How to Set Costs for Tasks in Microsoft Project 2016
During this Microsoft Project 2016 training tutorial video, we will discuss the process of setting cost for each of your tasks; how you accrue a particular cost whether at start, end or prorated; and which calendar is used by a resource.
Video Transcript
Hello again and welcome back to our course on Project 2016.
In this section we’re going to start to look at Costs. And I’m going to begin by looking at the bathroom refit project. We’re going to look at some basic aspects of costs in this project. Then I’m going to set you Exercise 05 to do, put in a little bit more detail about cost in relation to the bathroom refit. And then in the section after that we’re going to look at a couple of other more general aspects of cost and we’re going to also look at the cost for the wedding.
So first of all let’s look at the cost for the bathroom refit. And what I’m preparing here is version 05A of the bathroom refit project. And I’m going to go to the Resource Sheet and we’re going to look first of all at the cost related to the electrician. Now for work resources, generally, basically we would need at least a standard rate for a cost. And by default cost rate is entered in currency units per hour.
You can express it, for instance, in cost per day but we’ll stick with per hour. And I’m going to put the electrician cost as $25 per hour as a standard rate. That’s the STD column. And I’m going to put it as $40 per hour for the overtime rate.
Now as soon as I do that if I go back to the project itself, so let me just switch back to the Gantt Chart. There’s not really any noticeable different on that at all. But if I go to Project Information on the Project Tab and click on the Statistics button I’ll now see that I’ve got for the first time a cost for the bathroom refit.
And it comes out, currently, at $800. Now the reason it’s $800 is of course because the electrician is scheduled to do 32 hours of work on the project. So the first fix electric is two days work. That’s 16 hours at $25. That’s $400. And then the second fix electric is the same amount, another $400. So let’s close that and let me return to the Resource Sheet.
Now let’s take a look at a couple of other aspects of the cost of a work resource. We also specified here an overtime rate. And if for example I needed to get the electrician to work overtime, so to work outside the electrician’s normal hours of work then that is the rate I would need to pay the electrician at.
This difference between standard rate and overtime rate can of course be very significant because it may increase the cost of, for example, keeping a project on time that is starting to slip. And sometimes you have to balance the cost of a delay against the additional cost of keeping on schedule.
Cost per use relates to an additional cost for each time you might need to use a resource. This may apply to a work resource. So you may, for instance, have an agency hiring fee to pay or something like that. But it also could relate, for example, to a piece of equipment, the delivery cost of a pump or a special piece of machinery.
The next column is the accrue column or the accrue at column. And this basically relates to how you accrue a particular cost. Now this will often relate to when you pay for it. Do you pay for it up front? Do you pay for it as the work progresses? Do you pay for it at the end? And if I click on Accrual and click on the dropdown I’ve basically got those three options, Accrue at the start, Accrue prorated throughout the duration of the task, or Accrue at the end.
Now when it comes to company finance of course the accrual will be handled probably by an accountant or a team of accountants. But in a smaller project it can be as simple as saying when do I have to pay for this? Now very often on a small job like a bathroom refit you may have already agreed with the contractor that you’re going to pay at the start or perhaps by installments as you go or pay at the end. So on this occasion I’ve agreed to pay the electrician at the end so I’m going to put Accrue at end.
The next column determines which calendar is used by the particular resource. We haven’t looked at calendars at all yet. We’re going to be looking at them in a few sections from now. But basically by default we have a five day week, eight hour day working calendar. But a particular resource may have a different calendar. So for instance, this electrician may only be available Mondays, Tuesdays and Wednesday or may have different hours of work, perhaps starting earlier or finishing later than the rest of the people working on the project.
If the resource in this case the electrician does have a different calendar I can specify it here. And when Project is doing its scheduling it will use the resources calendar rather than the default one for the project. But as I say, more on that later.
So having put in the cost of the electrician and bearing in mind that I’m going to get you to setup the costs for the plumber and the contractor as part of Exercise 05, let’s look now at some of the materials on the bathroom refit. And we’re going to start with the flooring.
Now I’m going to fit floor tiles. The type of resource is material. And the material column specifies the unit that this material is measured in. Now it’s going to be measured in square meters, perhaps the initials. And the standard rate will be the cost of one of the material units.
So this is the cost of one square meter of floor tiles which we’re going to set at $36. Now in the case of the floor tiles we’re going to have to pay for those up front. So we’re going to put in here an accrual of Start. Now note cost per use in this case might, for example, be a delivery cost.
Now let’s go back to the Gantt Chart. Let’s find the task Select and order flooring and let’s assign the floor tiles to that task. Floor tiles are here. And the number of units that we need, we need 12 square meters of floor tile. So I put 12 in here, click on Assign. Note the cost there, $432. Close that and that’s another additional cost. Note that the cost itself doesn’t appear in the Gantt Chart on the right but the assignment of the floor tiles resource does.
Notice also that we’re going to have similar costs for the wall tiles here, Select and order wall tiles, Select and order paint, and Select and order equipment.
So we’ve entered some of the costs associated with this project. Exercise 05 is going to involve you in entering some more. And it’s Exercise 05 that I’m going to cover in the next section. Please join me for that.
Simon Calder
Chris “Simon” Calder was working as a Project Manager in IT for one of Los Angeles’ most prestigious cultural institutions, LACMA.He taught himself to use Microsoft Project from a giant textbook and hated every moment of it. Online learning was in its infancy then, but he spotted an opportunity and made an online MS Project course - the rest, as they say, is history!
