Help using MSP to effectively calculate costs and manage a project

[jtorresparodi]

I will really appreciate some help on this.

At the company I work for (software development company), Project
Managers (PM) are using MSP to calculate the project cost as well as
to manage the project. In fact, rather than calculating the cost they
are calculating how much to charge the client (price).

It´s very common to charge the client for an Analyst during the whole
project duration, even though the Analyst does not have tasks assigned
for the whole duration of the project. This is because the analyst is
always performing, at least, support activities.

In order to calculate the "price", PM assign the Analyst to the
summary tasks. This works fine to calculate the price. However, it
doesn't allow to calculate the SPI right. Also it doesn't allow to
calculate resource usage. (if the resource has an specific task
assigned to him, it will show up as resource overuse).

Can you advise me on this? I´ve tried with hammock tasks for the
support activities for a given resource. I was able to solve the SPI
issue but I still get resource overuse when the same resource is
assigned to specific tasks.

Thank you for your help.

 

[Jim Aksel]

1. Never assign resources to summary tasks.
2. Project calculates COST not PRICE. They are entirely different animals.
You should use Project to calculate the COST of using the resource. What you
want to bill your customer would include any other wraps you want to put on
it (like fee, profits, other G&A, Cost of Money, etc).
Only put rates in project that the project must acutally pay.

We usually have two files associtated with any one delivery. One file is
measurable tasks, the other is Level of Effort. The two files can be
combined into a Master Project if necessary.

Load your LOE taks into a separate file. Use a resource pool.
To keep "Analyst" from being overloaded since he only performs LOE work part
time, you will need to use the Resource Usage view from a Master.mpp file and
reduce the Allocation% of "Analyst" downward to avoid overload.

There are probably other solutions.
--
If this post was helpful, please consider rating it.

Jim

Visit http://project.mvps.org/ for FAQs and more information
about Microsoft Project

 

[davegb]

1. Never assign resources to summary tasks.
2. Project calculates COST not PRICE.

Jim, can you elaborate? I can't think of any reason why, by using
custom calculated fields, Project couldn't be used to calculate
price.

They are entirely different animals.

 

[Steve House]

The cost of doing a task is the man-hours the resource is on the task times
the cost to you of one man-hour of that resource. What you charge the
client may not even be based on man-hours of labour at all - you might
charge a fixed price, you might charge nothing at all, or you might charge
your labour costs plus overheads plus profit margin plus cost-of-capital,
etc.

Assigning resources to summary tasks as well as their subtasks creates a
situation where the resource hours are counted twice.

I have yet to hear of attempts to use Project for time and billing
accounting that worked properly. It's job is to help you schedule work and
estimate its direct internal cost and it does a pretty darned good job of
that. Trying to turn it into something that it is not is doomed to failure.


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

1. Never assign resources to summary tasks.
2. Project calculates COST not PRICE.

Jim, can you elaborate? I can't think of any reason why, by using
custom calculated fields, Project couldn't be used to calculate
price.

They are entirely different animals.

 

[davegb]

The cost of doing a task is the man-hours the resource is on the task times
the cost to you of one man-hour of that resource. What you charge the
client may not even be based on man-hours of labour at all - you might
charge a fixed price, you might charge nothing at all, or you might charge
your labour costs plus overheads plus profit margin plus cost-of-capital,
etc.

Obviously, on a lump sum contract, there's no direct relationship
between your costs and what you bill. However, on a T&M contract,
there is a direct relationship. As far as how you charge it, Project
has nearly the same capabilities as XL to factor in burden, overhead,
profit, etc. into your cost. And it certainly has the ability to keep
2 sets of books, cost and billable. I still don't see any reason why
this couldn't be done, though I've never had the need to try to set it
up. The only clear advantage I can see to using XL for this is that it
might be easier and for security/privacy reasons. You can't give the
schedule to the client if it has all your costs and all your factors
in it! Other than that, it seems feasible to me. Any real reasons why
this can't be done?

Assigning resources to summary tasks as well as their subtasks creates a
situation where the resource hours are counted twice.

I have yet to hear of attempts to use Project for time and billing
accounting that worked properly. It's job is to help you schedule work and
estimate its direct internal cost and it does a pretty darned good job of
that. Trying to turn it into something that it is not is doomed to failure. Why?

--
Steve House [Project MVP]
MS Project Trainer & Consultant
Visithttp://www.mvps.org/project/faqs.htmfor the FAQs

1. Never assign resources to summary tasks.
2. Project calculates COST not PRICE.

Jim, can you elaborate? I can't think of any reason why, by using
custom calculated fields, Project couldn't be used to calculate
price.

They are entirely different animals.

You should use Project to calculate the COST of using the resource. What
you
want to bill your customer would include any other wraps you want to put
on
it (like fee, profits, other G&A, Cost of Money, etc).
Only put rates in project that the project must acutally pay.

We usually have two files associtated with any one delivery. One file is
measurable tasks, the other is Level of Effort. The two files can be
combined into a Master Project if necessary.

Load your LOE taks into a separate file. Use a resource pool.
To keep "Analyst" from being overloaded since he only performs LOE work
part
time, you will need to use the Resource Usage view from a Master.mpp file
and
reduce the Allocation% of "Analyst" downward to avoid overload.

There are probably other solutions.
--
If this post was helpful, please consider rating it.

Visithttp://project.mvps.org/for FAQs and more information
about Microsoft Project

- Show quoted text -- Hide quoted text -

- Show quoted text -

 

[Steve House]

One of the basic problems with using Project for this sort of thing is that
it's very difficult to set it up so it can handle the oddball situation.
Consider a consultant that is on a day rate and who bills in full-day
increments only. He gets $400 per day and regardless of whether he works 1
hour or 5 hours or the full day, the charge is the same. Since Project
calculates costs based on scheduled man-hours, there's no easy mechanism to
bump the $50 cost of the 1 hour of his time actually scheduled for Tuesday
up to the $400 he's going to bill the client for Tuesday's work, all the
while showing the 3 hours he's doing Wednesday and the full workday plus a
bit of overtime he's doing Thursday all at the same $400 per day utilized
rate. In that scenario, his total cost should be $1200 but getting Project
to calculate that value is going to be a real muddle. In my view, trying to
use Project beyond internal cost estimating opens up a can of worms that may
be untangleable. Use accounting programs to solve accounting problems and
scheduling programs for solving scheduling problems, picking to optimum tool
for the job at hand rather than trying to get creative and hammer nails with
a screwdriver.
--
Steve House [Project MVP]
MS Project Trainer & Consultant
Visit http://www.mvps.org/project/faqs.htm for the FAQs

The cost of doing a task is the man-hours the resource is on the task
times
the cost to you of one man-hour of that resource. What you charge the
client may not even be based on man-hours of labour at all - you might
charge a fixed price, you might charge nothing at all, or you might charge
your labour costs plus overheads plus profit margin plus cost-of-capital,
etc.

Obviously, on a lump sum contract, there's no direct relationship
between your costs and what you bill. However, on a T&M contract,
there is a direct relationship. As far as how you charge it, Project
has nearly the same capabilities as XL to factor in burden, overhead,
profit, etc. into your cost. And it certainly has the ability to keep
2 sets of books, cost and billable. I still don't see any reason why
this couldn't be done, though I've never had the need to try to set it
up. The only clear advantage I can see to using XL for this is that it
might be easier and for security/privacy reasons. You can't give the
schedule to the client if it has all your costs and all your factors
in it! Other than that, it seems feasible to me. Any real reasons why
this can't be done?

Assigning resources to summary tasks as well as their subtasks creates a
situation where the resource hours are counted twice.

I have yet to hear of attempts to use Project for time and billing
accounting that worked properly. It's job is to help you schedule work
and
estimate its direct internal cost and it does a pretty darned good job of
that. Trying to turn it into something that it is not is doomed to
failure. Why?

--
Steve House [Project MVP]
MS Project Trainer & Consultant
Visithttp://www.mvps.org/project/faqs.htmfor the FAQs

1. Never assign resources to summary tasks.
2. Project calculates COST not PRICE.

Jim, can you elaborate? I can't think of any reason why, by using
custom calculated fields, Project couldn't be used to calculate
price.

They are entirely different animals.

You should use Project to calculate the COST of using the resource.
What
you
want to bill your customer would include any other wraps you want to put
on
it (like fee, profits, other G&A, Cost of Money, etc).
Only put rates in project that the project must acutally pay.

We usually have two files associtated with any one delivery. One file
is
measurable tasks, the other is Level of Effort. The two files can be
combined into a Master Project if necessary.

Load your LOE taks into a separate file. Use a resource pool.
To keep "Analyst" from being overloaded since he only performs LOE work
part
time, you will need to use the Resource Usage view from a Master.mpp
file
and
reduce the Allocation% of "Analyst" downward to avoid overload.

There are probably other solutions.
--
If this post was helpful, please consider rating it.

Visithttp://project.mvps.org/for FAQs and more information
about Microsoft Project

- Show quoted text -- Hide quoted text -

- Show quoted text -

 

[davegb]

One of the basic problems with using Project for this sort of thing is that
it's very difficult to set it up so it can handle the oddball situation.
Consider a consultant that is on a day rate and who bills in full-day
increments only. He gets $400 per day and regardless of whether he works1
hour or 5 hours or the full day, the charge is the same. Since Project
calculates costs based on scheduled man-hours, there's no easy mechanism to
bump the $50 cost of the 1 hour of his time actually scheduled for Tuesday
up to the $400 he's going to bill the client for Tuesday's work, all the
while showing the 3 hours he's doing Wednesday and the full workday plus a
bit of overtime he's doing Thursday all at the same $400 per day utilized
rate. In that scenario, his total cost should be $1200 but getting Project
to calculate that value is going to be a real muddle. In my view, tryingto
use Project beyond internal cost estimating opens up a can of worms that may
be untangleable. Use accounting programs to solve accounting problems and
scheduling programs for solving scheduling problems, picking to optimum tool
for the job at hand rather than trying to get creative and hammer nails with
a screwdriver.

Hey there! You're stealing my favorite metaphor!

Exception handling, such as your example, tries the capabilities of
any software. Such an exception might be easier to handle in XL, but
it still would need special handling. But it could be done in Project
also.

--
Steve House [Project MVP]
MS Project Trainer & Consultant
Visithttp://www.mvps.org/project/faqs.htmfor the FAQs

times
the cost to you of one man-hour of that resource. What you charge the
client may not even be based on man-hours of labour at all - you might
charge a fixed price, you might charge nothing at all, or you might charge
your labour costs plus overheads plus profit margin plus cost-of-capital,
etc.

Obviously, on a lump sum contract, there's no direct relationship
between your costs and what you bill. However, on a T&M contract,
there is a direct relationship. As far as how you charge it, Project
has nearly the same capabilities as XL to factor in burden, overhead,
profit, etc. into your cost. And it certainly has the ability to keep
2 sets of books, cost and billable. I still don't see any reason why
this couldn't be done, though I've never had the need to try to set it
up. The only clear advantage I can see to using XL for this is that it
might be easier and for security/privacy reasons. You can't give the
schedule to the client if it has all your costs and all your factors
in it! Other than that, it seems feasible to me. Any real reasons why
this can't be done?

Assigning resources to summary tasks as well as their subtasks creates a
situation where the resource hours are counted twice.

I have yet to hear of attempts to use Project for time and billing
accounting that worked properly. It's job is to help you schedule work
and
estimate its direct internal cost and it does a pretty darned good job of
that. Trying to turn it into something that it is not is doomed to
failure. Why?

"davegb" <[email protected]> wrote in message

On Oct 12, 6:27 pm, Jim Aksel <[email protected]>
wrote:

Jim, can you elaborate? I can't think of any reason why, by using
custom calculated fields, Project couldn't be used to calculate
price.

They are entirely different animals.

- Show quoted text -- Hide quoted text -

- Show quoted text -

 

[JCTP]

Thank you all for your responses

Juan Carlos