PROJECT COST MANAGEMENT

(Practical)
Fixed and Variable Cost Estimates
• You enter costs as fixed or variable based on
per-use material costs or variable based on
the type and amount of resources used
• Costs related to personnel are often a
significant part of project costs.
Entering Fixed Costs in the Cost Table
• The Cost table allows you to enter fixed costs
related to each task
• To access the Cost table
– Right-click the Select All button in the Entry table
and select Cost.
• You can also assign a per-use cost to a
resource that represents materials or supplies
and use it as a base for calculating the total
materials or supplies cost of a task
 Entering Human Resource Costs
• Human resources represent a major part of the costs on
many projects
• By defining and then assigning human resources and their
related costs to tasks in MS Project, you can calculate
human resource costs, track how people are used, identify
potential resource shortages that could force you to miss
deadlines, and identify underutilized resources
• One of the easiest is to enter basic resource information in
the Resource Sheet, accessible from the View tab.
• The Resource Sheet allows you to enter the resource
name, initials, resource group, maximum units, standard
rate, overtime rate, cost/use, accrual method, base
calendar, and code.
 Parts of the Resource Sheet
• Resource Name: The name of a resource/Task
• Type: Indicate whether a resource is work,
cost or materials
– Work– people and equipment
– Cost – Independent cost you want to associate to
a task eg. Plane ticket
– Material – Consumable supplies
• Material: The unit of measurement you enter
for a material resources (Eg. Tons, boxes,
yards, etc)
• Initial: Abbreviation for a resource name
• Group: The name of the group that a resource
belongs to
• Max. Units: The maximum percentage or
capacity for which a resource is available
during the current time period
• Std. Rate: The rate of pay for a regular, non-
overtime work performed by a resource
• Ovt. Rate: The rate of pay for overtime work
performed by a resource
• Cost/use: The cost that accrues every time a
resource is used
• Accrue At: Provides choices for how and when
resource standard and overtime cost are
charged to the cost of a task
• Code: Any code, abbreviation or number you
want to attach to the resource information
• Entering data into the Resource Sheet is similar to
entering data into an Excel spreadsheet, and you
can easily sort items by selecting Sort from the
Project menu
• Once you have established resources in the
Resource Sheet, you can assign those resources
to tasks in the Entry table with the list arrow that
appears when you click a cell in the Resource
Names column.
• The Resource Names column is the last column of
the Entry table.
• Assume that there are four people working on
the Project and that the only costs for this
project are for these human resources
• Mensah is the project manager;
• Esther is the business analyst;
• Timothy is the database analyst; and
• Chris is an intern or trainee.
• To enter basic information about each person
into the Resource Sheet:
• 1. Display the Resource Sheet view.
– Click the View tab, and then click the Resource
Sheet button under the Resource Views group.
• 2. Enter resource information below

Resource Name Initials Group Stand. Rate Ovt. Rate

Mensah PM 1 GHC 500.00/h GHC 600.00/h
Esther BA 1 GHC 400.00/h GHC 500.00/h
Timothy DA 1 GHC 400.00/h GHC 500.00/h
Chris IN 1 GHC 200.00/h GHC 250.00/h
• You can also enter annual salaries by typing
the annual salary number followed by /y for
per year.
• Leave the default values for the other columns
in the Resource Sheet as they are.
 IMPORTANT
• If you know that some people will be available for a
project only part time, enter their percentage of
availability in the Max Units column of the
Resource Sheet
• MS Project will then automatically assign those
people based on their maximum units.
• For example, if someone can work only 25% of
their time on a project throughout most of the
project, enter 25% in the Max Units column for that
person
• When you enter that person as a resource for a
task, his or her default number of hours will be 25%
of a standard eight-hour workday.
 Important ……
• If someone can work only 10hrs a week of their
time on a project, enter 25% in the Max Units
column for that person (ie. (10hrs/40hrs)*100)
where 40hrs is the standard hours for a week
and 10hrs is the number of hours the resource is
available
 Assigning Resources to Tasks
• For MS Project to calculate resource costs, you
must assign the appropriate resources to tasks
in your WBS
• There are several methods for assigning
resources.
 Assigning Resources Using the Entry
Table
❑ Select the task to which you want to assign resources
– Click the Gantt Chart button on the View tab, and right-
click the Select All button and click Entry to return to the
Entry table, if needed.
❑ Reveal the Resource Names column of the Entry table.
• Move the split bar to the right to reveal the entire
Resource Names column in the Entry table
❑ Select a resource from the Resource Names column
• In the Resource Names column, click the cell associated
with the required task
• Click the cells list arrow, and then click the checkboxes next
to the required resource name to assign the task
 Note
• Notice that the resource choices are based on
information that you entered in the Resource
Sheet
• If you had not entered any resources, you
would not have a list arrow or any choices to
select.
 Assigning Resources Using the
Resource Tab
• To assign resources using the Resource tab:
❑Select the task to which you want to assign
resources
❑Open the Assign Resources dialog box.
– Click the Resource tab, and then
– Click the Assign Resources button in the
Assignments group
– The Assign Resources dialog box displays.
 Assigning Resources Using the Split
Window
• When you assign resources using the split
view, you have more control over how you
enter information and can visually see the cost
table and Gantt chart changes in the top
window as you assign each resource in the
bottom window.
• To assign both Mensah and Esther to attend
the kickoff meeting using the split window:
• Open the Cost table view
– Right-click the Select All button, and then click Cost to
reveal the Cost table
• Split the window to reveal more information.
– Click the Details button under the Properties group of
the Resource tab
– The Gantt Chart view is displayed at the top of the
screen and a resource form is displayed at the bottom
of the screen
• 3. Assign Tasks
– Select Task and then click the Assign Resources
button, select resource name, and Close the dialog
box
 Viewing Project Cost Information
• Once you enter resource information, MS Project
automatically calculates resource costs for the project.
There are several ways to view project cost information
• You can view the Cost table to see cost information
• Right-click the Select All button, and then click Cost.
• The Cost table displays various cost information.
• Note that by assigning resources, costs have been
automatically calculated for tasks
• You could also enter fixed costs for tasks by simply
typing them into the appropriate cell in the cost table.
 Cost table fields
• Fixed Cost: Shows any non resource task expense
• Fixed cost Accrual: Choices for how fixed cost to
be charged
• Total Cost: Total projected cost for the project
=Actual Cost + remaining cost
• Baseline: Total planned cost for the project
• Variance: The differences between baseline cost
and total cost
= Cost-Baseline cost
 Cost table fields (cont)
• Actual cost: Cost incurred for work already
performed by resources on the task
• Remaining: The remaining scheduled expense
to be incurred in completing the remaining
project
= (Remaining Work * Standard Rate) +
Remaining Overtime Cost
 Set Baseline
• Click the Project tab, click the Set Baseline
button under the Schedule group, and click
Set Baseline
• Click the Baseline list arrow to reveal
multiple baselines
• You can save up to ten baselines
• After you set the baseline, the cost numbers in
the Baseline column are updated.
• Click OK.
 Open Cost reports
• Click the click Reports tab
• Double-click Costs to display the Cost Reports
dialog box.
• Set the time units for the report.
– Click Cash Flow, if necessary, and then click Edit
– The Crosstab Report dialog box is displayed
– Click the Column list arrow to see other options
(month, weeks, etc)
– Click OK.
• Click Select in the Cost Reports dialog box
 View the Project Summary report
• Click the Reports button
• Double-click Overview, and then double-click
Project Summary
• A Project Summary report is displayed, listing
information such as project baseline start and
finish dates; actual start and finish dates;
summaries of duration, work hours, and costs;
as well as variance information.
ENTERING ACTUAL COSTS AND TIMES
• After you set the baseline plan, you can track
information on each of the tasks as the project
progresses
• You can also adjust planned task information
for tasks still in the future
• The Tracking table displays tracking
information, and the Ribbon provides icons to
help you enter this information
 To enter actual information for tasks:
• 1. Return to the Task tab and make the tasks
automatically scheduled
– Click the Task tab, where the tracking buttons are
located
– Click the task name for the first Task and drag down
through the task names to the last Task, and then click
the Auto Schedule button under the Tasks group.
• 2. Display the Tracking table.
– Right-click the Select All button, and then click
Tracking to see more tracking-related information as
you enter actual data.
• 3. Make other adjustments as
 View the Variance table
• Right-click the Select All button, and then
• select Variance to display the Variance table.
 Earned Value Management
• Earned value management is an important
project management technique for measuring
project performance
• Because you have entered actual information
for some of the tasks in the Project, you can
now view earned value information in MS
Project
• You can also view an earned value report
using the visual reports feature.
 To view earned value information:

• 1. View the Earned Value table.

– Right-click the Select All button, and then select More
Tables
– The More Tables dialog box opens.
• Double-click Earned Value.
• 2. Display all the Earned Value table columns
– Move the split bar to the right to reveal all of the columns
• Note that the Earned Value table includes columns for
each earned value acronym, such as SV, CV, EAC
(Estimate at Completion), BAC (Budget at Completion)
 View the earned value chart
• Click the Report tab, and then click the Visual
Reports button under the Reports group to
open the Visual Reports dialog box.
• Click Earned Value Over Time Report
• If you have Excel, click View to see the
resulting report as MS Project automatically
creates Excel data and a chart based on your
current file.