Can I normalize standard rate for salaried employees who work OT?

[Mike Terwelp]

Our salaried employees use MS project to track hours on a project. However,
they don't get paid overtime. The costs for our projects, therefore, are
artificially inflated when overtime is worked. Team members work on multiple
projects, so we can't simple put a "0" in the OT rate (which appears
cumbersome to use anyway).

We need a way to create a report that normalizes the overall rate based on
the time logged to MS project server (for 40 or more hours). For example, if
the resource cost is $1000/wk and they work 50 hrs. The normalized rate for
the tasks they worked on that week would be $20/hr, rather than the standard
$25/hr.

Thanks for any ideas on how to get this type of report created.

 

[Rod Gill]

HI,

The issue here is that the extra 10 hours of overtime, whilst they don't
take money from the bank account, do incur an opportunity cost. To say the
extra 10 hours are "free" is completely wrong. What if they went home
instead? productivity would rise noticeably. What if they spent the extra 10
hours on a different project, what value would they add then?

By all means have a separate calculation for $ out of the bank account, but
I would still track the real cost for the project, which must include all
hours, even if some of the cost is opportunity cost.

--

Rod Gill
Microsoft MVP for Project

Author of the only book on Project VBA, see:
http://www.projectvbabook.com

 

[Steve House]

I concur with Rod. For exempt employees who do not actually receive extra
pay for overtime work, the value to the project, hence the cost, of an hour
of work done outside of their normal working hours is exactly the same as
that of an hour of work done during their normal workday. Thus for exempt
employees, show the same rate for standard and overtime rates. Non-exempt
employees, on the other hand, should show overtime at the rate either set by
labour statutes or collective agreements.

Always bear in mind that costing in Project deals with the economic costs to
firm of doing the project, something quite different from tracking and
accounting for the actual out-of-pocket cash expenditures. The latter is
the job of the accounting systems.

 

[Mike Terwelp]

Thanks for the reply Steve. I also found your very detailed reply to a very
similar question in the "overtime calculations" thread from May 21, 2007. I
missed that in my searches before. I understand what you and Rod are saying
and will talk this over with my management.

They are looking at this as a way to determine if we went beyond our
approved budget for the project. To your point, the project costs is more
expensive because more hours were spent on it than planned. So the project
was overbudget. The finance department may not see an increased expense, but
the additional hours over on that project could have gone towards another
project (opportunity cost)... granted folks are only working OT to get the
project done on time and otherwise wouldn't (they usually make the decision
to work OT, rather than being required to). Still your clarifications (and
Rod's) here and in the other thread make a lot of sense.

Regards,
-MikeT

I concur with Rod. For exempt employees who do not actually receive extra
pay for overtime work, the value to the project, hence the cost, of an hour
of work done outside of their normal working hours is exactly the same as
that of an hour of work done during their normal workday. Thus for exempt
employees, show the same rate for standard and overtime rates. Non-exempt
employees, on the other hand, should show overtime at the rate either set by
labour statutes or collective agreements.

Always bear in mind that costing in Project deals with the economic costs to
firm of doing the project, something quite different from tracking and
accounting for the actual out-of-pocket cash expenditures. The latter is
the job of the accounting systems.

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

Our salaried employees use MS project to track hours on a project.
However,
they don't get paid overtime. The costs for our projects, therefore, are
artificially inflated when overtime is worked. Team members work on
multiple
projects, so we can't simple put a "0" in the OT rate (which appears
cumbersome to use anyway).

We need a way to create a report that normalizes the overall rate based on
the time logged to MS project server (for 40 or more hours). For example,
if
the resource cost is $1000/wk and they work 50 hrs. The normalized rate
for
the tasks they worked on that week would be $20/hr, rather than the
standard
$25/hr.

Thanks for any ideas on how to get this type of report created.