In this chapter, you learn about costs, budgets, and overtime in Project 2010.
Project costs are calculated using the planned and actual work values for resource assignments in your project. You can also set up budgets within your project using Project 2010 and then compare your budgeted costs with the planned and actual costs. This helps you to track how closely you’re sticking to your budget, so that you can determine the next steps, if necessary. You can also plan for and track overtime costs in your project using Project 2010.
Project 2010 supports three different types of costs:
• Rate-based costs— These costs are incurred by a resource’s pay rate (for example, an employee’s hourly wages, or a daily rate for a machine rental).
• Per-use costs— These are one-time costs that may be incurred each time the resource is used within your project, or within a task in your project. For example, each time you rent a piece of equipment, there is an upfront per-use cost for the rental. It may be possible for a resource to have an associated per-use cost and rate-based cost.
• Fixed costs— These costs are associated with tasks, not resources, and they are incurred only once per task. For example, if a task in your project requires you to set up a temporary office in another location, the rent on that office space would be a fixed cost for that task.
These types of costs can be captured using work, material, and cost resources, as discussed in Chapter 5, “Working with Resources.” Each resource can have an associated cost, and that cost is incurred when the resource is used within your project.
Note that these cost types are different from cost resources. Cost resources capture fees associated with getting tasks done, such as airfare or lodging. Rate-based, per-use, and fixed costs are associated with work and material resources, and are incurred based on when a resource is assigned to work, and how much work that resource completes.
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In addition to these cost types, Project also enables you to do some basic budgeting. You can provide some high-level budget figures and compare the actual costs incurred by tasks in your project with the budgeted costs you outlined during the planning process. The following section walks you through the budgeting process.
Creating a project budget is a three-step process. First, you create budget resources and assign them to the project summary task, then you identify the budget values for the project (costs or number of hours), and finally, you match up each of your project’s resources with a budget type, so you can compare budgeted values with actual values as your project progresses.
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The first step to creating a budget for your project is to create resources that represent each budget category in your organization. For example, your organization may have one budget for training costs and another budget for travel costs. To track these budgets in Project 2010, create two separate resources that represent each of these budgets in your project.
To create a budget resource, follow these steps:
Figure 6.1. The Budget check box appears below the Material Label field.
After you create the resources, the next step is to assign them to the project summary task.
To assign a budget resource to the project summary task, follow these steps:
Figure 6.2. The Show project summary task check box is highlighted.
Figure 6.3. Assigning the budget resources to the project summary task.
Right now, you have placeholders in your project for each budget in your organization, but we haven’t identified values for those budgets. For example, if you added a resource called “Budget-Training,” you’ve basically said that yes, there is a training budget, but you haven’t said how much money there is in that budget. This is the next step in budgeting your project using Project 2010.
Follow these steps to provide values for your budget resources:
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Now that you have your budgets defined for your organization, you can choose to go through each work, material, and cost resource in your project and give each a budget assignment. This step is not necessary for using budget resources, but it enables you to easily compare budgeted values against actual values as your project progresses. This comparison lets you see whether you’re overspending, on track, or under-spending.
To match resources with budgets, follow these steps:
Figure 6.5. Select the Roll down unless manually entered option.
After work on your project has started, and resources have begun recording the actual work, costs, and other values for tasks in your project, you’ll likely want to check in on how those actual values are comparing with the budgeted values you identified when you were planning the project. If you’ve done the work to set up the budget correctly in Project 2010, comparing actual values with budgeted values is relatively easy.
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To compare actual values with budgeted values, follow these steps:
Figure 6.6. Creating the Budget Assignment grouping for the Resource Usage view.
Overtime work isn’t defined the same way in every organization. In some organizations, overtime is considered any work totaling more than 40 hours in one week. In other organizations, overtime is considered any work beyond eight hours in one day. Overtime sometimes is calculated on a monthly basis, and other times, extra hours don’t count as overtime costs because the resources are salaried. Even within one organization, there may not be a single hard-and-fast rule about overtime. Some resources may be salaried; other resources may record overtime on a daily basis; and others may account for overtime weekly.
Because of this, Project makes no assumptions about overtime. If a resource reports that he or she has worked 10 hours in one day, Project records those 10 hours as regular work. It’s up to the project manager to determine whether two of those 10 hours are actually overtime work. After the project manager has manually changed the reported work to eight hours of regular work and two hours of overtime work, the overtime rate for the resource will apply for those two hours, and costs will be accounted for correctly.
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If you know that some of the work on your project will be done as overtime work, you can plan for that overtime work before it actually happens. This enables you to more accurately estimate project costs by including overtime rates for resources during the planning process.
Follow these steps to plan for overtime work in Project 2010:
Figure 6.7. Adding planned overtime to a resource assignment.
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As resources on your project begin work on tasks, their actual work hours will begin rolling in. As the project manager, you’ll need to be recording how much of each resource’s time is actually overtime.
To add actual overtime work to your project, follow these steps:
Figure 6.8. Click Zoom Selected Tasks in the Zoom group on the View tab.
Figure 6.9. This resource normally works eight hour days, so this 10-hour day includes overtime work.
After the actual overtime work has been correctly recorded in your project, the resource’s overtime rate will be used to calculate the overtime costs.
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