Managing Project Costs in Microsoft Project
This blog will look at different methods of managing project costs in Microsoft Project. This blog will apply to Project 2010, 2013, and Project 2016. Microsoft Project can maintain a full budget for any project, including material costs, resource labour costs, and equipment costs.
Costs in Microsoft Project
Microsoft Project has several methods for adding costs depending in the cost type.
- Work Resources – Paid for by the hour
- Material Resources – paid for by quantity
- Cost Resources – Items with changing costs
- Fixed Costs – One-off costs
The first three of these are accessed from the ‘Resource Sheet’ view in Project.
We will look at each of these cost types in turn.
Resource Type Work: A ‘Work’ resource is paid for by the hour, and that may include machines as well as human resources. Labour rates can be added to each resource in Microsoft Project on the Resource Sheet.
Any work, then assigned to the resource will generate the associated costs:
Cost = Labour rate x Work hours
Use the ‘Cost Table’ to view the costs associated.
Resource Type Material: Material costs are paid for by the quantity, and the ‘Material’ field can then be used to describe the quantity (Box, Crate, Container etc.) The cost is therefore a set amount per that quantity.
Cost = Resource quantity x Unit Cost
Use material costs when the cost is fixed for that material, and it may be used on many tasks.
Assigning material resources to tasks will again automatically calculate the associated costs on the ‘Cost Table’.
A resource on the ‘Resource Sheet’ with a type ‘Cost’ can be used for items that have a variable cost each time they are used. You will note that you cannot assign a cost to the resource on the resource sheet, as it will be different every time.
In this example an Airline Ticket has been added.
When a task needs this resource, the cost can be added.
For those one-off costs that apply to a single task, consider using the ‘Fixed Cost’ column found on the ‘Cost Table’. Use this where the cost really is a one-off, and add some ‘Task Notes’ to describe the cost.
Cash-flow in Microsoft Project
Using a combination of these methods, all of the project costs can be modelled in Microsoft Project. Furthermore, the cash-flow can also be modelled using the “Accrue At” column on the resource sheet, to simulate invoices being paid at the start or end of assigned tasks.
Reporting Costs from Microsoft Project
Using the ‘Reports’ feature in Microsoft Project allows ‘Cost’ reports to be generated. There are several default ‘Cost’ reports, but all are customisable by clicking on the tables or graphs.
You will notice that this default report includes ‘Earned Value Analysis’ data.
Microsoft Project can manage the costs associated with any project. Setting up the resource sheet and considering how to enter the costs is an important part of planning the project.