material costs

[jan.grinwis]

Hi,

I am having a problem with the resource type "Material"

I am hiring cranes and they cost 800 Euro/day/piece. No matter how
long they are working..
On certaine days I hire more than one and costs should be x times
800..


The std rate can't be defined per day.
cost per use doesn't seem to work either because only one crane is
calculated


I tried to define them as resource type "work"
They disadvantage then is that they add up in the total work hours..

Who knows???

Thanks in advance

Jan

 

[alavinsky]

Hi,

I am having a problem with the resource type "Material"

I am hiring cranes and they cost 800 Euro/day/piece. No matter how
long they are working..
On certaine days I hire more than one and costs should be x times
800..

The easiest way is to add the cranes to your project as material
resources and set the standard cost to 800 Euro. When you assign
them, go to the Gantt Chart, split the screen (Windows > Split
Screen), and use the form at the bottom to assign them. Under units,
enter "1/d". If you need more than one, enter "2/d" and so on. This
will calculate the 800 Euro / Crane / Day.

-A

 

[jan.grinwis]

On Aug 2, 7:01 am, (e-mail address removed) wrote:> Hi,



The easiest way is to add the cranes to your project as material
resources and set the standard cost to 800 Euro.  When you assign
them, go to the Gantt Chart, split the screen (Windows > Split
Screen), and use the form at the bottom to assign them.  Under units,
enter "1/d".  If you need more than one, enter "2/d" and so on.  This
will calculate the 800 Euro / Crane / Day.

-A








- Tekst uit oorspronkelijk bericht weergeven -

Thanks this works great...

 

[Steve House]

I have to disagree with alavinski ... the cranes are work resources since
their availability determines the scheduling of the tasks that require them.
Material resources are either items such as bricks for a wall that are
physically incorporated into the task's deliverable or consumables such as
fuel for those cranes that are used up during the course of the task.

The costs in Project do not represent the cash outlay the firm spends on the
project. Instead they represent the specific economic cost to the firm of
doing the project's work and only the project's work. If on a given day
your 800 Euro/day crane only does 1 hour of work on project tasks, the cost
should be distributed as 100 Euro to the project and 700 Euro to the firm's
general overheads - only the 100 Euro portion being counted as part of the
project's direct cost. After all, consider the case that you might have TWO
projects under way, both of which need a crane for a few hours on some given
day, let's say 4 hours each, so that one crane can be shared between them.
Should each project budget bear the full 800 Euro cost of that crane for a
total of 1600 Euro or should each budget pay for $400? Now it's not your
project's fault that there isn't another project going on to use the crane's
idle time and pick up some of that 700 Euro so why should its budget pay for
it?

MS Project's costing only is concerned with the cost of the specific costs
of the project's work and doesn't deal with other costs or the revenues of
the firm in any way.

 

[Steve House]

It's the definition of "true cost of the project" where you and I disagree.
IMHO, and I'm not an accountant, the "true cost" only includes the costs
directly attributable to specific project work and nothing else. If you
have an employee in the firm who earns $5000 per month and you use him 10
hours on this specific project during a given month with the rest of his
time being spent elswhere, should all $5000 be charged against the project's
budget or should only the 10 hours be charged to the project and the rest to
general operating expense? I say the latter. If only the portion of an
internal employee's time spent on specific project work impacts the
project's budget, why should contractors and equipment be treated any
differently? The same goes for equipment purchases - unless they are
destroyed by doing the project work, they go on the shelf for use in other
projects after the current is done. Thus their cost to the project is not
their purchase price but rather the depeciation they acrue while they are
being used, again just for the hours that they are actually utilized - in a
sense they are 'employees' being paid a 'salary' equal to their
depreciation.

On the other side, there are some costs that are frequently omitted from the
project budget that I think should be included in it. Most of the MS
Project courseware books say that while non-exempt employee's overtime rates
are the statutory rate, exempt professional and managerial employees
overtime rates are zero. I disagree - the fact that a manager doesn't get
paid extra for overtime doesn't mean his work outside of the normal calendar
has no value. If nothing else, there is an opportunity cost associated with
the work that properly should be charged against the project budget. An
hour of an exempt employee's time between 7 and 8 pm is worth to the company
exactly the same as an hour of his time between 2 and 3 pm and should impact
the prject budget by the same amount. Thus I teach my students that for
exempt employees the overtime rate should not be left zero but rather should
be set equal to the standard rate.

All of this emphasizes my view that MS Project is NOT a cash accounting
system and it's cost estimating features do not deal in any way or form with
revenues and expenditures.


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

Jan,

While the approach taken by Andrew lets you do the math, Steve's
categorization makes more sense since there is an availability
constraint. The problem I have with Steve's approach is laying-off the
cost to some overhead account which doesn't reflect the true cost of the
project.

An alternative approach would be to use Steve's categorization but
assign a $800/d cost to the resource and assign it to a specific
sub-task in whatever quantity you need.

=====
Richard Warren [MBA, PMP, MCITP for EPM]
http://richardlwarren.info


-----Original Message-----
From: (e-mail address removed) [mailto:[email protected]]
Posted At: Saturday, August 02, 2008 11:01 AM
Posted To: microsoft.public.project
Conversation: material costs
Subject: material costs

Hi,

I am having a problem with the resource type "Material"

I am hiring cranes and they cost 800 Euro/day/piece. No matter how
long they are working..
On certaine days I hire more than one and costs should be x times
800..


The std rate can't be defined per day.
cost per use doesn't seem to work either because only one crane is
calculated


I tried to define them as resource type "work"
They disadvantage then is that they add up in the total work hours..

Who knows???

Thanks in advance

Jan

 

[dlmckirdy]

Pardon my intrusion, but I would like to put my two cents worth in...

I would have to agree with Richard. The entire $800/day/crane is a direct
cost to the project. The crane/s would not be available for any length of
time for any less cost. The entire $800 has to be paid to get the crane on
site, no matter the actual working time (if the crane company can rent the
crane out to somebody else for the remainder of the day at another $800,
kudos to them - great business, it makes up for idle days). If, per-chance,
the crane is needed on another of the same company's projects, in my
experience, an additional $800/day would be charged (so that the crane
company could recover their additional costs for mobilization/de-mobilization
and transportation) In my nearly 30 years in construction related work, I
have never seen a job that can charge off rental equipment's "idle" time to
overhead - Either you pay the full rental price for the equipment, or you
don't get it.
--
Douglas McKirdy
Senior Project (Controls) Analyst

It's the definition of "true cost of the project" where you and I disagree.
IMHO, and I'm not an accountant, the "true cost" only includes the costs
directly attributable to specific project work and nothing else. If you
have an employee in the firm who earns $5000 per month and you use him 10
hours on this specific project during a given month with the rest of his
time being spent elswhere, should all $5000 be charged against the project's
budget or should only the 10 hours be charged to the project and the rest to
general operating expense? I say the latter. If only the portion of an
internal employee's time spent on specific project work impacts the
project's budget, why should contractors and equipment be treated any
differently? The same goes for equipment purchases - unless they are
destroyed by doing the project work, they go on the shelf for use in other
projects after the current is done. Thus their cost to the project is not
their purchase price but rather the depeciation they acrue while they are
being used, again just for the hours that they are actually utilized - in a
sense they are 'employees' being paid a 'salary' equal to their
depreciation.

On the other side, there are some costs that are frequently omitted from the
project budget that I think should be included in it. Most of the MS
Project courseware books say that while non-exempt employee's overtime rates
are the statutory rate, exempt professional and managerial employees
overtime rates are zero. I disagree - the fact that a manager doesn't get
paid extra for overtime doesn't mean his work outside of the normal calendar
has no value. If nothing else, there is an opportunity cost associated with
the work that properly should be charged against the project budget. An
hour of an exempt employee's time between 7 and 8 pm is worth to the company
exactly the same as an hour of his time between 2 and 3 pm and should impact
the prject budget by the same amount. Thus I teach my students that for
exempt employees the overtime rate should not be left zero but rather should
be set equal to the standard rate.

All of this emphasizes my view that MS Project is NOT a cash accounting
system and it's cost estimating features do not deal in any way or form with
revenues and expenditures.


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

Jan,

While the approach taken by Andrew lets you do the math, Steve's
categorization makes more sense since there is an availability
constraint. The problem I have with Steve's approach is laying-off the
cost to some overhead account which doesn't reflect the true cost of the
project.

An alternative approach would be to use Steve's categorization but
assign a $800/d cost to the resource and assign it to a specific
sub-task in whatever quantity you need.

=====
Richard Warren [MBA, PMP, MCITP for EPM]
http://richardlwarren.info


-----Original Message-----
From: (e-mail address removed) [mailto:[email protected]]
Posted At: Saturday, August 02, 2008 11:01 AM
Posted To: microsoft.public.project
Conversation: material costs
Subject: material costs

Hi,

I am having a problem with the resource type "Material"

I am hiring cranes and they cost 800 Euro/day/piece. No matter how
long they are working..
On certaine days I hire more than one and costs should be x times
800..


The std rate can't be defined per day.
cost per use doesn't seem to work either because only one crane is
calculated


I tried to define them as resource type "work"
They disadvantage then is that they add up in the total work hours..

Who knows???

Thanks in advance

Jan

 

[Steve House]

My point is that you are thinking of cash accounting here - invoices
received and cheques paid - and while that's certainly important, it lies
outside of the project universe. The costs estimated in Project are not
cash outlays, they are the economic costs to the firm of doing the project
rather than doing something else with their capital. Think about the cost
of internal employee labour. If someone is paid $5000 per month and they
work full time on the project, the cost as far as the microworld of the
project itself is $5000. But if they spend half of their time on the the
project and the other half of their time doing something else, the project
budget only covers $2500 of their $5000 salary, the "something else" picking
up the balance. And if that "something else" is sitting idle doing nothing
productive or the employee's vacation, the project is still only responsible
for the $2500 worth of the employee's time that they directly use. If the
firm doesn't use that $2500 worth of idle time productively, it's general
overhead, but in no case is it any of the project's concern. Whose budget
pays for it is irrelevant, as long as it's not the project's budget. The
cost of an equipment/work resource is handled no differently from that of a
people/work resource. The total costs for the project are not equal to the
total amount of the cheques that are cut or the invoices that are paid.
--
Steve House [Project MVP]
MS Project Trainer & Consultant
Visit http://project.mvps.org/faqs.htm for the FAQs

Pardon my intrusion, but I would like to put my two cents worth in...

I would have to agree with Richard. The entire $800/day/crane is a direct
cost to the project. The crane/s would not be available for any length of
time for any less cost. The entire $800 has to be paid to get the crane
on
site, no matter the actual working time (if the crane company can rent the
crane out to somebody else for the remainder of the day at another $800,
kudos to them - great business, it makes up for idle days). If,
per-chance,
the crane is needed on another of the same company's projects, in my
experience, an additional $800/day would be charged (so that the crane
company could recover their additional costs for
mobilization/de-mobilization
and transportation) In my nearly 30 years in construction related work, I
have never seen a job that can charge off rental equipment's "idle" time
to
overhead - Either you pay the full rental price for the equipment, or you
don't get it.
--
Douglas McKirdy
Senior Project (Controls) Analyst

It's the definition of "true cost of the project" where you and I
disagree.
IMHO, and I'm not an accountant, the "true cost" only includes the costs
directly attributable to specific project work and nothing else. If you
have an employee in the firm who earns $5000 per month and you use him 10
hours on this specific project during a given month with the rest of his
time being spent elswhere, should all $5000 be charged against the
project's
budget or should only the 10 hours be charged to the project and the rest
to
general operating expense? I say the latter. If only the portion of an
internal employee's time spent on specific project work impacts the
project's budget, why should contractors and equipment be treated any
differently? The same goes for equipment purchases - unless they are
destroyed by doing the project work, they go on the shelf for use in
other
projects after the current is done. Thus their cost to the project is
not
their purchase price but rather the depeciation they acrue while they are
being used, again just for the hours that they are actually utilized - in
a
sense they are 'employees' being paid a 'salary' equal to their
depreciation.

On the other side, there are some costs that are frequently omitted from
the
project budget that I think should be included in it. Most of the MS
Project courseware books say that while non-exempt employee's overtime
rates
are the statutory rate, exempt professional and managerial employees
overtime rates are zero. I disagree - the fact that a manager doesn't
get
paid extra for overtime doesn't mean his work outside of the normal
calendar
has no value. If nothing else, there is an opportunity cost associated
with
the work that properly should be charged against the project budget. An
hour of an exempt employee's time between 7 and 8 pm is worth to the
company
exactly the same as an hour of his time between 2 and 3 pm and should
impact
the prject budget by the same amount. Thus I teach my students that for
exempt employees the overtime rate should not be left zero but rather
should
be set equal to the standard rate.

All of this emphasizes my view that MS Project is NOT a cash accounting
system and it's cost estimating features do not deal in any way or form
with
revenues and expenditures.


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


in
message news:B7EA400AEE60433A962193E272D8AECC@RLWM90...

Jan,

While the approach taken by Andrew lets you do the math, Steve's
categorization makes more sense since there is an availability
constraint. The problem I have with Steve's approach is laying-off the
cost to some overhead account which doesn't reflect the true cost of
the
project.

An alternative approach would be to use Steve's categorization but
assign a $800/d cost to the resource and assign it to a specific
sub-task in whatever quantity you need.

=====
Richard Warren [MBA, PMP, MCITP for EPM]
http://richardlwarren.info


-----Original Message-----
From: (e-mail address removed) [mailto:[email protected]]
Posted At: Saturday, August 02, 2008 11:01 AM
Posted To: microsoft.public.project
Conversation: material costs
Subject: material costs

Hi,

I am having a problem with the resource type "Material"

I am hiring cranes and they cost 800 Euro/day/piece. No matter how
long they are working..
On certaine days I hire more than one and costs should be x times
800..


The std rate can't be defined per day.
cost per use doesn't seem to work either because only one crane is
calculated


I tried to define them as resource type "work"
They disadvantage then is that they add up in the total work hours..

Who knows???

Thanks in advance

Jan