True Consulting Cost/Benefit

[wbrethour]

Is there anyway I can take a human resource and do two different things with
it. First I want to enter a billable rate to be charged to a client for that
resource and secondly I want to enter the salary for that resource that I
would have to pay as an expense for having that resource on the project. I
know I can do one or the other but I would like to be able to do both. I
have thought of entering the difference of the two and only reflect the
profit gained by using the resource but I would like to not always have to do
that. The salary would be a fixed varible that would change but once a year
where the billable would change based on task and time of day. Any
suggestions with this?

 

[Steve House [MVP]]

There are several problems. First of all Project does not do a very good
job of tracking revenues, it's more oriented towards monitoring your
internal costs. You can see this in the organization of the Rate Tables
where you can have up to 5 different rate schedules for the resource costs
and choose which applies to a specific task from the assignment information
page in the usage views but there's no field for billing rate at all.

You can kludge together some revenue figures through the use of the user
defined cost fields but I'd be very careful what I used them for and would
never use them to actually bill the client.

Secondly, the revenues are more closely associated with the tasks than they
are resources. While you can always record a billing rate for a resource,
using it to calculate the amount X hours of work should be billed at is a
bit more dicey as work is a task value while rate is a resource value and
you generally can't mix them in the same formula. On the task level, OTOH,
you can record your billing rate for that type of work in one of the
user-defined cost fields and then multiply it by the work hours in a second
field. I'm not sure billing rate even should be associated with the
resource - as I said in another message, if I'm the client and am paying
your firm to wax 100 widgets, the fact that one of your widget waxers gets
$35 an hour and another gets $25 an hour is not my concern. As the client
all I care about is getting 100 widgets waxed and I'm going to expect to pay
the same for those widgets regardless of who you send over to do the waxing.
I'm going to be thinking I'm booking XX hours waxing widgets and widget
waxing is worth $YY per hour, period. As long as the work itself is of
equal quality and takes the same time to accomplish, I could care less who
you send to do it and your staffing decisions shouldn't affect the rate you
charge me.

Even with internal costs, Project has no way to vary the rate based on time
of day. Work is either standard, taking place during the working time
calendar, or overtime, taking place outside the working time calendar.
That's about to only distinction it can make on its own.

I knowe this isn't a lot of help but hopefully it'll give you points to
ponder.


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

 

[wbrethour]

Thanks for your suggestions and the question was not to be used for billing
to a client but just for internal usage to measure profitability of
individual projects. In fact most of our client projects where we will be
billing for the resourse is done on a fixed price anyway but there are some
that are time and material and those are the ones that (internally) I would
like to track the profitability of a given project. For those time and
material billable projects I know what all resources cost per hour (salary
plus benefits) and I know what the billable rate to the client is based on
the signed contract. I was just looking for a place to enter the resources
salaries and have it factored into the cost of the projects for internal use
and not for billing use.

My comments on different rates based on the time of day was nothing more
then standard vs overtime rates for any given task based on work time of day.

 

[Steve House [MVP]]

Re Standard versus Overtime - that you can do easily, but Project won't
actually watch the times for you. When you assign resources to tasks or
input actual work you manually input the number of hours included in the
total work that are overtime hours in the OTWork fields. Project then
calculates the task's cost with the formula:
[Cost] = ([Work]-[OTWork])*[StdRate] + [OTWork]*[OTRate] + [CostPerUse]
+ [FixedCost]
and its duration by:
[Duration] = ([Work]-[OTWork])/Effort

I'm confused - you say you're looking for a place to enter the resource
salaries. But that is the Standard Rate column in the resource sheet and
gets totalled in the cost tables already. Do you mean you're looking to
enter the resource's billable rate as well as their salary so you can say
"Joe is working a total 40 hours on this project, we'll pay him $500 and
bill the client $750"? If that's the case and all you need is totals by
resource without a breakdown on a per task basis I think I have something
that'll work for you ...

In the Resource Sheet, add the column Cost1 and label it "Billing Rate." Go
to Customize Fields and for the Cost2 field use the formula
[Cost1]*[Work]/60 and set it to sum on rollups. Rename Cost2 to something
meaningful like "Billed to Client." Add Cost2 to whatever resource or
resource usage table you'd like to see it in. Unfortunately, it won't carry
over to task and task usage tables because although both tasks and resources
have a Cost1 field, for example, the task and resource data is actually
stored in two completely different, non-interacting, tables that happen to
have some similar field names. As I said, this can give you total client
billing and your total internal costs for each resource but it won't give
you a task by task breakdown of those costs.

Hope this helps

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

 

[wbrethour]

Thank you. That is what I think I am looking for and I will give it a try.

Re Standard versus Overtime - that you can do easily, but Project won't
actually watch the times for you. When you assign resources to tasks or
input actual work you manually input the number of hours included in the
total work that are overtime hours in the OTWork fields. Project then
calculates the task's cost with the formula:
[Cost] = ([Work]-[OTWork])*[StdRate] + [OTWork]*[OTRate] + [CostPerUse]
+ [FixedCost]
and its duration by:
[Duration] = ([Work]-[OTWork])/Effort

I'm confused - you say you're looking for a place to enter the resource
salaries. But that is the Standard Rate column in the resource sheet and
gets totalled in the cost tables already. Do you mean you're looking to
enter the resource's billable rate as well as their salary so you can say
"Joe is working a total 40 hours on this project, we'll pay him $500 and
bill the client $750"? If that's the case and all you need is totals by
resource without a breakdown on a per task basis I think I have something
that'll work for you ...

In the Resource Sheet, add the column Cost1 and label it "Billing Rate." Go
to Customize Fields and for the Cost2 field use the formula
[Cost1]*[Work]/60 and set it to sum on rollups. Rename Cost2 to something
meaningful like "Billed to Client." Add Cost2 to whatever resource or
resource usage table you'd like to see it in. Unfortunately, it won't carry
over to task and task usage tables because although both tasks and resources
have a Cost1 field, for example, the task and resource data is actually
stored in two completely different, non-interacting, tables that happen to
have some similar field names. As I said, this can give you total client
billing and your total internal costs for each resource but it won't give
you a task by task breakdown of those costs.

Hope this helps

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

Thanks for your suggestions and the question was not to be used for
billing
to a client but just for internal usage to measure profitability of
individual projects. In fact most of our client projects where we will be
billing for the resourse is done on a fixed price anyway but there are
some
that are time and material and those are the ones that (internally) I
would
like to track the profitability of a given project. For those time and
material billable projects I know what all resources cost per hour (salary
plus benefits) and I know what the billable rate to the client is based on
the signed contract. I was just looking for a place to enter the
resources
salaries and have it factored into the cost of the projects for internal
use
and not for billing use.

My comments on different rates based on the time of day was nothing more
then standard vs overtime rates for any given task based on work time of
day.