Why is it bad to place resources on milestones?

[KingKikapu]

I would like to place a material resource on a 0 Day milestone. Th
material resource (used instead of Cost Resource for EV purposes) merel
represents a contract payout term for achieving the milestone. If the
are late, they start to incurr penalties, so this is by no means a fixe
price cost

I have often heard that it is poor practice to place a resource on
milestone. Could somebody elaborate as to why and under wha
circumstances this is believed to be true? Should I not plan my projec
in the manner described above

Thank you

 

[Steve House]

A resource on a task means either a work resource is expending energy or a
material resource is being consumed by the activity that the task describes.
But a milestone is not a task in the truest sense of the word - it does not
extend over time or achieve any deliverable. It is simply marker for an
instantaneous state transition - ie, you have gone from the state of not
having the contract signed to the state of contract signed. No resources
are doing work nor are any materials being consumed by the milestone itself,
that's all done by the tasks that extend back along the chain of dependent
activities leading up to the miletone. The milestone is just a flag
pointing to the date where the chain of events ends. All of the costs are
created doing the tasks leading up to it.

 

[KingKikapu]

That may be true, but in this case, the resource allocated is a pseud
resource denoting money leaving our hands in the form of a performanc
holdback: by law we are required to hold back 10% of the cost of ou
contract until such time as a Government Inspection is performed on th
work of the subtrade. Should the subtrade not uphold their fiduciar
responsibility to complete their work by the time of the schedule
government inspection, then they incurr large penalties.

As you see, this "material resource" is not really a material resource
It is, however, a monetary resource being consumed should a certai
planned outcome arrive. It is by no means though a fixed price expens
to our project: the expense is entirely dictated by their wor
performance, but it is NOT part of the work done. Do you see th
distinction? With that in mind, is what I'm proposing going to lead m
to technical issues such as tracking woes in project, or are th
objections more based on the concept of my implementation

 

[Jim Aksel]

Milestone: Holdback Funds Delivered, 0 Days, Cost=$1 (or Fixed Cost)
Costs may be assigned without resources.

However, as Steve pointed out, why not assign the cost to the prior task?
"Deliver Holdback Funds to Subcontractor", 1 day, $1 (cost). You can then
add the name of the resource who is tagged to actually release the funds.

Adding a fixed cost is resource independent.
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Jim Aksel, MVP

Check out my blog for more information:
http://www.msprojectblog.com

 

[KingKikapu]

There are a couple reasons why I wouldn't do it this way. Firstly, I d
not want to record it as a fixed cost as the cost has the potential t
be variable (it is effort driven afterall), secondly, the holdback i
released upon passing the government inspection, not upon completion o
the work. The milestone is the inspection. The government doesn'
charge us for the inspection, but it is a necessary condition fo
holdback release. Once approved, the money is invoiced. That's when i
leaves our hands, and not a second before. Why not associate it the
with that crucial milestone?



I also have an alterior motive for avoiding fixed costs: I wish t
record EVERYTHING (even true fixed costs) in earned value as I do no
want a subset total reflecting what we track via EVM, and another tota
reflecting EVM + fixed costs. The brass likes to see one projection
and fixed costs aren't included in EV rollups. Fixed costs may not b
effort driven, but they're at least easy to simulate in EV, so what'
the harm

 

[Brian Lukanic]

If you want to track earned value against a milestone then this is what turns
the conversation from theoretic to real-world. I actually agree with you that
resourcing a milestone can have applications. We sometimes do it to identify
the accountable party to seeing the milestone is met, for instance.

But if measuring earned value ona milestone is what you want to do, then
there is no debate: Project will not calculate EV against a 0-work,
0-duration task. This is by definition. Earned value can't go up or down if
the milestone has nothing tangible to it. Best way to get around this would
be to give the task a single hour, resource it, and in the advanced tab of
the task mark it as a milestone. It's not a true milestone by definition but
it will allow you to then track EV.

 

[Marty]

The best way to do what you are trying to do is as follows:
- Set up a resource category for example "LUMP SUM"
- Change the resource to a material
- Allocate resource to milestone at 0 units
- On the lower half of a Gantt chanrt view show Task Form then Format
Details to show Resource Cost
- Against the allocation you can overwrite cost with exactly the cost
you would like, eg $10,000

This approach allows you to Baseline, provide Actual nd reaining cost
as well as calculate Earned Value, really handy.

Its incorrect to say you shouldnt resource a milestone, it is more
correct to say a milestone should have no effort associated with it.

 

[KingKikapu]

That's a good point. 0 Day milestones have zero work by definition.
suppose a 1 day milestone could be created to satisfy that requirement.
Is there any effort on the situation in question? Not as far as I ca
tell, but I may have the definitions muddled a bit by this point