Cost firm committments

[YLE]

Hi,

I heard already reading thru the posted messages that MSP is not the cost
managing application but still decided to ask. I was asked to investigate the
possibility to use MSP to track Project Commitments. The amounts that are
committed to be spent (as part of the base line cost). For example Material
Order contracts. It will be paid according to the set up plan and project
development. I need to have ability to allocate the portion of the resource’s
work/cost as committed amount and possibly track them separately. Actual will
be updated manually against committed and additional (non-committed cost). I
believe I could do it thru custom cost fields but only at the task level
ignoring resources assigned to the task. For example the task with assigned
labor and material where material is committed amount and I have to track it
separately. Any suggestions???

Thanks for the help in advance

 

[John]

Hi,

I heard already reading thru the posted messages that MSP is not the cost
managing application but still decided to ask. I was asked to investigate the
possibility to use MSP to track Project Commitments. The amounts that are
committed to be spent (as part of the base line cost). For example Material
Order contracts. It will be paid according to the set up plan and project
development. I need to have ability to allocate the portion of the resource’s
work/cost as committed amount and possibly track them separately. Actual will
be updated manually against committed and additional (non-committed cost). I
believe I could do it thru custom cost fields but only at the task level
ignoring resources assigned to the task. For example the task with assigned
labor and material where material is committed amount and I have to track it
separately. Any suggestions???

Thanks for the help in advance

YLE,
What you have read is correct, Project is not intended to be a financial
accounting application. It certainly can track costs associated with a
schedule but those costs rarely make up the whole financial picture.

When you talk about committed costs "as part of the base line cost" it
sounds like you are really talking about that part of the project budget
that has been allocated to tasks in the plan. What specifically do you
mean by having "the ability to allocate the portion of the resource's
work/cost as committed amount"? Is the original cost (i.e. baseline
cost) allocated to the task considered committed? If so, then perhaps
you don't need any special custom fields, but can make use of Project's
built-in earned value fields.

John
Project MVP

 

[YLE]

Hi John,

What I would like to do is to have a task w labor and mtl resource assigned.
Task cost is mtl rate * hrs + lbr rate * hrs. So MSP will track this cost for
me with actuals entered manualy or imported from other aplication. Same time
I would like to track in this case cost of mtl separately as committed cost.
But not all tasks in the project will have mtl as commited cost, only some of
them and not every mtl resource constitute committed cost. What I did is
created cost1 field and wanted to enter the value in this field per resource
if resource cost is commited cost. I was using task usage and/or resource
usage views. But by doing so I could never get this cost summarized at task
level. Why? BaseCost and Cost work this way?
The purpose of this is to know what portion of the budget is committed
amount and track it separately.
Just trying to eliminated bunch of different spreadsheets and have MSP to do
the most of the work.

Thanks again,
Yakov

 

[John]

Hi John,

What I would like to do is to have a task w labor and mtl resource assigned.
Task cost is mtl rate * hrs + lbr rate * hrs. So MSP will track this cost for
me with actuals entered manualy or imported from other aplication. Same time
I would like to track in this case cost of mtl separately as committed cost.
But not all tasks in the project will have mtl as commited cost, only some of
them and not every mtl resource constitute committed cost. What I did is
created cost1 field and wanted to enter the value in this field per resource
if resource cost is commited cost. I was using task usage and/or resource
usage views. But by doing so I could never get this cost summarized at task
level. Why? BaseCost and Cost work this way?
The purpose of this is to know what portion of the budget is committed
amount and track it separately.
Just trying to eliminated bunch of different spreadsheets and have MSP to do
the most of the work.

Thanks again,
Yakov

Yakov,
One clarification to the way you have described total task cost.
Material resources are not normally based on rate times hours. Instead
they normally take the form of so much material per unit of usage for
consumed resources or so much cost per period as in cost/use (e.g.
rented). And yes, gasoline for instance might be a resource that is
indeed used at an hourly rate (e.g. generator) but I just wanted to
clarify that when a resource is entered as a material type on the
resource sheet the Std. Rate field loses its "per hour" dimension - it
becomes a cost/unit. A fine point perhaps, but sometimes the fine points
become very important.

Now on to your question. First of all, let me refer you to FAQ 37 -
Custom fields in tables on our MVP website at:
http://www.mvps.org/project/faqs.htm
You also might want to take a look at my response to a post by Dann in
this newsgroup 2/4/06 titled: "Filtering tasks in resource usage view
(report)". I stumbled a bit in my original reply but the basics are
correct.

With reference to the Usage views. If you display the Cost1 field what
you are seeing is the Resource Cost1 (or Task Cost1) on resource or task
rows and Assignment Cost1 on assignment rows. Custom formulas only apply
to Task or Resource data - there is no provision for creating assignment
formulas other than through VBA.

Baseline Cost and Cost are "basic" fields of Project and as such, they
have features that aren't necessarily available for custom fields. Yes,
custom fields can be summed up but only in their "native" field type
(i.e. task or resource).

So how do you accomplish what you want? First of all, when showing
material resources I always allocate a separate task line so labor and
material are handled separately. This isn't necessary of course, but
sometimes it makes it easier to do special things like filtering or
similar. If you want to use Cost1 to designate selected material
resources as committed (and you don't want to use VBA), then don't try
to use either Usage view. Instead, use a task view (e.g. Gantt Chart)
and use the sum option when creating your formula for Task Cost1.

Hope this helps.
John
Project MVP

 

[YLE]

Hi John and thanks,

I understood that in case of material resource hrs is actually units. Having
all material resources ( at least committed cost related) as separate task is
not the optimal choise. Actually this is what I am trying to avoid - i tell
people that task is a task, and resource is resource. Unless it is just
natural that one resource per task, than no need to separate them.
I would not mind to see some help using VBA. I do have a limited expirience
with it in Access and we do have professionals around. So if you have
something in mind, pls let me know.
I also try to simplify the process. I could identify committed cost thru
resource and by separate resource group. It looks like a real life case -
since committed cost is usually PO based and same is applied to resource. I
guess the question now is to track it in task view and see the committed cost
in the same views and reports with baseline budget, actual costs and progress
reports.
I will try to work something out today but if you see the clear path pls let
me know.

Thanks for your help,

Yakov

 

[Steve House [Project MVP]]

Point of clarification reuqest, please. What is a "committed cost" and what
distinguishes it from the other costs? In my everyday language thinking, if
Joe is scheduled to spend 3 days waxing widgets, I'm committed to pay him
once he's done the work and I've got to purchase the materials used. But
the amount I'm committed to pay is not just a portion of the total salary
he's owed, it's the entire amount. And I'm also committed to pay for all
the materials that were used up. If he doesn't do the work, his salary
costs our project budget nothing at all (though it may cost my firm money,
but that's not the same thing as the direct costs of doing our specific
project) nor have we spent anything directly for materials on that now
non-task so nothing is committed.

 

[John]

Hi John and thanks,

I understood that in case of material resource hrs is actually units. Having
all material resources ( at least committed cost related) as separate task is
not the optimal choise. Actually this is what I am trying to avoid - i tell
people that task is a task, and resource is resource. Unless it is just
natural that one resource per task, than no need to separate them.
I would not mind to see some help using VBA. I do have a limited expirience
with it in Access and we do have professionals around. So if you have
something in mind, pls let me know.
I also try to simplify the process. I could identify committed cost thru
resource and by separate resource group. It looks like a real life case -
since committed cost is usually PO based and same is applied to resource. I
guess the question now is to track it in task view and see the committed cost
in the same views and reports with baseline budget, actual costs and progress
reports.
I will try to work something out today but if you see the clear path pls let
me know.

Thanks for your help,

Yakov

Yakov,
A task is a task....perhaps. I guess it is personal preference whether
to break out various elements of task cost (i.e. labor versus
non-labor). For example, maybe I'm scheduling something to be built. The
labor part of the task may start earlier to do setup, prep, etc. The
material part of the task isn't really needed until the assembly starts.
I prefer to break out the elements for greater ease of tracking.

I thought I already gave you a path - use a task view with a custom cost
field rolled up. What doesn't that do for you?

John

 

[YLE]

Hi Steve,

You right committed Cost is not always clear. here is an example:
You have Joe assigned to the task as LBR for 5d**hrs=40 hrs*$50=$2000
You have Mtl assigned to the same task Xlb'sofwax*X=$500.
You base line task cost (budget) is 2500.
You placed the PO to purchase mtl nd the term of PO is to pay at the end of
the task duration(sounds like a joke). so now 500 is you committed
amount(cost). Purpose:
you are 2d in progress. AD=2d, BCWS=800, BCWP=800 Remaining budget =
2500-800=1700$. Now out of this amount you have already committed 500 (it is
not yet paid, but already spent). So your actual exposure (estimated
available budget??) is 1200.
Hope this helped to understand the purpose.
Now here what i believe could be done:
I need to have a flag set at resource level for each resource (based on PO)
that is considered to be committed cost. Then I need to total the separately
based on Flag in task cost reports.
Since actual’s are manually entered in resource or task usage view at
resource level, they could be also grouped and displayed based on the same
flag.
So at the end I will have committed cost tracked separately as part of the
Cost.
I believe that no Committed Cost data will be used for any of Progress/EV
calcs.
Sounds like ABRACADABRA???

Thanks for being part of this discussion,

Yakov

 

[YLE]

Thanks again, John.
I will try your approach, but still not sure. Correct me if I am wrong.
Say I have 200 construction tasks with 3- 4 resources assigned. To track the
cost of each resource or allocate them separately per your rec. I will have
600-800 tasks.
Do I have to create a task for "Rental of Trailer for Temp Office" or i
could have Trailer as a resource and add it to Inderect
Cost/ConstrManagment/Temp Office Spase with other resources such as:
Utilities, Telephone contract, Furniture, Maintenance Lbr.
Same would apply for all dirrect cost of the project.

Thanks,

Just trying to work my way thru. As I said the task for me is to try to
eliminate the use of excell sheets to do the project progress and keep bunch
of project data duplicating MSP.

 

[Steve House [Project MVP]]

Your figures for BCWS and BCWP are incorrect for most types of tasks. The
materials are required in order to do the work - if they're not there, the
work doesn't take place. The costs of the work on the task include both the
prorated costs of labour AND the prorated costs of materials consumed. So
after 2 days into your task the real BCWS and BCWP are $1000, not $800.

Actually it seems like after 2 days your suggested method of calculating
"committed cost" would be 2 days labour plus all the materials since having
Joe proceed with work creates the committment to pay him for it or committed
cost would be $800 labour plus $500 materials = $1300. But Project assumes
that you can return materials to the vendor for a refund if you don't
actually use them in the task. Since materials are things that are used up,
you still have their value if you haven't actually used them yet and so
their money worth hasn't been "spent." So even though your initial PO was
for $500, if you abandon work after 2 days you've used up 2/5 of the
materials and you'll need to pay for the $200 worth you've used and return
the other $300 worth to the vendor for credit. So in that sense, your
committed cost after 2 days is actually $1000, same as BCWP.

Project does a good job of estimating the costs required to achieve the
project's work but it really doesn't deal with when you pay the bills or
receive revenues. As John has suggested you can create some workarounds to
help you do a bit more sophisticated computations but you can only go so far
outside it's design functions before you run into walls.

--
Steve House [MVP]
MS Project Trainer & Consultant
Visit http://www.mvps.org/project/faqs.htm for the FAQs

 

[YLE]

Your figures for BCWS and BCWP are incorrect for most types of tasks. The
materials are required in order to do the work - if they're not there, the
work doesn't take place. The costs of the work on the task include both the
prorated costs of labour AND the prorated costs of materials consumed. So
after 2 days into your task the real BCWS and BCWP are $1000, not $800.

Actually it seems like after 2 days your suggested method of calculating
"committed cost" would be 2 days labour plus all the materials since having
Joe proceed with work creates the committment to pay him for it or committed
cost would be $800 labour plus $500 materials = $1300. But Project assumes
that you can return materials to the vendor for a refund if you don't
actually use them in the task. Since materials are things that are used up,
you still have their value if you haven't actually used them yet and so
their money worth hasn't been "spent." So even though your initial PO was
for $500, if you abandon work after 2 days you've used up 2/5 of the
materials and you'll need to pay for the $200 worth you've used and return
the other $300 worth to the vendor for credit. So in that sense, your
committed cost after 2 days is actually $1000, same as BCWP.

Project does a good job of estimating the costs required to achieve the
project's work but it really doesn't deal with when you pay the bills or
receive revenues. As John has suggested you can create some workarounds to
help you do a bit more sophisticated computations but you can only go so far
outside it's design functions before you run into walls.

 

[YLE]

Thanks Steve,

Thanks for correcting the figures.

Yakov

 

[John]

Thanks again, John.
I will try your approach, but still not sure. Correct me if I am wrong.
Say I have 200 construction tasks with 3- 4 resources assigned. To track the
cost of each resource or allocate them separately per your rec. I will have
600-800 tasks.
Do I have to create a task for "Rental of Trailer for Temp Office" or i
could have Trailer as a resource and add it to Inderect
Cost/ConstrManagment/Temp Office Spase with other resources such as:
Utilities, Telephone contract, Furniture, Maintenance Lbr.
Same would apply for all dirrect cost of the project.

Thanks,

Just trying to work my way thru. As I said the task for me is to try to
eliminate the use of excell sheets to do the project progress and keep bunch
of project data duplicating MSP.

Yakov,
You're welcome, I hope we are getting you there.

Perhaps you misunderstood about separating out costs. I am simply
suggesting separating out the labor from the non-labor. For example, if
3 resources are assigned to a task it could take several scenarios. All
three resources might be labor (e.g. Joe, Bill & Tom). Or it could be a
task with one labor resource, some material required and some travel
associated with the task. In the first case there is no point in
creating 3 tasks for each labor resource but in the second case, there
may indeed be an advantage to breaking out the material and travel
separate from the labor.

As far as breaking things out, it depends on how you want to track the
data. Often the user wants to be able to clearly see labor costs
separate from non-labor. Sometimes the user also wants to see various
types of non-labor cost broken out further. All the costs are direct
costs to the project, or they shouldn't be in the plan at all.

John
Project MVP