msproject 9

8/10/2019 msproject 9

1/14

Cost Management

PAN-AFRICAN INSTITUTE OF PROFESSIONAL STUDIES. Email: [email protected] Page 1

Section 9Managing Project Costs.


2/14

Cost Management


Section Objectives

Upon completion of section 9, you will be able to:

Define the types of costs Understand Cost Calculations

Apply Overtime using the Overtime Rate

View the Cost Table

Input Fixed Costs

Apply Rate increases and decreases

Setup new Rate Tables

Obtain a general understanding of budget resources


3/14

Cost Management


Cost Categories

The types of costs you are most likely to encounter for Project Management are listed in the

table below. Although most field in Microsoft Project can be entered in many different ways,

the most often used table or view if provided in the Usually defined in column, and only servesas a quick guide.

Type of Cost Usually defined In

Standard Resource sheet

Overtime Resource sheet

Cost per Use Resource sheet

Fixed Costs Cost Table

Variable Costs Resource Information Form

Standard, Overtime and cost per Use have all been discussed in the Resource Management

Section. This Section will cover Fixed cost, and Variable Costs.

Fixed Costs

The fixed cost field displays any task expense that is non-labour (non-labour) related. This field

is manually entered.

Fixed Cost Accrual

You can accrue fixed costs

At the start of a task, once a task has commenced (any amount of progress has been

entered)

At the end of a task, once the task if 100% complete

Or pro-rated as the task progresses the cost will be calculated accordingly

To Access the Fixed Cost Field


4/14

Cost Management


Click on View, and Table

Choose the Cost Table

The cost table appears

Entering Fixed Cost Information


5/14

Cost Management


Click in the Fixed cost cell for the appropriate task, and type in the costs (this is a

currency field therefore you do not need to enter the dollar sign, or there decimal)

Click in the Accrue column, and choose the appropriate accrual method.

Exercise:

1. Enter the amount of $20,000 in the fixed cost cell for reinforcing site, and leave theaccrual as Pro-rated.

Note: how the Total cost, the Reinforcing summary phase, and the project summary task line

are also recalculated as a result of this fixed cost being added into the cost table.

Cost Rate Tables

There two components to the Cost Rate Tables Form

a) Establish pay increase at specific dates throughout the project

A resource will receive rate increases (or decreases) at specific dates, and this rate

needs to be accounted for, to accurately track the project costs. If a task crosses through

the line where the new rate takes effect, then the part of the task prior to the effective

date will be costed at the current rate, and the task after the effective date of the

increase or decrease would be costed at the new rate. Once entered the program takes

care of the calculations automatically.

b) Establish Different rates for one resource

A resource assigned to more than one task, and different types of work, may charge a

different rate dependent on the task. A task may require more technical knowledge,

may be dependent on the task. A task may require more technical knowledge, may be

more dangerous to perform, or may require working in very challenging environment

circumstances. To handle the various costs for one resource, Microsoft Project provides

5 different rate tables (Rate table A (default), B, C,D,E).

To set up a rate increase or Decrease

Double clickon the resources name in the resource sheet view

Choosethe Cost Tab


6/14

Cost Management


Cost Rate Table A is the default, and is cross referencing the resource sheet to pick up the

standard and overtime rates, and Per Use Cost, where applicable.

To input a new rate, click in the second row, pick an effective date (if no date is chosen

the rate will be commence at the beginning of the project)

You can enter the actual new amount, or a percentage (i.e +/- 10%) if you enter a

percent, when you hit enter or click in another cell, MS Project will calculate the actual

value of the increase or decrease.

Click on the Ok button


7/14

Cost Management


Note: Rate increase and decreases can be entered in any rate table

To establish a New Rate Table

Double clickon the resources name in the resource sheet

Choose a different rate table(B to E). Notice there is no cross-reference to the resource

sheet.

Type in the new rate (standard, overtime, and/or per Use Cost ), and the appropriate

effective date

Click on the Ok button

Exercise:

a) Setup a rate increase of 10% for project engineer (no effective date is required)

b) Set Up a new rate table (B), and input project engineer new salary as $100,000 per

year.


8/14

Cost Management


Budget Resources

A new function in Microsoft Project 2007 is the ability to create a budget for your project.

As this function requires considerable customization and application of fields in the database,exercise would be applied in an advanced training program. However as this is new, a general

overview of the function is provided in this two day class, to assist you in understanding if

budgets resources could be helpful to you for future projects.

At the end of this section, the author has provided their comments on using the function.

Create A Budget for Your Project

Five steps are required to create a project budget

1. Create a budget resource

A budget resource defines the maximum capacity for the project to consume

money work or the material units. Budget must be applied at the project level

(assigning a budget resource to the project summery task). The project summary

task represents the overall project budget (including resources costs, work and

materials that have been defined in the project)/

2. Assign the Budget Resource to Summary Task Line

This assign the budget resources to the entire project

3. Enter a value amount for the budget resources

Input the data(values) for the budget resources

4. Categorize the costs according to the budget type

Identify the other resources to track and monitor against the overall budget

resources (group them by budget type)

5. Group the resources, and compare them against the budget amounts.

Step 1- Create a Budget Resources

We will create two budget resources

Budget Travel

Budget Accommodation

Note: The names you provide for budget resources helps to distinguish them from other type ofresources when you do step 4 (categorized them)

Exercise:

Step 1Create the budget resources


9/14

Cost Management


Choose the Resource Sheet View

Create the budget resource (travel and Accommodation)

Choose the type of cost (the following information is now defined)

Double click on the travel resource (you will see the Resource Information dialogue box)

Activate the Budget selection box

Do the same for Accommodation.

Step 2Assign the budget resources to the Project Summary Task

Select the Gantt Chart view


10/14

Cost Management


Make sure theproject summary taskline is showing at the top of the task name column

if it is not, choose tools, option and the View Tab. In the outline option section, activate

the show project summary task box and then click Ok

Assign the two budget resource to the project summary task line (by using the AssignDialogue shortcut button on the standard toolbar)

Note: If you have a long list of resources in the assignment dialogue box, you can filter the

resources for budget resources only.


11/14

Cost Management


Step 3Enter values for the budget resources

Choose the Resource Usage view

Insert two new columns Budget Cost, and Budget Work fields (if appropriate) right

click on the resource name row.

You must now enter the budget values for each appropriate resource.


12/14

Cost Management


Enter the value of the travel ($4000, 00) and accommodation ($1500, 00), in the line for the

project summary task field (see below).

.

When you hit enter or click away from the cost cell, the value will rill up to the resource line for

travel and Accommodation.

Step 4- Categorize the Resource Costs according to their budget type

Create a custom text field that identified words or phrase for each of the budget types,

you can then compare them to the overall budget.

Choose the Resource Sheet View

Insert a new customized text column and name it Budget Type

Name the type as Expenses for each budget resource (as you see above)


13/14

Cost Management


Step 5Group the Resources

In the Resource Usage view

Choose the Project menu, and click on Group by, and Customize Group by:

The Customize Group by dialogue box will appear

Choose the custom field name that you created in step 4


14/14

Cost Management


And click Ok

Notice the group Expenses in the resource name column (notice the cell background is

hilited)

Authors comments:

Overall, this function can be helpful for total management of the work and the costs of a

project. It is the authors opinion that it takes considerable effort to set up the fields to

categorize, to group, to baseline and finally to insure that all work and cost are entered and

accounted for. I would have preferred that this function be more intuitive than it is. I am not

sure that for the amount of work in the set up, that enough value is provided that could not be

found in default table and reports already in the program. That being said I did set up a sample

scenario where all costs were identified, and some of you may find that you like the at a

glance view of you project health.

Documents

msproject 9