Re: Resources = Rates

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Steve, thank you for your answer, it's very detailed and informative. But I
am a project manager in a software consulting company where man-hours are
almost everything, and correctly estimating project costs vs. billing rates
can make or break the company. We have projects which either have all
man-hours directly billed to the client, or we have a fixed price project in
which we have had to estimate the same. I would like to easily be able to
track both cost and billing rate in regards to labor in order to be able to
improve our abilities to provide accurate estimates to clients (and
ourselves). I agree with Jan, in the sense that it seems like providing the
user with another resource rate per hour column shouldn't be that big of a
deal, and would certainly help users in my situation.

"Steve House" wrote:

Well, you don't have to use a separate calculator to do it on a task by task
basis - you can record the billing rate in a spare field and use Project's
own user-defined calculation ability to do this and it'll work in some
cases. But you are correct in that accounting for billing rates is more the
province of a separate, purpose-built, accounting application and not the
project costing portion of Project. Project's cost calculations are aimed
at estimating your own internal, direct, marginal cost in getting the
specific work on the project done. Billing rates may take that as one input
but there are many other inputs such as overheads, cost of capital, profit,
etc that also need to be taken into account that Project has no knowledge
of. And consider too that Project uses man-hours of work as a base for its
calculations - if you have a situation such as the client being charged a
certain fixed amount per day regardless of the amount of time the resource
puts in that day or time with a certain minimum (not an unsual situation)
Project has no way of calculating that - Example, Your John Q whom you pay
$65 but bill the client at $90 per hour, this time has a half-day minimum
billing. On one particular day he works 2 hours on the client site and
another day he works 5 hours. YOUR cost for doing that work for the first
day is 2 man-hours of work * $65 = $130, and for the second is 5 man-hours *
$65 = $325, simple arithmetic. But you client's cost isn't that simple - on
the first day they're billed not for the 2 hours the work takes but for 4,
the minimum billing amount, and the charge is 4 hours * $90 = $360. OTOH,
the day he's there for 5 hours their cost is a straightforward 5 * $90 =
$450. In the first instance, his billing amount is not directly based on
the number of hours spent until he exceeds 4 hours whereupon in the second
instance it IS based on actual time spent. But in both cases, your cost is
directly based on the actual hours required for the work while the amount
you bill the client really has no simple relationship to the amount of work
performed. Project would have no way of tracking and calculating that sort
of thing other than by a direct task-by-task manual entry of billing amounts
or hours to be used for billing separate from the hours the work is actually
requiring.
--
Steve House [Project MVP]
MS Project Trainer & Consultant
Visit http://project.mvps.org/faqs.htm for the FAQs



"Kate Carrillo" <Kate Carrillo@xxxxxxxxxxxxxxxxxxxxxxxxx> wrote in message
news:813DD4C9-5206-4D69-92F0-13FFFEC949A2@xxxxxxxxxxxxxxxx
Mike,

I am struggling with a similar problem as Jason's (I think), and I am
guessing that there's no real solution in the current version of Project.
I
would like to track both the costs for the company of a resource and the
billing rate of the resource. In other words, what that resource costs the
company, and what that resource costs the client (which is particularly
important for fixed-price projects). for example if we pay John Q. $65.00
per
hour, and mark that up to the client for $90.00 an hour.

But it seem seems like all I can do is decide whether or not I want to use
cost rate per hour or billing rate per hour in the standard rate column,
and
then simply record the other rate with the resource and figure out
separately
with a calculator what the actual $$$ is based on hours worked. Is that a
correct assumption?

"Mike Glen" wrote:

Hi Jason,

Welcome to this Microsoft Project newsgroup :)

I don't think you can get more than the 5 on offer. If you remember that
these rates are not wages, but the cost of using that resource to the
project, and includes overheads, sickness, holiday, etc. Thus, I sugest
you
make some generalizations and combine the nearest two rates, and another
two
to keep within the five rates.

FAQs, companion products and other useful Project information can be seen
at
this web address: http://project.mvps.org/faqs.htm

Hope this helps - please let us know how you get on :)

Mike Glen
MS Project MVP
See http://tinyurl.com/2xbhc for Project Tutorials


Jason wrote:
Has anyone had the need to have available at one time (for a
resource) more
than five (5) ââ,¬Å"ratesââ,¬Â?

Within the ââ,¬Å"Resource Informationââ,¬Â box, in the
ââ,¬Å"Costsââ,¬Â tab,
you have access from (A to E). If I have a consultant who is working
seven (7) jobs, each job needs a different rate. Is there a way to
accomplish this?

Thanks, Jason





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Relevant Pages

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  • Re: Resources = Rates
    ... you don't have to use a separate calculator to do it on a task by task basis - you can record the billing rate in a spare field and use Project's own user-defined calculation ability to do this and it'll work in some cases. ... Project's cost calculations are aimed at estimating your own internal, direct, marginal cost in getting the specific work on the project done. ... And consider too that Project uses man-hours of work as a base for its calculations - if you have a situation such as the client being charged a certain fixed amount per day regardless of the amount of time the resource puts in that day or time with a certain minimum Project has no way of calculating that - Example, Your John Q whom you pay $65 but bill the client at $90 per hour, this time has a half-day minimum billing. ...
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