Examining Resource Costs


Project managers sometimes focus on resource costs as a means of measuring progress and variance within a project. However, resource cost information also serves other people and other needs. For many organizations, resource costs are the primary or even the only costs of doing projects, so keeping an eye on resource costs might directly relate to the financial health of an organization. It might not be a project manager, but an executive, cost accountant, or resource manager who is most interested in resource costs on projects as they relate to organizational costs.

Another common reason to track resource costs is for billing either within an organization (for example, billing another department for services your department has provided) or externally. In either case, the resource cost information stored in project plans can serve as the basis for billing out your department’s or organization’s services to others.

Because cost values in the short film project are almost entirely derived from the costs of resource assignments, you’ll look at resource cost variance next.

  1. On the View menu, click Resource Sheet.

    The Resource Sheet view appears.

  2. On the View menu, point to Table: Entry and click Cost.

    The Cost table appears. Your screen should look similar to the following illustration:

    click to expand

    In the Cost table you can see each resource’s cost, baseline cost, and related cost values. In most cases, the resource cost values are derived from each resource’s cost rate multiplied by the work on their assignments to tasks in the project plan.

    Currently, the resource sheet is sorted by resource ID. Next you will sort it by resource cost.

  3. On the Project menu, point to Sort and click Sort By.

    The Sort dialog box appears.

  4. In the Sort By box, click Cost in the drop-down list, and click Descending.

  5. Make sure the Permanently renumber resources check box is cleared, and then click the Sort button.

    Project sorts the resources by cost, from highest to lowest. Your screen should look similar to the following illustration:

    click to expand

    This sort quickly tells you who the most and least expensive resources are (as indicated in the Cost column), but it doesn’t help you see variance patterns. You will do that next.

  6. On the Project menu, point to Sort and click Sort By.

    The Sort dialog box appears.

  7. In the Sort By box, click Cost Variance, and make sure Descending is still selected.

  8. Make sure the Permanently renumber resources check box is cleared, and then click the Sort button.

    Project re-sorts the resources by cost variance, from highest to lowest. Your screen should look similar to the following illustration:

    click to expand

    With the resource list sorted by cost variance, you can quickly zero in on those resources with the greatest variance, and, if you want, begin to investigate why.

  9. On the Project menu, point to Sort, and then click By ID.

    Project re-sorts the resources by ID.

Here are a few more tips and suggestions for working with resource costs:

  • You can use the Overbudget Resources report to list resources who are over budget. On the View menu, click Reports. In the Reports dialog box, double- click Costs, and then double-click Overbudget Resources.

  • You can also see timephased cost values in a usage view. For example, in the Resource Usage view, on the Format menu, click Detail Styles. In the Usage Details tab, show the Baseline Cost and Cost fields. This also works in the Task Usage view.

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Project Management Focus: What About All Those Other Costs?

In many projects, cost budgets don’t fully reflect all the costs of completing the project. For example, in the short film project, we’re not accounting for such overhead costs as renting or acquiring studio space, electricity, or replacement parts for equipment. Depending on your organization’s needs and practices, you might need to track such overhead costs in your project plan. If you do need to track overhead costs, you might be able to use a burdened labor rateresource rates that factor in such overhead costs. Using burdened labor rates has the additional benefit of hiding each resource’s exact pay rate—often considered highly confidential information—in the project plan. Here’s one caveat, though: if you plan to use cost information from your project plan for accounting purposes, especially for capitalizing specific task types, check with an accounting expert about how salary, benefit, and overhead cost rates should be handled.

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Microsoft Office Project 2003 Step by Step
MicrosoftВ® Office Project 2003 Step by Step (Step by Step (Microsoft))
ISBN: 0735619557
EAN: 2147483647
Year: 2003
Pages: 199

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