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Microsoft Project 2010 : Defining Project Resources - Defining Resource Costs

11/20/2012 6:01:24 PM
There are three cost measures you can associate with a resource. The Standard Rate is used for work completed during normal working hours. The Overtime Rate is used for work completed during overtime hours. Cost Per Use is a special, one-time cost per assignment that is independent from the number of hours worked. Each of these cost measures has a default rate that you can define in the Resource Sheet view or in the Resource Information dialog box.

You can create four additional sets of the three rates in the Resource Information dialog box if you want to charge different rates for different kinds of work. You can also define time periods when the rates will change. 

Applying the Standard Rate to a Resource

You use the Standard Rate field to show the current default cost of each unit of the resource assigned to a task:

  • For work resources, the standard rate is the amount to charge per time unit of normal working time for the resource. Enter the rate as a number, followed by a forward slash (/) and one of the following units or its abbreviation: minute (m), hour (h), day (d), week (w), month (mo), or year (y). Project assumes an hourly rate if you type just a number without a time unit. For example, you can type 900/w for $900 per week, 46000/y for $46,000 per year, or just 18.7 for $18.70 per hour. Suppose you were to rent a moving truck for $100 per day. You could create a resource named Moving Truck and enter the standard rate 100/d.

  • For material resources, the standard rate is the amount to charge tasks per unit of the resource consumed. The unit is defined in the Material Label field. There is no time unit attached to the dollar amount. Enter the standard rate as an amount, with no time unit, and it is understood to be the amount per unit of the resource. For example, if you include gas as a material resource for the moving truck, its material label might be gallons (which is already defined in the Material Label field) and the standard rate might be 3.00, which means $3.00 per gallon.

  • Cost resources use a flat charge amount assigned to it and do not have either units or standard rate.

Tip

Although the standard rate is frequently the hourly or salaried rate for a resource, organizations often define the standard rate as the billed-at rate. When the standard rate is defined as the billed-at rate, a project plan serves as a budget estimate for the work to be performed under contract.

Often, a project plan demonstrates to the client early in the proposal stage that client requirements are understood and acknowledged and gives the client important confidence. Expectations are set for the project in the early stages of planning, as opposed to being unpleasantly discovered during project execution. Estimates of cost and work are based on defined work rather than ballpark estimates.


If the standard rate is entered with a time unit, the rate is converted to an hourly rate and is applied to the number of hours of work it takes to complete the task. For annual rates, the hourly rate is calculated by assuming there are 52 weeks in a year, and the number of hours per week is that which is defined on the Calendar tab of the Options dialog box. For the standard workweek of 40 hours, the annual rate is divided by 2,080 (52 weeks × 40 hours) to get an hourly rate. For monthly rates, the hourly rate is calculated using the Calendar tabs’ definitions for days in a month and hours in a day (Hourly Rate in a Month = Monthly Rate / (Days in Month × Hours in Day).

When you want to charge more or less than the default rate, you can define four more rates in addition to the default standard rate that can be used for assignments. 

Applying the Overtime Rate to a Resource

Project uses the entry in the Overtime Rate field when calculating the cost and actual cost of overtime hours that you schedule for a work resource. There is no overtime rate for material and cost resources. The default overtime rate is zero (0.00), so for salaried employees you can leave the zero value if these resources are not paid extra for their overtime hours. If the rate for overtime work is the same as the regular rate and you intend to collect actual overtime work, you must enter that amount again in the Overtime Rate field, or overtime hours will be charged at the zero default rate.

Note

Overtime work can be scheduled using the resource or task usage views by displaying the overtime work column. Overtime work can only be scheduled and actual overtime collected at the assignment level.


Resources that are paid by the hour often receive a higher wage when working overtime. Be sure to enter this amount in the Overtime Rate field.

As with the standard rate, you can define four additional overtime rates for each resource and use them for special tasks. 

Note

You can set the default values for the standard and overtime rates for all new resources in the Options dialog box. Choose Tools, Options, and then click the General tab. Enter an amount per time unit in both the Default Standard Rate and the Default Overtime Rate fields. All resources added from that point on initially show these default rates.


Applying the Cost Per Use to a Resource

The Cost Per Use field is titled “Cost/Use” in the Resource Sheet view and “Per Use Cost” in the Resource Information dialog box. This field contains any cost that is to be charged once for each 100% of a unit of a resource that is assigned to a task, regardless of the duration of the assignment. In other words, the amount entered in the Cost Per Use field will be charged every time the resource is assigned to a task.

Tip

Be sure to take advantage of the Cost Per Use field when you are laying out your project plans. One example of this would be a required trip charge for deploying a resource. Perhaps a plumber charges $50 to examine a plumbing problem, regardless of the number of hours spent and the materials necessary to fix the problem. The Cost Per Use field enables you to assign flat-rate costs to various tasks.


For example, if you rent a piece of equipment by the hour but also have to pay a flat charge of $400 for having it delivered to the work site, you could enter the delivery charge as a Cost Per Use cost. Keep in mind, however, that if you assign the equipment to more than one task, the $400 will be charged for each assignment. Therefore, you should always be careful when using the Cost Per Use field with work resources, because the amount entered in that field will be charged once for each 100% of the resource that is assigned to any task.

Understanding the Cost Rate Tables

The Costs tab of the Resource Information dialog box contains five Cost Rate tables—Tables A through E—which show the default cost rates (Table A) plus four other levels of cost that you can define for different types of assignments. For example, a Plumber resource’s Table A would contain its default rates, which might be for new commercial plumbing assignments. Table B might contain the rates for new residential plumbing assignments, Table C might show rates for modifying commercial plumbing, and Table D might contain the rates for modifying residential plumbing. You can select the rate to apply to an assignment in the Assignment Information dialog box.

Tip

You cannot change the labels on the five cost tabs to something more descriptive than A–E, so you should use the resource Notes field (in the Resource Information dialog box) to document what each rate is to be used for.


Figure 1 shows Cost Rate Table B for Movers. This table defines the default cost rates to use for the Movers’ assignments.

Figure 1. Use the Cost Tables to specify various cost rates for each resource.

The entry in the first cell in the Effective Date column is always two dashes, signifying that there is no set start date for that level of rates. To enter additional levels for subsequent dates, enter the change date in the Effective Date column and then enter the values for the Standard Rate, Overtime Rate, and Per Use Cost columns. Movers will receive a raise of 20% to both the standard and overtime rates on 2/14/2011 (see Figure 8.9). You can enter up to 25 dated rate changes in each of the five tabs.

You can also allow for changes over time in these rates. For example, if you assume that inflation will cause your costs to increase by 5% per year, you could show different rates for each of the years during which the project lasts.

If you want Project to calculate a percentage increase or decrease in one of the rates, enter the plus or minus percentage with a percent sign (%), and when you leave the cell, Project applies that increase to the value in the cell just above it, displaying the calculated result instead of the percentage you entered (see Figure 2).

Figure 2. Enter the 5% raise increase in a new row of the Cost Table B Standard Rate field and click the Tab button on your keyboard to have project automatically calculate the dollar value.

Selecting the Cost Accrual Type

The Cost Accrual field determines when costs are recognized for standard and overtime costs. You can choose one of three options: Start, End, or Prorated.

Tip

The various cost tables allow for the use of a resource that might be billed at different rates for various services and functions within the project. For example, suppose one of your resources is a bilingual writer who is billed at one rate for writing in English but charges a different rate for writing in Russian. By factoring in the resource’s competency in using each language, a different rate can be charged for utilizing the same resource with various skill sets within the same project.


The default accrual method is Prorated, which means that planned cost is distributed equally across the duration, and if you mark a task at 15% complete, the actual costs for all assigned resources would be estimated to be 15% of the scheduled or estimated cost of those assignments. This method is the most widely used because it keeps up with the pace of the project, allowing the cost to coincide with task progress.

If you choose Start as the accrual method, total planned costs are shown on the task start date; then, as soon as you indicate that work on a task has started, Project considers the entire standard and overtime costs of the assignment as the actual cost. In other words, after a task has begun, the entire cost is incurred and recognized as if the task were complete.

If you choose End, Project postpones recognition of the actual cost until you enter a finish date and the assignment is 100% complete.

Note

Only the standard and overtime rates are affected by the accrual method you choose. The Cost Per Use value is always accrued at the start of an assignment, no matter which accrual method you choose for the resource.


The Cost Accrual setting only matters when you are printing interim reports and when you are working on a task assignment that has started but is not finished.

 
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