Re: Cost firm committments

Your figures for BCWS and BCWP are incorrect for most types of tasks. The materials are required in order to do the work - if they're not there, the work doesn't take place. The costs of the work on the task include both the prorated costs of labour AND the prorated costs of materials consumed. So after 2 days into your task the real BCWS and BCWP are $1000, not $800.

Actually it seems like after 2 days your suggested method of calculating "committed cost" would be 2 days labour plus all the materials since having Joe proceed with work creates the committment to pay him for it or committed cost would be $800 labour plus $500 materials = $1300. But Project assumes that you can return materials to the vendor for a refund if you don't actually use them in the task. Since materials are things that are used up, you still have their value if you haven't actually used them yet and so their money worth hasn't been "spent." So even though your initial PO was for $500, if you abandon work after 2 days you've used up 2/5 of the materials and you'll need to pay for the $200 worth you've used and return the other $300 worth to the vendor for credit. So in that sense, your committed cost after 2 days is actually $1000, same as BCWP.

Project does a good job of estimating the costs required to achieve the project's work but it really doesn't deal with when you pay the bills or receive revenues. As John has suggested you can create some workarounds to help you do a bit more sophisticated computations but you can only go so far outside it's design functions before you run into walls.

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


"YLE" <YLE@xxxxxxxxxxxxxxxxxxxxxxxxx> wrote in message news:C8068BA2-C6DB-494B-86B1-9155EF899836@xxxxxxxxxxxxxxxx
Hi Steve,

You right committed Cost is not always clear. here is an example:
You have Joe assigned to the task as LBR for 5d**hrs=40 hrs*$50=$2000
You have Mtl assigned to the same task Xlb'sofwax*X=$500.
You base line task cost (budget) is 2500.
You placed the PO to purchase mtl nd the term of PO is to pay at the end of
the task duration(sounds like a joke). so now 500 is you committed
amount(cost). Purpose:
you are 2d in progress. AD=2d, BCWS=800, BCWP=800 Remaining budget =
2500-800=1700$. Now out of this amount you have already committed 500 (it is
not yet paid, but already spent). So your actual exposure (estimated
available budget??) is 1200.
Hope this helped to understand the purpose.
Now here what i believe could be done:
I need to have a flag set at resource level for each resource (based on PO)
that is considered to be committed cost. Then I need to total the separately
based on Flag in task cost reports.
Since actualâ?Ts are manually entered in resource or task usage view at
resource level, they could be also grouped and displayed based on the same
flag.
So at the end I will have committed cost tracked separately as part of the
Cost.
I believe that no Committed Cost data will be used for any of Progress/EV
calcs.
Sounds like ABRACADABRA???

Thanks for being part of this discussion,

Yakov

"Steve House [Project MVP]" wrote:

Point of clarification reuqest, please. What is a "committed cost" and what
distinguishes it from the other costs? In my everyday language thinking, if
Joe is scheduled to spend 3 days waxing widgets, I'm committed to pay him
once he's done the work and I've got to purchase the materials used. But
the amount I'm committed to pay is not just a portion of the total salary
he's owed, it's the entire amount. And I'm also committed to pay for all
the materials that were used up. If he doesn't do the work, his salary
costs our project budget nothing at all (though it may cost my firm money,
but that's not the same thing as the direct costs of doing our specific
project) nor have we spent anything directly for materials on that now
non-task so nothing is committed.
--
Steve House [MVP]
MS Project Trainer & Consultant
Visit http://www.mvps.org/project/faqs.htm for the FAQs



"YLE" <YLE@xxxxxxxxxxxxxxxxxxxxxxxxx> wrote in message
news:B1202718-4A61-4C75-B247-E6B07F2C8D8A@xxxxxxxxxxxxxxxx
> Hi John and thanks,
>
> I understood that in case of material resource hrs is actually units.
> Having
> all material resources ( at least committed cost related) as separate > task
> is
> not the optimal choise. Actually this is what I am trying to avoid - i
> tell
> people that task is a task, and resource is resource. Unless it is just
> natural that one resource per task, than no need to separate them.
> I would not mind to see some help using VBA. I do have a limited
> expirience
> with it in Access and we do have professionals around. So if you have
> something in mind, pls let me know.
> I also try to simplify the process. I could identify committed cost > thru
> resource and by separate resource group. It looks like a real life > case -
> since committed cost is usually PO based and same is applied to > resource.
> I
> guess the question now is to track it in task view and see the > committed
> cost
> in the same views and reports with baseline budget, actual costs and
> progress
> reports.
> I will try to work something out today but if you see the clear path > pls
> let
> me know.
>
> Thanks for your help,
>
> Yakov
>
> "John" wrote:
>
>> In article <0337CCAC-2048-4FB8-AEB9-DD8AA6C589A1@xxxxxxxxxxxxx>,
>> YLE <YLE@xxxxxxxxxxxxxxxxxxxxxxxxx> wrote:
>>
>> > Hi John,
>> >
>> > What I would like to do is to have a task w labor and mtl resource
>> > assigned.
>> > Task cost is mtl rate * hrs + lbr rate * hrs. So MSP will track this
>> > cost for
>> > me with actuals entered manualy or imported from other aplication. >> > Same
>> > time
>> > I would like to track in this case cost of mtl separately as >> > committed
>> > cost.
>> > But not all tasks in the project will have mtl as commited cost, >> > only
>> > some of
>> > them and not every mtl resource constitute committed cost. What I >> > did
>> > is
>> > created cost1 field and wanted to enter the value in this field per
>> > resource
>> > if resource cost is commited cost. I was using task usage and/or
>> > resource
>> > usage views. But by doing so I could never get this cost summarized >> > at
>> > task
>> > level. Why? BaseCost and Cost work this way?
>> > The purpose of this is to know what portion of the budget is >> > committed
>> > amount and track it separately.
>> > Just trying to eliminated bunch of different spreadsheets and have >> > MSP
>> > to do
>> > the most of the work.
>> >
>> > Thanks again,
>> > Yakov
>>
>> Yakov,
>> One clarification to the way you have described total task cost.
>> Material resources are not normally based on rate times hours. Instead
>> they normally take the form of so much material per unit of usage for
>> consumed resources or so much cost per period as in cost/use (e.g.
>> rented). And yes, gasoline for instance might be a resource that is
>> indeed used at an hourly rate (e.g. generator) but I just wanted to
>> clarify that when a resource is entered as a material type on the
>> resource *** the Std. Rate field loses its "per hour" dimension - it
>> becomes a cost/unit. A fine point perhaps, but sometimes the fine >> points
>> become very important.
>>
>> Now on to your question. First of all, let me refer you to FAQ 37 -
>> Custom fields in tables on our MVP website at:
>> http://www.mvps.org/project/faqs.htm
>> You also might want to take a look at my response to a post by Dann in
>> this newsgroup 2/4/06 titled: "Filtering tasks in resource usage view
>> (report)". I stumbled a bit in my original reply but the basics are
>> correct.
>>
>> With reference to the Usage views. If you display the Cost1 field what
>> you are seeing is the Resource Cost1 (or Task Cost1) on resource or >> task
>> rows and Assignment Cost1 on assignment rows. Custom formulas only >> apply
>> to Task or Resource data - there is no provision for creating >> assignment
>> formulas other than through VBA.
>>
>> Baseline Cost and Cost are "basic" fields of Project and as such, they
>> have features that aren't necessarily available for custom fields. >> Yes,
>> custom fields can be summed up but only in their "native" field type
>> (i.e. task or resource).
>>
>> So how do you accomplish what you want? First of all, when showing
>> material resources I always allocate a separate task line so labor and
>> material are handled separately. This isn't necessary of course, but
>> sometimes it makes it easier to do special things like filtering or
>> similar. If you want to use Cost1 to designate selected material
>> resources as committed (and you don't want to use VBA), then don't try
>> to use either Usage view. Instead, use a task view (e.g. Gantt Chart)
>> and use the sum option when creating your formula for Task Cost1.
>>
>> Hope this helps.
>> John
>> Project MVP
>> >
>> > "John" wrote:
>> >
>> > > In article <C66A2E93-F3C9-495C-9D53-35C34DB3BF1E@xxxxxxxxxxxxx>,
>> > > YLE <YLE@xxxxxxxxxxxxxxxxxxxxxxxxx> wrote:
>> > >
>> > > > Hi,
>> > > >
>> > > > I heard already reading thru the posted messages that MSP is not
>> > > > the cost
>> > > > managing application but still decided to ask. I was asked to
>> > > > investigate
>> > > > the
>> > > > possibility to use MSP to track Project Commitments. The amounts
>> > > > that are
>> > > > committed to be spent (as part of the base line cost). For >> > > > example
>> > > > Material
>> > > > Order contracts. It will be paid according to the set up plan >> > > > and
>> > > > project
>> > > > development. I need to have ability to allocate the portion of >> > > > the
>> > > > resourceÃffÃ,¢Ãf¢â?sÃ,¬Ãf¢â?zÃ,¢s
>> > > > work/cost as committed amount and possibly track them >> > > > separately.
>> > > > Actual
>> > > > will
>> > > > be updated manually against committed and additional >> > > > (non-committed
>> > > > cost). I
>> > > > believe I could do it thru custom cost fields but only at the >> > > > task
>> > > > level
>> > > > ignoring resources assigned to the task. For example the task >> > > > with
>> > > > assigned
>> > > > labor and material where material is committed amount and I have >> > > > to
>> > > > track
>> > > > it
>> > > > separately. Any suggestions???
>> > > >
>> > > > Thanks for the help in advance
>> > >
>> > > YLE,
>> > > What you have read is correct, Project is not intended to be a
>> > > financial
>> > > accounting application. It certainly can track costs associated >> > > with
>> > > a
>> > > schedule but those costs rarely make up the whole financial >> > > picture.
>> > >
>> > > When you talk about committed costs "as part of the base line >> > > cost"
>> > > it
>> > > sounds like you are really talking about that part of the project
>> > > budget
>> > > that has been allocated to tasks in the plan. What specifically do
>> > > you
>> > > mean by having "the ability to allocate the portion of the >> > > resource's
>> > > work/cost as committed amount"? Is the original cost (i.e. >> > > baseline
>> > > cost) allocated to the task considered committed? If so, then >> > > perhaps
>> > > you don't need any special custom fields, but can make use of
>> > > Project's
>> > > built-in earned value fields.
>> > >
>> > > John
>> > > Project MVP
>> > >
>>



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