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Commitment flow from PR to Contract

Nov 20, 2017 at 07:34 AM

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Hi Gurus,

We require WBS budget commitment in service contract level. WBS budget is committing correctly in Service PR. While we are creating service PO from service PR, it is getting populated correctly. But while we are trying to create Service contract, commitment budget is not flowing from PR. In this case if we create Service PO from Contract, double budget is getting consumed as well as commitment of PR is not getting reduced.

Thanks & Regards,

Biswajit Dey

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3 Answers

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Biswajit Dey Dec 08, 2017 at 05:14 AM
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Dear All,

We have came to a conclusion. Since there is no issue of budget commitment with PR & PO, we're omitting contract in this procurement process.We will create service PR & service release order(SRO) with reference to that service PR. Validity start & end date will also can be incorporated in that SRO. That'll be the only legal document with the vendor (not considering the RFQ). As per requirement, service entry sheet will be created from that SRO (time to time). Here we will not get the benefit of value restriction as contract header value.

Thanks & Regards,

Biswajit Dey

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Former Member Nov 22, 2017 at 11:15 AM
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Why cannot follow sequense of Contract- > PR -> PO

1. Create service contract

2. Create service PR from service contract

3. Create service PO from service PR

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Dear Mr. Barik,

As we know PR is the internal document, it must be created initially to start any procurement process. Users create PR as per their Material / Service requirement. After negotiation with vendor, materials department creates Contract. Afterwards as per requirement, PO is created & placed to vendor time to time.

Since Contract is the legal document & its price can't be changed after creation, it can't be created initially. We must follow PR > CONTRACT > PO this path for any kind of procurement.

Thanks & Regards,

Biswajit Dey

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A PR created by a requisitioner or MRP is usually for an individual procurement.

It is as well possible to create a PR for creation of a contract, but here is the process finished after the contract is created. The differentiation is the PR document type.

If the requisitioner creates a requisition for 10, and buyer creates a contract for 1000, then there is no real connection between these processes. Of course may this PR have triggered the thoughts to create a contract. But finally the requistioner just wants his requisition fulfilled.

Creating a PR for 10 and then a contract for 10 and then a call of for 10 is just superfluous as the call of is nothing else than a purchase order with contract reference and is its own legal document.

And even contract prices can be changed.

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Hi Jurgen,

I do agree with your comment. Buyer can assign more quantity than PR while creating a contract. But our system is already incorporated with a check that we can't increase quantity in Contract or PO (if created from PR). Also we always create value contract. So even after we change the qty (by changing config), we can still create PO until the contract header value get exhausted.

We just need to track the budget consumption from PR to PO level. Let us assume 1000$ has been consumed in PR. Vendor negotiation price is 1200$. So if we enable budget consumption in contract also, we can easily find how much budget is actually going to be consumed for a particular procurement.

Thanks & Regards,

Biswajit Dey

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Former Member Nov 28, 2017 at 04:50 AM
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Hi KK,

This resolution was already tried. But commitment plan in contract is not working if there is account assignment exists in purchase requisition. In case of service requisition, account assignment is mandatory in PR level (with item category 'D'). So we can't go for commitment plan since it is not acceptable for contract creation from service requisition.

Thanks & Regards,

Biswajit Dey

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