Re: Help using MSP to effectively calculate costs and manage a project

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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



"davegb" <davegbel@xxxxxxxxxxx> wrote in message news:1192551600.112905.253820@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
On Oct 15, 4:09 pm, "Steve House" <sjhouse at hotmail dot com> wrote:
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

"davegb" <daveg...@xxxxxxxxxxx> wrote in message

news:1192455563.961979.287660@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
On Oct 12, 6:27 pm, Jim Aksel <JimAk...@xxxxxxxxxxxxxxxxxxxxxxxxx>
wrote:

> 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.

> Jim

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

> "jtorrespar...@xxxxxxxxx" wrote:
> > 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.- Hide quoted text -

> - Show quoted text -- Hide quoted text -

- Show quoted text -


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