Salary vs Hourly

D

Donald

how do we calculate costs based on resources salary? does
project divide a resources salary into an hourly rate and
then uses that per hour? What happens if the salary
resource enters more than forty hours a week?

I hope someone can tell me this

Thanks
Donald
 
K

Kevin Flanagan

It actually calculates on an hourly basis for salaries.
You want a resource to enter more than 40 hours and you
can customize a report to take out all of the OT (=40)
time entered. The reason for this is what is called
missed opportunity cost. If a resource puts in more
hours than the task ewas estimated to complete, you need
this information. The extra time spent on that task
could have been spent as scheduled on another project, so
in effect you lost the opprotunity for that resource to
work as planned. It is also valuable for resource
utilization and forecasting.

Kevin
 
D

Dale Howard

Donald --

If you folks are using an enterprise implementation of Microsoft Project
with Project Server, I would strongly advise against using the actual
salaries of your people. The Cost information which is entered in the
Enterprise Resource Pool for each resource is visible to every project
manager who uses the system. Although you can hide the several Cost columns
temporarily, you cannot hide them permanently, and the information is
available to anyone who knows how to insert a column in Microsoft Project.

Frankly, this could quickly become a source of unrest among your people, and
I think your HR department would "have a cow" about this. Instead of using
actual salaries for costing your project, it is preferable to use a "blended
rate" of some type for each resource, so that no resource's real salary is
shown in the system. Blended rates could represent the average salary and
benefits for people in your company, department, team, or any other way you
can think of. Just a thought. Hope it helps.
 
M

Matt Steele

That sounds like what he is saying. That you take an
average of cost rates for a particular staff type and use
that as the salary. You will be over on some resources and
under on others but you will be pretty close overall.

We actually developed a plug-in that holds billing rates
for each staff type (each project can have its own billing
rate table) and we can calculate a true salary cost and
the billing on each resource on each task. The difference
of course is a gross margin. Real slick, but I don't
suppose this helps you. In our shop of 80 engineers & 3
offices, anyone can be a project manager and we do not
have problems with revealing the true salary of staff to
the people using my system since they are the managing
engineers anyway.

Matt
 
D

Dale Howard

Donald --

No, what I am saying is that you can end up with lots of problems when you
try to use people's real salaries in your Enterprise Resource Pool. In most
company's, the salary of each employee is kept strictly confidential. If
you place salaries in your Enterprise Resource Pool, all confidentiality
regarding salaries is lost. Frankly, some people would be willing to sue
based on this breach of confidentiality. Are you willing to face a lawsuit
over this issue? There are potential morale problems as well.

On the other hand, what is the "actual cost" of any work in your company?
Is is salary only, or salary plus benefits, or salary plus benefits plus
cost of lights, heat, phone, equipment, supplies, square footage for the
worker's cubicle, etc? Companies that use a blended rate for the resources
in their Enterprise Resource Pool use this approach to approximately the
cost of their project work. The numbers are not exact, but on the other
hand, Project Server is not meant to be an accounting system. Hope this
helps.
 
D

Donald

That sounds real cool Matt, I have seen a demo from the
EPKGroup that generates revenue and margins and other
things as well in their line of products. However, right
now we figure out the cost of the project then simply add
a markup of 1.15 or 1.20 in a separate enterprise field to
get revenue. I guess we do it at the overall project
level. Thanks for the advice, with the red tape i guess
averages will be the best solutoin.

Donald
 
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