Entering Fixed Costs

For most projects, financial costs are derived mainly from resource costs. Typically, you set up hourly, weekly, or monthly cost rates for resources. However, in addition to (or sometimes instead of) the resource costs associated with a task, a task might have a fixed cost. A fixed cost is a specific monetary amount budgeted for a task. It remains the same regardless of how much time or effort resources expend to complete the task. Here are some common examples of fixed costs in projects:

  • Travel expenses for a consultant, paid in addition to an hourly or a daily fee.

  • A setup fee, charged in addition to a per-day rental fee, for a piece of equipment.

  • A permit to film in a public location.

If you enter both resource costs and fixed costs for a task, Project adds the two to determine the task’s total cost. If you do not enter resource cost information into a project plan (perhaps because you do not know how much your resources will be paid), you can still gain some control over the project’s total cost by entering fixed costs per task.

You can specify when fixed costs should accrue:

  • Start. The entire fixed cost is scheduled for the start of the task. When you track progress, the entire fixed cost of the task is incurred as soon as the task starts.

  • End. The entire fixed cost is scheduled for the end of the task. When you track progress, the entire fixed cost of the task is incurred only after the task is completed.

  • Prorated. The fixed cost is distributed evenly over the duration of the task. When you track progress, the project incurs the cost of the task at the rate at which the task is completed. For example, if a task has a $100 fixed cost and is 75 percent complete, the project has incurred $75 against that task.

When you plan a project, the accrual method you choose for fixed costs determines how these costs are scheduled over time. This can be important in anticipating budget and cash-flow needs. By default, Project assigns the prorated accrual method for fixed costs, but you can change that to match your organization’s cost accounting practices.

For the film project, you know from past experience that the filming permits will cost $500, payable when you apply for the permits. In this exercise, you assign a fixed cost to a task and specify its accrual method.

  1. On the View menu, click More Views.

  2. In the More Views dialog box, click Task Sheet, and then click the Apply button.

    The Task Sheet view appears.

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

    The Cost table appears, replacing the Entry table.

  4. In the Fixed Cost field for task 8, Apply for filming permits, type 500, and press [Tab].

  5. In the Fixed Cost Accrual field, select Start, and press [Tab].

    click to expand

Now Project will schedule a $500 cost against the task Apply for filming permits at the task’s start date, and the project will incur this cost when the task starts. This cost is independent of the task’s duration and of the costs of resources assigned to it. In fact, the task’s total cost (visible in the Total Cost column) includes both the $500 fixed cost and the cost of the resources assigned to the task.

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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