How to manage repetitive costs and indirect costs in Microsoft Project

The management of Indirect Costs and Repetitive Costs is always a big problem for the Project Manager.

Microsoft Project helps us and gives us elegant cost management definitive.

Let's see together the indirect costs, the repetitive costs, in this article.

Estimated reading time: 9 minutes

For correct cost management in Microsoft Project, it is necessary to associate both the indirect costs that repetitive costs to an activity, with a similar/equal criterion to the real criterion.
This activity must have the particularity of having a dynamic duration that varies from that of the project. That is, if the project lasts less this activity is shortened and vice versa lengthens to lengthen the duration of the project.

Hammock task

In Project Management, a purposeful activity like this comes definita Hammock task, or Level of Effort.

In Microsoft Project cost management, a Hammock task it is an activity that groups other activities, and therefore linked to a start date and an end date. The activities grouped by a Hammock task they might even be unrelated, in the hierarchical sense of one W.B.S., or in the logical sense to the dependence of an activity.

Una Hammock task groups:

• non-similar activities that lead to an overall capacity, eg "Preparation for a trip";
• unrelated elements for the purposes of a summary such as a calendar-based reporting period, e.g. "Semester plans";
• ongoing or general activities that perform the duration of an effort, eg "Project management".

The duration of theHammock task it can also be set by the sub-activities inside it, so that the abstract grouping has a start date of the first of any of the sub-activities and the end date is the last of the contents.

A Hammock task is considered a form of summary activity similar to an activity Level of Effort.

Level of Effort

To support Microsoft Project cost management, let's now see what an activity is and how to implement it Level of Effort.

A task Level of Effort it is a support activity that must be carried out to support other work activities or the entire project. It usually consists of short amounts of work that must be repeated periodically. For example the accounting of the project budget, the relationship with the customers or the maintenance of the machinery during production.

Because an activity Level of Effort it is not in itself a work object directly associated with the realization of the product, service or final result of the project, but a support to work, its duration is based on the duration of the working activity. Precisely for this reason, an activity Level of Effort it must not be on the critical path of project planning, since it never adds time to the project.

The estimate of a task Level Of Effort is one of the main tasks of a project manager.

We insert this activity as the first activity of the project plan, and we call it Level of Effort indirect costs, without entering start and end dates, nor duration.

We can assign resources of any kind to this activity with appropriate Assignment Units to spread the costs evenly throughout the project.

Let's see step by step how to do it:

1. Right-click in the cell Start of the first project activity and choose Copy Cell;
2. With the right mouse button in the cell Start Business Level Of Effort indirect costs and select Paste special;
3. On the screen displayed select Paste link and confirm;
4. At this point, right-click in the cell Finish of the last project activity (which should be the end of project milestone) and choose Copy Cell;
5. Next, click with the right mouse button in the cell Finish Business Level Of Effort indirect costs and select Paste special;
6. On the screen displayed select Paste link e confirm.

Once this is done, the duration of the activity Level Of Effort indirect costs will cover the entire project, in our case from 26 February 2018 to 27 April 2018.

How to definish a custom field

The display of the activity LOE indirect costs could be misleading, as it is always critical. The GANTT display may be problematic with the activity display LOE indirect costs, so let's see how to hide it.

To avoid displaying it, we can create a custom type field Mark (true / false), and a display filter to hide the activity LOE indirect costs.

To create the field Level Of Effort Task, right click on the "Add New Column" column, and choose "Custom Fields" from the context menu

And create the field Level Of Effort Task like Mark

At this point we can display a new column by associating the newly created custom field, and set the value of the cell relative to the activity Level Of Effort indirect costs a Si, as in the figure.

This value will be used by the filter we are going to create to identify the activity we want to hide.

How to create a custom filter

To create the filter, to hide the display of the activity Level Of Effort indirect costs from the menu Immagine, we identify the drop-down list No filter present in the center of the Ribbon in the group Data.
From the drop-down list of commands we choose Other filters and from this we click on the button New.

Enter the filter name Hide LOE, we activate the check-box Show in the menu to have the new filter always displayed in the drop-down list of available filters.

The criteria of the new filter are:

Field Name = Level Of Effort Task
Condition = "different from"
Value (s) = "Yes"

Activation of a filter in Microsoft Project

Click on View, activate with a mouse click the list of available filters and then click on Hide LOE,

The activity Level Of Effort it will be hidden.

To assign resources to this activity, proceed normally. Let's try to assign resources Administration e Sales Manager assigned with a max unit of 50%. In this way, half of the indirect cost of the Project Manager and his company car will be borne by the project.
To attribute the cost of the two resources to this activity during the execution of the project, it is sufficient to enhance the camp % completion with a value proportional to the time elapsed from the beginning of the project to the time the project is updated.

We can have the same result by creating asupport activities to project activities.

An activity Hammock o Level Of Effort it can also refer to a single phase of the project.

We will now see how to create an LOE activity with a different method than the previous one.

We create three activities:

• The first activity of Support is a summary activity that will have only two Milestone-type activities within it;
• We relate Home-Start the First activity with the activity of Analysis;
• We create the relationship End-End between Last activity and the activity of transportation.

The result will be as in the following figure.

At this point we can assign to the activity of Support all the resources and costs necessary to support the entire project.

If the project (or phase) undergoes a time extension, then the duration of the activity LOE increases and thus costs related to work-type resources or costs charged manually.

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Ercole Palmeri