using a work breakdown structure (WBS) By process, using individual activities (work packages)

Work Breakdown Structure: It is a model of the work to be performed in a project

organized in a hierarchical structure. The WBS is an important tool which helps to keep an overview of the project. The Project Structure can be represented according to the following criteria:

By phase (logic oriented) By function (function oriented) By object (object oriented)

Objectives of Project system

Network: A network can represent the sequence of activities in a

project. The essential components of a network are: Activities Relationships between the activities

Activities: Activities are the key tasks to be completed. These

activities map to internal activities, external activities, cost activities and materials components.

Work Packages: A work package is a quantitative and qualitative

description of an activity to be carried out in the project. The work packages can be on any level in the work breakdown structure

Objectives of Project system…

© SAP 2009 /

Process Flow for Bulk Projects (HVDS) in Project System

Ananthapur Circle

Construction Sub-Div.-1 (Agmt-1) Construction Sub-Div.-2 (Agmt-2) Construction Sub-Div.-3 (Agmt-3)

1st Mother DTR

Ananthapur Construction Div

1st Mother DTR

Survey & Preparation of Sketches……..

Supply & Erection of Pin Insulators

Supply & Erection of Intermediate Poles…...

Supply & Erection of 16/25KVA DTRs

Removal of Mother DTRs and Handing over

to Stores…...

2nd Mother DTR

2nd Mother DTR






to Stores…...

nth Mother DTR

nth Mother DTR






to Stores…...

WBS Element

Network Element

Activity

HVDS Project

Grouping of various Projects - Example

Bulk Projects: HVDS APDRP and APDRP – R P:SI Schemes JBIC P:IE (RGGVY, INDIRAMMA) SPA:PE All bulk schemes that would come up in near future.

T & D Improvements: All improvements works.

Contribution Works: Release of service with minor and major extensions. Deposit Contribution Works Contribution Works

Process Flow in Project System

Estimate preparation in SAP

Approval process

Allocation of Budget

Tendering Process

IM

PO, Material Receipt etcMM

Work Execution

Monitoring

Closure

Templates for Preparation of Estimates is available in SAP

Investment Planning Structure (Corporate Level)

Budget Planning (Corporate Level)

© SAP 2008 /

Budget Planning for T&D Improvements

© SAP 2008 /

Budget Distribution to Projects (Defined

at Division Level)

Once budget is set,

estimates/ actual cannot

exceed this value.

Supplementary

amendments to be

based on prior approvals

© SAP 2008 /

Master data – Project overview

© SAP 2008 /

Master - Work Package creation

Project Status – Create,

Released, Budget

Availability, Goods

consumption, Technical

completion and closure

Status set to Tehco – work

package is closed for operation

Capitalisation of Project

• Steps in Settlement Process of WBS elements other than DCW/TCW orders are :-

Settlement of costs from Network order to

WBS element

Overhead Capitalisation on WBS element

Execution of IDC on WBS Element

Settlement of WBS element costs to AUC

Final Settlement from AUC to Fixed Assets

Monthly

process

After project

completion

Material control (under implementation)

• Materials assigned code on entering stores

• On issue to project, the functional code will be changed from “Stores” to “Location installed”

• Asset will be tracked from this location code

• Technical completion will be generated by the system

THANK YOU

andhra pradesh power sector reforms...• the caol is maintained work order wise, wherein the...

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