How and what costs to enter into Microsoft Project Cost Management

The Cost Management of the project is fundamental for the achievement of the objectives, in compliance with the times. Microsoft Project implements a very flexible and easily adaptable methodology for all sectors.

For a correct Cost Management in Microsoft Project, it is good to first identify the types of resources, the type of cost, availability and variability over time.

The various types of costs work in different ways, depending on whether the resource is a work resource (a person), a material resource (such as paper, wood or cement) or a cost resource.

Before talking about Cost Management in Microsoft Project, let's start by identifying the types of costs:

• Job resource, with the cost resulting from a job performance. In this case it is possible to enter the rates of a work resource, and the rates for use of a work resource. In the first case the cost of a human resource is declared by specifying the standard hourly and extraordinary hourly rate, for example the work activity of an employee or a consultant. In the second, the cost of the resource is declared for use, for example the work activity identified by a service, for example a courier delivery, or a flat rate activity;
• Material resource, allows you to specify the cost of the material used during the project. As an example we can identify the materials needed for production, and consumables;
• Cost resource, allows you to apply a cost to an activity by assigning a cost item to that activity. Unlike fixed costs, you can apply any number of cost resources to an activity. Cost resources offer greater control when various types of costs are applied to activities. As an example we can consider an air fare or renting a room or machinery;
• Fixed cost for an activity or project, attributable to an activity and not to a resource.

It is necessary to consider that for the labor resources, the VAT rate per unit of time is applied. While both the cost resources and the material resources, the VAT rate per specified unit of measurement is applied.

How to enter the rates for the work resource, in the case of employee or consultant provision, paid on time

We proceed with the following steps

1. click on Resource list in the tab Immagine.
2. In the field Resource name select a resource or type a new resource name.
3. In fields Stand rateard e Rate straordinario enter the standard and extraordinary rate of the resource.

A resource, however, could have different rates based on different factors:

• Type of work
• Workplace
• Volume discount resulting from work
• Changes made over time
• Used resources, for example trained or experienced

Microsoft Project can manage these variants through the resource information dialog. Let's see how to access resource information:

1. Double-click on resource to open the dialog box Resource information, then choose the tab Costs.
2. In rates tables, enter the validity date from which the new rates will be applied;
3. In the columns Standard rate e Extraordinary rate enter the resource rates;
4. To enter a modification of the tariff that will come into force on another date, in the additional rows of the rate tables, type or select the new date and the new standard and overtime rates;
5. To enter other sets of rates for the same resource, click on the tab B;

Tips:

• Project calculates cost totals when resources are allocated to activities;
• a change to the standard rate for a resource affects the cost of activities completed at 100% (where the resource is obviously committed);
• After entering multiple rates for a single resource using rate tables, you can change them using the table for a given assignment (Activity management, select the resource, right-click, and select Information. In the tab Cost select the rate table to be used in the list Tariff table.

How to enter rates for use of a work resource

1. click on Resource list in the tab Immagine.
2. Fill in the column Resource Name e Cost / Use for the resource that has a fixed rate for each assignment. Resources can have a cost per use as well as costs based on time rates (previous paragraph).

It is possible to enter more than one cost per use for each resource in order to obtain combinations with mixed rates:

1. Double-click on resource to open the dialog box Resource information and then click on the tab Costs.
2. In rates tables, enter the date when the rate will be changed in the column Validity date of the card (default settingdefinita).
3. Fill in the column Cost Per use.
4. To enter a cost per use that will take effect on another date, in the additional rows of the rate tables, type or select the new date and the new cost per use.
5. To enter other cost sets for the same resource, click on the tab B;

National → If you normally use the rate tables, add the column Tariff table in the display of the Activity management.

How to enter a fixed cost for an activity or for the entire project

Fixed costs are assigned to an activity and are useful for planning and acquiring the costs of the activities that may occur in addition to those deriving from the resources allocated. Fixed costs are applied to an activity and not to a resource.

1. In the tab Immagine click on Gantt chart.
2. Choosing Table from the menu Immagine, then select Cost.
3. In the field Activity name select the activity for which to enter a fixed cost.
4. In the field Fixed costs enter a cost value.

It is also possible to enter fixed costs for the entire project, if you are only interested in the general costs of the project.

1. Choosing options from the menu Instruments and then click on the tab Advanced.
2. In Options of visualization for the project select the check box Show project summary tasks, then choose OK.
3. In the field Activity name select project summary activities.
4. In the field Fixed costs type a cost for the project.

How to enter the prices of a resource cost

A cost resource allows you to apply a cost to an activity by assigning a cost item (such as an airfare or rent) to that activity. Unlike fixed costs, you can apply any number of cost resources to an activity. Cost resources offer greater control when various types of costs are applied to activities.

Before entering a cost for a cost resource, you need to create the cost resource:

1. Choosing Resource list from the menu Immagine.
2. In the field Resource name type a name for the cost resource and then click Information about the resource
3. In the dialog box Resource information click on Cost list Type of the card General.

After creating the cost resource, you can assign it to an activity, then enter the costs for assigning the resource through the Task Management view.

1. Choosing Activity management from the menu Immagine.
2. Select the task the cost resource is assigned to and then click Assignment information.
3. In the dialog box Assignment information click on the tab General, then enter a cost value in the box Cost.
4. Choosing OK.

When a cost is applied using a cost resource that is assigned to an activity, the amount of the cost resource may vary depending on how the cost resource is used.

Advice:

• Unlike fixed costs, cost resources are created as a type of resource and then assigned to an activity.
• Unlike labor resources, cost resources cannot specify a calendar applied to these properties. 
• If you have estimated multiple values ​​for a cost resource for a period of time and actual values ​​other than the estimates, Project 2007 replaces the estimates with actual values. This cost resource behavior is different from other types of resources because cost resources are not linked to actual work.
• The currency value of the cost resources does not depend on the amount of work done on the activity to which they were assigned.

How to enter the rates of a material resource

1. Choosing Resource list from the menu Immagine.
2. Choosing Table from the menu Immagine and then click placing.
3. In the field Resource name field select a material resource or type a new material resource name.
4. If it is a new material resource, do the following:
   1. Select Material in Type field.
   2. Enter the name of a unit of measurement in the field Material label
5. In the field Stand rate. enter a rate.

Also in this case it is possible to enter more than one tariff for each material resource, as already described in the previous paragraphs.

How to enter rates for use of a material resource

1. Choosing Resource list from the menu Immagine.
2. Choosing Table from the menu Immagine and then click placing.
3. In the field Resource name select a material resource or type a new material resource name.
4. If it is a new material resource, select Material in Type field.
5. If it is a new material resource, type the name of a unit of measurement in the field Material label
6. Type a cost value in the field Cost / Use.

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Ercole Palmeri

Temporary Innovation Manager