Is Budget Cost useful?

[andrewandrew]

Try as I might I can't figure out how the Budget Cost feature does anything
useful--the Microsoft documentation says that it's used to set a baseline
that I can track my actuals against. Isn't that what the real baseline is
for? And it's quite a hack to get it to work too--I need to show the PJ
Summary Task, create a custom field to group by, and edit it in the Usage
View. I know most users of MSP don't know how to do any one of these things,
let alone all three.

So I ask--what's the value of this new, convoluted feature?

If I wanted to group resources under a certain budget heading, roll-up their
baseline costs and compare them with their scheduled or actual costs,
couldn't I do just that?

And if it was too much for me to breakdown the budget into a single baseline
cost for each resource, is it really so hard to just make a dummy resource to
hold the budget cost for that category, WITHOUT having to monkey around with
the PJ Summary and the Usage Views?

Someone please illuminate me, I want to love this feature!

 

[Jan De Messemaeker]

Hi,

To me, and to most customers I work for, a budget is not the baseline.
Baseline is your bottom-up estimation of costs.
Budget is what management is willing to invest in your project.
Only in Utopia are these identical.

So abudget on top of a baseline is definitely useful
But indeed, it took me blood sweat and tears to understand how it works
)

Greetings,
--
Jan De Messemaeker
Microsoft Project Most Valuable Professional
+32 495 300 620
For availability check:
http://users.online.be/prom-ade/Calendar.pdf

 

[andrewandrew]

Very good point about having a separate budget, baseline, estimated, and
actual cost. Although that's why I do a higher-level budget breakdown using a
custom Cost field for summary tasks, or sometimes milestones. I don't think
Budget Resources adds anything to this, especially since you can only apply
it to the project as a whole.

I've been reading a bit more about Cost Resources and I think the answer
relates to these. Cost Resources are used to track different kinds of
expenses across many unrelated tasks. If you want to budget for these
different expenses on a project-wide basis, the Budget Cost will do that for
you. So it's no so much for an overall budget as it is for an expense budget
for things like airfare and per diems. I can see that being useful.

A

 

[Steve House [MVP]]

I think MS's assumption is that the planning workflow will be such that the
PM first calculates a bottom-up cost estimate, then presents it to senior
management in order to secure the funds required for the project. The
Project Manager is an active participant in the basic decision regarding
whether or not there ultimately even will BE a project. That bottom-up
estimate is used by Senior Management to compute such things as ROI in order
to make a go/no-go decision on whether or not to allocate funds and procede
with the project. Management, using projected cost input provided by the
PM, determines the resources they are willing to invest and if it's a
worthwhile endeavor for the firm to act upon. Once management approves the
estimate and allocates the funds, the Baseline becomes the Budget.
Management doesn't go to the PM and say "Here's XXX dollars; go and create
such and such." Instead they go to the PM and ask "We're thinking about
doing such-and-such - if we decide to do it, how much money should we be
willing to spend?" The PM deals directly with the Project Sponsor and the
other members of senior management, getting involved at the stage when the
project is just an idea someone has had as a possible direction the firm
ought to take. I think the assumption is the PM is higher in the food chain
than many might actually be, positioned one notch down from Senior
Management, and has as part of their responsibilities contributing data that
is then used at the department head and board of directors level as part of
their strategic decision-making process. The "budget" is prepared as part
of the decision whether or not the project should proceed, not after the
fact when the decision has been made and funds already allocated by some
seat of the pants process.

This is not so radical, by the way. I have read several sources that say a
top-down budget is not a budget at all - it is instead an allocation of an
estimated projected revenue stream. They suggest that the term "budget"
should be limited to bottom-up cost projections once the decision has been
made to commit those required resources.

 

[Steve House [MVP]]

By the way, the PIMBOK definition of "budget" is ...

Budget.
The approved estimate for the project or any work breakdown structure
component or any schedule activity. See also estimate.

and ...

Estimate [Output/Input].
A quantitative assessment of the likely amount or outcome. Usually applied
to project costs, resources, effort, and durations and is usually preceded
by a modifier (i.e., preliminary, conceptual, feasibility,
order-of-magnitude, definitive). It should always include some indication of
accuracy (e.g., ±x percent). =

Source .. PMBOK Guide, Third Edition, 2004