Construction projects in current assets – Optimisation project at Schulbau Hamburg

The state enterprise SBH | Schulbau Hamburg is responsible for managing school buildings and all construction measures in schools on behalf of the Free and Hanseatic City of Hamburg. The company carries out renovations and new construction projects amounting to around €350 million annually^[1] – a volume that must also be accurately and efficiently mapped for accounting in accordance with all applicable rules and company-specific features. A bundle of new functions from PROMOS consult has been making the accounting and controlling work significantly easier recently.

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Initial situation – Time for automation!

Building extensions, canteens, gymnasiums and even entire school complexes are being constructed under the direction of the state-owned company SBH. But the actual construction project management is not the company’s only organisational masterpiece. SBH approached PROMOS consult with the desire to automate – as far as possible – all postings and the calculation of posting values and account assignments relating to assets from the construction projects. Project manager Anke Greschkowiak, who is responsible for SAP at SBH, describes the initial situation: “Historically, we recorded ongoing and annual asset postings manually due to the company’s internal structures. However, our colleagues in the financial accounting department came to face an enormous outlay with the current construction volume. It was clear to us that there had to be a more convenient solution for this.” SBH began an intensive design phase together with PROMOS to determine the status quo and produce solutions.

Design phase – Turning Excel spreadsheets into clicks

Various factors played a role in the design of a suitable solution for SBH. Since the Hamburg-based company handles construction projects for third parties (the schools), all of the bookkeeping for their activities is done in current assets. Consequently, external services belong to current assets, but in-house services, i.e. internal working hours, must also be capitalised. Of the ten project types available in the system, six were identified as requiring capitalisation during the design phase. The corresponding postings relating to the creation and reversal of provisions, the calculation of own fees and transfers upon project completion are relatively demanding. The complexity becomes all the more clear in light of the active projects currently numbering around 1,800 and often running multiple years. In addition to its main SAP^® ERP system for invoice processing and other functions, the Hamburg company also uses a third-party system for project controlling. The actual costs, performance statuses and planned costs must first be manually collated before the final posting in SAP^®. To this end, SBH previously used extensive Excel spreadsheets from which numerous batch folders had to be generated in order to carry out the individual postings in the SAP^® system. During the one-year design phase, the project team identified three essential functions to optimise the interaction between SAP^® and the third-party system and to significantly reduce the workload for the responsible employees.

How it works – key features at a glance

“In the close design cooperation between PROMOS and our users and experts from IT, we were able to identify very clear areas of action. PROMOS enabled us to achieve significant workload reductions with important automation functions,” said Greschkowiak, describing the productive project relationship. A quick look at the results reveals a leap in efficiency.

1. Performance status recording and provision creation

Assets must be valued at the end of the financial year. In order to execute this correctly for SBH’s project activities, the corresponding performance status must be recorded, as the current invoice status does not always correspond to the actual status on site. In the event of a deviation, provisions must be created. SBH developed its own function in SAP^® for recording performance levels, which can now be uploaded to the system via Excel. The allocation of provisions can then be posted. Subsequent invoices are posted as a claim against the provisions, and unused provisions are reversed. Calculation and posting of the allocation, claim and, if necessary, the reversal of provisions – these functions are automatically carried out by a report from the data in the SAP^® system.

In addition, a distinction is made between provisions during the construction phase and those after the handover, meaning provisions may have to be reposted for the handover.

2. Fee calculation

The company also performs its own services during construction projects, and the fee for this must be calculated and capitalised separately. This determination takes place once a year as part of the annual financial statement. The amount of the fee is calculated based on a percentage of the actual costs. It is then staggered according to the project volume and limited to the fee of the planned target costs. SBH now has a new report to easily calculate the fee and even simulate it during the year as needed. And the capitalisation of own services can also be conveniently posted automatically with a separate function.

3. Handover postings

Various accounting postings are due when a construction project is handed over. The invoice is first posted and the corresponding current assets are additionally cleared. There are also typically services still open at the time of the handover such as documentation or minor defects to be rectified. The provisions to be created for this are assigned to a specific purpose and, in contrast to the annual accounting accruals, remain in place until the project is completely settled. Corresponding reports were also implemented for this purpose.

Successfully automated – summary

SBH was able to go live on 1 January 2019 with the functions described here. They then enjoyed all the benefits when preparing the annual financial statement as of 31 December. “In the past, the controlling and accounting teams had to manually combine the performance statuses and actual costs from SAP^® and the planned values from our third-party system in a huge Excel spreadsheet that was used, in turn, to create individual batch folders for the allocation and release of provisions, to post handovers and to capitalise fees before posting them individually. Today, these processes are largely automated using specialised reports in SAP^®. Imagine the workload reduction this represents if you have hundreds of projects with a duration of up to ten years!” Greschkowiak said enthusiastically as she commented on the successful joint IT project. She adds: “We found the cooperation with our contact partners at PROMOS to be very productive and successful. We’re now able to use the implemented solutions in our work completely independently and haven’t encountered any problems yet.” So who knows – maybe our company paths will cross again in the future!

Construction projects in current assets – Optimisation project at Schulbau Hamburg

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