Hey there!!! This is Harikrishna Anumandla. Am working as an EAM Consultant.

I want to share my recent experience on

Operation Level Costing for the community. Purpose of this blog is to leverage operation level costing insights to drive innovative
new business models.

Operation Level Costing: This Functionality is primarily used to track the costs at Operation Level. Earlier to this, there used to
be a single Accounting Structure for the whole Order which would result in exponential growth of Maintenance Orders. Most of the
times, we may create a separate order for maintenance work due to the fact that the work order need to be settled to a single
costing object.
Therefore, by activating OLC Business Function you can assign more than one Technical Objects for every operation. Each
Operation can possibly have different Account Assignments, Settlement Rules which could eliminate creating multiple work orders.
There can be a possibility of integrating PM with PS by tying operation to a WBS Element. Further Total costs of the work order can
breakdown to granular level.
This Functionality is available from SAP ECC 6.0 EHP 5. Operation Level Costing can be activated per Order Type and Plant.
However, this functionality cannot be supported for Refurbishment and Investment orders.
Once you activate OLC to any order type, and create a new order then System Status ACAS Activity Account assignment is
defaulted.
 -Settlement Rules
Before OLC After OLC
-Planned/Actual Cost

order order
-WBS Elements
-Settlement Rules
-Maintenance Activity Type -Planned/Actual Cost
-WBS Elements
-Equipment/FL -Maintenance Activity
Type
-Equipment/FL
operation operation
10 10
-Settlement Rules
-Planned/Actual Cost
-WBS Elements
-Maintenance Activity
operation operation Type
20 20 -Equipment/FL

-Settlement Rules
operation operation -Planned/Actual Cost
-WBS Elements
30 30 -Maintenance Activity
Type
-Equipment/FL
With the Order Operation Account Assignment function, following account assignment information is available at each operation
Costing Sheet, Overhead key, Profit Center, Maintenance Activity Type & WBS Elements.
For Order Confirmations, system updates the actual costs to the cost objects of the order operations.
Settlement Rule: With OLC Activation, Settlement Rule is no more active on Order Header Level. So, you have Settlement Rule
for each operation. We have two options for the Settlement Rules.
1. With Default
2. Without Default

With Default, Settlement Rules are Copied from the Master Data & Without Default we can manually change the Settlement
Rules as per our requirement. Please follow the following path to default the selected operations with same Settlement
Rules.
Once you activate this OLC Business Function, Settlement can be either at Order Header Level or Operation Level but both
conditions cannot be satisfied

Main intent of this blog is to reveal the features of Operation Level Costing. This Functionality is primarily used to track the costs at
Operation Level. Earlier to this, there used to be a single Accounting Structure for the whole Order which would result in
exponential growth of Maintenance Orders. Most of the times, we may create a separate order for maintenance work just due to
the fact that work order need to be settled to a single costing object.

Therefore, by activating OLC Business Function(LOG_EAM_OLC) you can assign more than one Technical Objects for every
operation. Each Operation can possibly have different Account Assignments, Settlement Rules which could eliminate creating
multiple work orders. Further Total costs of the work order can breakdown to granular level.

This Functionality is available from SAP ECC 6.0 EHP 5. Operation Level Costing can be activated per Order Type and Plant.
However, this functionality cannot be supported for Refurbishment and Investment orders.
IMG Path:

Plant Maintenance and Customer Service - Maintenance and Service Orders - Functions and Setting for Order Types -
Costs at Operation Level
Once you activate OLC to any order type, and create a new order then System Status ACAS Activity Account assignment is
defaulted. With the Order Operation Account Assignment function, following account assignment information is available at each
operation.

Costing Sheet
Overhead key
Profit Center
Maintenance Activity Type &
WBS Elements.
Functional Area (This field is used when Funds Management is Active)

For Order Confirmations, system updates the actual costs to the cost objects of the order operations.
Integration:

There can be a possibility of integrating PM with PS by tying operation to a WBS Element. System can consider order operations as
the account assignment objects for the posting of Finance, Controlling and Material Management. While posting orders as account
assignments in MM, FI & CO, the order number & operation number in the coding block become Active.
Settlement Rule:

With OLC Activation, Settlement Rule is no more active on Order Header Level. So, you have Settlement Rule for each operation.
We have two options for the Settlement Rules.

1. With Default
2. Without Default

With Default, Settlement Rules are Copied from the Master Data & Without Default we can manually change the Settlement Rules
as per our requirement.
Once you activate this OLC Business Function, Settlement can be either at Order Header Level or Operation Level but both
conditions cannot be met.

Header v/s Operational Costs

System determines the Plan costs and Actual Costs at the header level from the total costs for all operations.

In order to view the cost reports by operation follow the path

Extras-Cost Reports-Operation Costs Overview

IW40N Report -
You can use this report to display a cost summary for each operation for one or more maintenance order(s). Beside displaying costs
for Operation Level Costed orders, the report can also display costs of Header Costed orders.