Author: Sander Nekeman

Sander Nekeman has focused on change management and embedding Microsoft Project and Project Server into daily operations since 2006. Through Enabler Consultancy Sander delivered project guidance at more than 40 organizations, including ASML, Feadship and PostNL. Now, along with business partner and life-long friend Edwin van den Broek, he delivers Project training through comprehensive e-courses at ms-project-elearning.com. Their approach for showing others how to successfully embed Project into an organization incorporates a maturity-level approach, a proven way of work, weekly quality checks on schedules and ample tips and tricks for saving planners time. Learn more at their website.

Get rid of your last separate Excel sheets: Use your MS project schedule for project financials

Project Management Institute (PMI)® Professional Development Units (PDUs): This Webinar is eligible for 1 PMI® PDU in the Strategic category of the Talent Triangle. Event Description: Many, many times we see that project timing and project resourcing are managed in MS Project, while project finances are kept in Excel. Using the financial governance capabilities in MS Project is often an unexploited area. This is a waste, because only adding rates to resources will already bring you half way. MS Project can calculate anything for you directly from your schedule. In this webinar we will show you how to get the financial part of your project in MS Project, by building on what you already have in your schedule. We will show you how to enter a project budget for main cost types, compare planned cost against actual cost, predict eventual cost at project complete based on actual progress, we will discuss the built-in financial reports, and examine earned value metrics to qualify the project’s performance. For any proficiency level, the only thing you need is the will to automate work and save time! Presenter Info: Sander Nekeman After successfully training (more than 500 days) and embedding the ‘new way of project work’ at more than 40 organizations he realized that the demand for the expertise was was many times higher than the amount of consultancy and training he could deliver with the team at Enabler Consultancy. Together with his business partner Edwin van den Broek he decided to write down all the knowledge on successfully embedding MS Project – MS Project E-Learning was born. He developed an online course including a maturity-level approach, a proven way of work, weekly quality checks on schedules, and all the tips & tricks that can save planners time. Sander is a Microsoft Certified Professional (MCP). Have you watched this webinar recording? Tell MPUG viewers what you think! [WPCR_INSERT]

How to Do Your Cost Management Right in Project

Often, we see that project timing and project resourcing are managed in Microsoft Project, while project finances are kept in Microsoft Excel. Using the financial governance capabilities in Project is often an unexploited area. If you think about it, this is a waste. Assuming you add rates to resources in Project, that gets you halfway; Project can calculate anything for you directly from your schedule. The trick here is to keep the right balance between the amount of input you do to get valuable output. Remember, Project isn’t meant to be accounting software; it’s a modeling tool that should deliberately simplify the reality. Accountants aren’t permitted to simplify reality. Neither will Project serve as an invoicing system. Learn more from Sander Nekeman on this topic in his MPUG webinar, “Get rid of your separate Excel sheets: Use your MS Project schedule for project financials” available on-demand. In this article, I’ll lay out an approach for using Project to enter a project budget for main cost types and compare planned cost against actual cost. The work will also predict eventual cost for the project based on actual progress. Plus, it will provide burn-down charts and earned value metrics to qualify the project’s performance — all the things required to be able to perform quality cost control. Cost Management Terms in Project You’ll have to understand the basics of several cost management terms to accomplish the work I cover in this article: Forecast: The projected cost for all past, current and future tasks. In other words, the predicted cost for the project. This is called “cost” in Project. Actual: The costs that have already been made or for which the obligation to pay is already made. This is called “actual cost” in Project. Remaining: All costs that are still to be incurred because they’re related to tasks that still need to be done. This is called “remaining cost” in Project. Budgeted costs: The amount of money you’re allowed to spend due to agreements made with your client, boss or stakeholders. There could be an agreed-upon tolerance level for deviating from this budget. (In this article, I use 10 percent as the tolerance.) This agreement would be well-documented, of course. This is called “budget cost” in Project. Baseline costs: At the point of accepting the project, you set a baseline, a copy of the schedule that adheres to the time, budget and scope constraints for the project. Baseline costs reflect the “forecasted” costs at that time the project is set up. This is called “baseline cost” in Project. The actual and forecasted costs can be compared to the budget as well as to the baseline costs. How To Set Up a Project Budget To set up a budget, you need to do three things: Create the budget resources in your file. Assign these budget resources to your project. Enter the amount of your budget per budget type. This isn’t a difficult process, but the need for doing things in the right order and using different views for these steps can make it a bit confusing. A budget resource is one of the four resource types and as such can be created in the resource sheet. Make sure you do this in the right order. Otherwise, it won’t work: Enter the new resource into the sheet and mark it as resource type “Cost.” I recommend using the naming convention: Budget <budget category> In other words: “Budget Internal Hours,” or “Budget Hardware” or “Budget Travel.” Use the budget category field to indicate the budget category. This will enable you to group on this field in order to see a nice summary of your costs against the budget by budget type. Double-click your new resource. In the resource information window, check the box before Budget. To assign any of these budgets to your project, you have to assign them in the Gantt chart to the project summary task, just like you assign any other resource to any regular task. If you don’t see the project summary task, go the layout tab and check the box on the right before Project Summary Task. To enter the amounts for the different budget types, go to the Resource Usage view, add the column “Budgeted Cost,” and type the amount on the line that has your Project’s name. You’ll see that the budget is being spread equally in time-phased increments over the length of your project. You could deviate from this equal spread, for instance, by applying the month’s timescale and adjusting the monthly amounts as you wish. Obviously, make sure that the total is still correct. At this point the budget has been correctly entered! How To Enter Costs for Resources Project “knows” multiple cost types and each of these cost types requires its own way of being entered into the schedule. This illustration shows how the different cost types are distinguished: Let’s go over each one. Work costs at a “standard rate”: William works 40 hours on a certain task and does this for a standard rate of $60 per hour. This standard rate could also have a standard overtime rate, which is applied for every hour worked over the standard number of work hours this person’s work week contains. Labor costs at a changing rate over time: Ruben has a rate of $60 per hour, but this rate will change to $70 per hour after his promotion on January 1. Material “variable” costs: These materials are used in the project and consumed per unit, such as sandbags or meters of cable. Material “fixed” costs: These materials have a cost per use unrelated to the number of units or number of hours of usage. An example is the transport costs for the rented concrete mixer. You pay it once regardless of how many days the mixer will be used. The daily rental for the crane, however, would be considered a material variable cost. Fixed resource costs: This is a resource you use only once. It isn’t actually a material used in the project. Often this category is called “out-of-pocket”‘ costs — travel tickets, training location costs or “pizza-Friday.” Fixed task costs: This would be the fixed-price consultancy task or a fixed-price outsourced part of the project. The price can’t change based on more hours and is always directly related to a certain task in the project. When To Take the Costs In the resource sheet you’ll also find the column “Accrue At.” With this you can determine when the costs will appear as actuals in your cost reports. For work resources, for instance, the obligation to pay the expenses accrues when hours are worked. In this case, you would select the default option, “Prorated.” Another situation is the purchase, for example, of three PCs used for a certain task. Once you start using these PCs, you incur the costs (possibly even sooner, at the moment of purchase). Regardless the duration of this task, if you incur the costs at the beginning, you should select the option “Start here.” The option “End” is used for a task that has a fixed price or “no cure no pay” assignment. The obligation to pay for this starts up once you have verified the work was done correctly (or the “cure” has completed). How To Compare Costs to Your Baseline With the (custom) view “Cost vs Baseline,” you can learn from your actual costs against baseline. The smileys will tell you how your cost is doing compared to the baseline cost. Green smiley: Value hasn’t changed. Amber smiley: Value has increased, but not more than 10%. Red smiley: Value has increased by more than 10%. Green minus symbol: Value has decreased, but not more than 10%. Amber minus symbol: Value has decreased by more than 10%. Hovering over the symbol will show you the result of the calculation: cost/baseline cost. Notice that this is also done for summary tasks. A value higher than one means that the current cost of activities is more than previously estimated for the project: We have lost money! A value between zero and one means that the current cost of activities is less than previously estimated for the project: We have earned some buffer! Although a value between zero and one is, of course, good news for the project, we also consider this to be an estimate that wasn’t so good. After all, those funds could have been freed up for other tasks or projects earlier. The Cost Overview Report The cost overview report shows four areas with cost information about your project. The upper left corner of the report shows the forecasted cost (“Cost”); this is the actual cost plus the remaining cost for the entire project. It also shows the remaining cost separately as well as the percentage completed of the project. Note that this percentage refers to the duration that has passed. It doesn’t say anything about the work that has been done, actual cost being incurred or the actual physical product being finished. The “Progress Versus Cost” chart displays whether your project is over budget or not. If the blue line (for cumulative percent complete) is below the orange line (cumulative cost), your project may be over budget. The “Cost Status” table shows actual cost, remaining cost, baseline cost, cost and cost variance for every top-level task (outline level 1). These are your main deliverables in this case. Here we can see, for example, that the final assembly cost $200 over baseline and the preparation cost $998 less than we have baselined. The “Cost Status” chart is a compilation that shows the actual cost (orange) and remaining cost (blue) in stacked columns for each top-level task, as well as a line for baseline cost. In the example, preparation costs came in below baseline cost (actual cost + remaining cost vs. baseline cost), and that the preparation is almost finished. Resource Cost Overview and Cost Overview of Tasks The reports “Resource Cost Overview” and “Task Cost Overview” provide useful graphs and a clear overview of the costs of the work in progress. To open the reports click the Report tab, select “Costs” from the dropdown menu and chose Resource Cost Overview and Task Cost Overview. The Resource Cost Overview shows three areas with information about the cost of resources in your project. The “Cost Status” chart displays the actual cost (blue) and remaining cost (orange) per resource in stacked columns, as well as a line for baseline cost. You can see in the example that the resource Edwin is expected to cost the most, but that he costs less than the baseline cost. The reason for this could be a lower rate, fewer hours or a combination. The “Cost Distribution” pie chart shows how costs are spread among different resource types (work, material and cost). The “Cost Details” table shows the actual work, actual cost and standard rate (actual cost = actual work x standard rate) for each resource in your project team. The Task Cost Overview also shows three areas, but this time with information about the cost of tasks in your project. The “Cost Status” chart is a combination chart that shows the actual Cost (blue) and remaining cost (orange) in stacked columns for each top-level task as well as a line for baseline cost. This has the same elements as the chart shown in the cost overview. The “Cost Distribution” chart displays how costs are spread among tasks based on the Status field. “Complete” means the task is done. “Future Task” refers to tasks with start dates greater than status date. “On Schedule” shows tasks where the time-phased cumulative percent complete spread to at least the day before the status date. And “Late” are the tasks where the time-phased cumulative percent complete doesn’t reach midnight on the day before the status date In the example you can see that the biggest chunk of costs is for future tasks. The “Cost Details” table shows fixed cost, actual cost, remaining cost, cost, baseline cost and cost variance for each top-level task of your project. Cost = actual cost + remaining cost. Cost variance = cost – baseline cost. Also in this table you can clearly see that the final assembly costs $200, more than baselined, and preparation came in $998 under baseline. Earned Value Management If you set a baseline and keep track of your tasks, you can use the earned value management report in Project. Earned value analysis is a method to determine the progress of your project and predict what the final costs and the possible finish date will be. Earned value is calculated on these details in your schedule: Hours worked; Budget spent at a certain point (the status date); and Value delivered by the project so far (earned value). For example, say I have 10 paintings to produce in 10 days. I sell them at $100 each. At the end of day five, I’ve only finished only three paintings. Day 5 is the status date. The value the project has delivered is $300. Assuming that each painting takes an equal amount of time to produce, after 10 days the earned value will be $600. At this pace, finishing all 10 paintings will take around 16-17 days. Let’s use that example to set up the schedule for earned value management. I have to make 10 paintings (scope) in 10 days (duration). We sell them at $100 each (cost information). At the end of day five (status date) I have finished three paintings (progress information). Earned Value Management Reporting You’ll find the Earned Value Report in the reports tab under costs. It covers three new fields: EAC: Estimate at completion. If you extrapolate the current progress against the baseline to the end of the project, this will be the total costs of the project (in my example, 16-17 days for 10 paintings at my hourly rate). ACWP: Actual cost of work performed. This type of field shows costs incurred for work already done on a task, up to the project status date or today’s date. When a task is first created, the ACWP field contains 0.00. As progress (percentage of completion or actual work) is reported on the task, Project calculates the actual cost of work performed (ACWP). This is the cost of actual work plus any fixed costs for the task to date. BCWP: Budgeted cost of work performed. ) This type of field contains the cumulative value of the percent complete for the task, resource, or assignments multiplied by the time-phased baseline costs. BCWP is calculated up to the status date or today’s date. This information is also known as earned value. A variation on this is BCWS — budgeted cost of work scheduled. CPI: Cost performance index. This type of field shows the ratio of budgeted (or baseline) costs of work performed to actual costs of work performed up to the project status date. The time-phased version of this field shows values distributed over time. SPI: Schedule performance index. This type of field shows the ratio of the budgeted cost of work performed to the budgeted cost of work scheduled (BCWP/BCWS). SPI is often used to estimate the project completion date. The time-phased version of this field shows values distributed over time. Earned Value over Time The graph “Earned Value over Time” shows the earned value of the project based on the status date. If the actual costs (blue) are higher than the earned value (orange), the project budget has been exceeded. For example, I have painted three paintings for a higher hourly rate. If the scheduled value (gray) is higher than the earned value (orange), the project is behind schedule. For example, I have finished fewer paintings than I expected to have on this (status) date. Variance over Time The graph “Variance over Time” shows costs and efficiency variances for the project based on the status date. If cost variance (blue) is negative, the project exceeds budget. For example, I have painted three paintings for a higher hourly rate. If the schedule variance (orange) is positive, the project is behind schedule. For example, I have finished fewer paintings than I expected to have on this date. Indices over Time The graph “Indices over Time” shows the performance index for cost and schedule based on the status date. The greater the performance index, the better the project is on schedule (SPI) and the more costs are saved (CPI). The concepts I’ve covered may come across as complex, but once you begin working with them, you’ll sort it out in no time because they’re fairly straightforward and just require a bit of practice. I advise you to tune into my MPUG webinar, which takes place on November 2, 2016 at noon Eastern time. If you miss the live broadcast (which gives you an opportunity to ask questions), you can watch the recording on demand. In the meantime, consider how you can get more out of your Microsoft Project investment by using the schedule data you’re already tracking to keep an eye on financial and budgeting data related to your project as well. All you need is the will to automate work and save time. A version of this article originally appeared on LinkedIn here. Image Source: Chris Potter

Finally: The Resource Leveling Feature Explained!

Project Management Institute (PMI)® Professional Development Units (PDUs): This Webinar is eligible for 1 PMI® PDU in the Technical category of the Talent Triangle. Event Description: Friend or foe? A bug? The magic button? A huge pain? Or simply – the best feature you can not live without! Whatever your feelings are regarding resource leveling, there are some things that need to be cleared out. We have successfully trained hundreds of people and they have all changed their feelings towards this feature. Actually, there are only a handful but essential things you need to know and which will all be covered. Chances a great that after this webinar you want to try it out! Make sure you don’t miss this chance. Presentation Materials: MPUG Webinar Presentation_SanderNekeman_resourceleveling Presenter Info: Sander Nekeman Since 2006, Sander focused on change management and embedding MS Project (Server) in daily operations. In the field of EPM implementation professionals he is now positioned as a business consultant that knows the EPM product through and through. After successfully training (more than 500 days) and embedding the ‘new way of project work’ (supported by PPM) at (more than 40) organizations like ASML, Feadship, PostNL he realized that demand for the expertise was many times higher than the amount of hours consultancy and training he could deliver with the team at Enabler Consultancy. It was 2014 that he decided together with business partner and life-long friend Edwin van den Broek to write down all the knowledge on successfully embedding MS Project. Including a maturity-level approach, a proven way of work, weekly quality checks on schedules, and all the tips & tricks that can save planners time, a comprehensive e-course was constructed that leans on the 10-20-70 principle. This approach to learning MS Project proved to be a direct hit, as within a couple of weeks already people from 21 nationalities started an e-course at this new company: www.ms-project-elearning.com Lots of content are also given for free. With this Sander wants to show everyone that while MS Project is generally considered to be a though program to learn, it can be explained in a very simple, accessible way. Even resource-leveling… Have you watched this webinar recording? Tell MPUG viewers what you think! [WPCR_INSERT]

Finally, Resource Leveling Explained

You have a project with several tasks and resources assigned to those tasks. Some resources are assigned to multiple tasks, resulting in over-allocated resources. Resource leveling is the act of taking a resource-loaded schedule and making it so that those people don’t have to work overtime. The main goal is to have a critical path that is corrected for resource dependencies. Furthermore, all other tasks and deliverables should have reliable finish dates.   Author Sander Nekeman recently delivered an in-depth look at the resource leveling feature during a live webinar with MPUG. Watch the PMI® PDU eligible session on-demand to gain a better understanding of the topic. Manual resource leveling means that you reassign or take action to resolve potential problems. Microsoft Project also has a feature that evaluates your work and resource allocations and adjusts your schedule so that your resources have no over-allocations. Some people call this a bug; others are just afraid of it; and still others can’t live without it. No matter where you stand on the use of resource leveling, I’ve written this article to lay out the basics. After all, what you don’t know could end up allowing Project to “mess up” your schedule. One reason some project managers prefer not to use resource leveling in Project is because they don’t fully trust the tool. Project could come back with unexpected or strange results. When that happens, it means somebody hasn’t checked the completeness and correctness of the schedule’s network logic (dependencies or links). If, for instance, you didn’t use a dependency to indicate that the task of “reviewing document” has to take place after the task, “writing document,” resource leveling might reorder them nonsensically since Project has to rely  on the leveling algorithm. The elegance of automatic resource leveling is that it will solve the over-allocations based on the settings, just like Excel would do the calculation for you based on the formulas you enter. Since automatic resource leveling respects all settings within your schedule, your schedule should adhere to some basic guidelines to take advantage of the logic in the program’s leveling algorithm. Let’s examine that logic more closely. Resource Leveling Scope A misconception we often hear is that resource leveling is only one button with enormous consequences. If you don’t want to level your whole project at once (Level all), you can also level on a per-allocation basis. This keeps you very much in control and on top of the changes. We advise always starting with the most critical resource (on the critical path) and working your way through as resources become less important for the timing of your project. Project offers the following ways of dealing with resource leveling (starting with the smallest incremental changes to your schedule): Reschedule to available date: only one task will move; Level selection: only the tasks you select will be leveled; Level resource: only one resource you select will be leveled; and Level all: level all resources at once Resource Leveling Order When solving over-allocation, Project chooses which task to put first and uses a certain logic (algorithm) to achieve this. For each task in the schedule, a score value is calculated based on all factors that have an impact on the leveling process: Tasks are scheduled in the order of the calculated value. Tasks with a lower score are pushed out further in time; Resource leveling only splits and delays (!) tasks; and Tasks will never be scheduled to start earlier than initially planned, even where it’s possible. Leveling twice without clearing leveling will result in introducing more delay. The leveling “score” for each task is calculated based on: Task ID: This is the order in the schedule from top to bottom. Tasks with a lower ID get a better score (very little impact on the score though); Duration: Tasks with a longer duration get a higher score; Constraints and dependencies: They have a negative impact on the score, because Project will honor constraints and dependencies (if set in options > schedule > task will always honor their constraint dates); and Priorities: Have a big impact on the score. A higher priority has a higher score. (Priorities are only a “hint” for Project, and are NOT always honored). Priorities can be set in Task information > General > Priority. Of course, this field can also be added as a column to the task views. Resource Leveling Options Next to the regular scheduling options (constraints, dependencies) and the leveling algorithm, it’s important to understand the impact of each resource leveling option that can be found by clicking Resource tab > Leveling Options: Automatic vs Manual: Choosing “automatic” calculates and levels your schedule automatically each time something changes. When choosing “manual,” you need to click the level resources button. Day by Day, Week by Week, etc. Determines when the red puppet will appear. Day by day basis means that puppets will be red at more than 8 hours in a day; week by week more than 40 hours in a week, and so on. Clear leveling values before leveling: Having this option on makes sure each leveling action uses a new start, instead of continuing on top of the already leveled tasks. Leveling order. Choosing “ID,” it will only use the location in the schedule to determine which task goes first. Choosing “standard” will use the algorithm logic as explained previously and weighs in the priority field for the leveling score. Choosing “priority, standard” means that the priority will always precede the factors of the standard algorithm. Level only within available slack. Having this option on won’t increase the duration of your schedule. It will only solve the over-allocation up to the point that there is available slack. Leveling can adjust individual assignments on a task. Having this option on enables resources to start on a task when they’re available. This means that tasks scheduled to start at the same time could start at a different moments depending on the resource availability. Additionally, if you have more than one resource assigned to a task, this allows one person to start and another person to join when available. Leveling can create splits in remaining work. Tasks are allowed to depart the work for another task or meeting and resume at a later moment. Without this option ticked, a 10-day task would be planned when there is a 10-day gap in the availability of the resource. With this option ticked, it will split the work over shorter periods of availability. This means that this option ticked will create much shorter lead times for the schedule. Level resources with the proposed booking type. Project has the ability to indicate whether an assignment is only proposed or definitively booked. Default is always definitively booked. This option will have no consequences for you if you don’t change the booking type of the resource. Level manually scheduled tasks. Manually scheduled tasks aren’t moved by Project. With this option you can have Project level these tasks as well. The following image shows our preferred settings, which also mirrors the settings shown when somebody has completed all the “It’s-your-turn” assignments. The settings can also be applied on a task level by inserting the column with these names in your view. The Resource Allocation View The Resource Allocation view (view tab > more views > resource allocation view) is perhaps the best view to use when you have Project do the leveling for you. This combination view combines the resource usage view and the Leveling Gantt view. To understand and appreciate its value, look at the images below. The first shows an over-allocation; the second shows the delay of each task as a consequence of the leveling action. Before leveling:   After leveling:   The olive-green bar represents the pre-leveled task and the olive-green line is the leveling delay. The field leveling delay keeps track of the number of days the task was delayed as a consequence of the leveling action. These are called “edays,” short for elapsed days. Finally, Try Resource Leveling Yourself! Get confidence in the feature by recreating the following situation in MS Project. Create each task one by one and click “level all” to learn what got pushed out and what Project found more important. What you’ll see is that mostly the task with the most amount of (Total) Slack is pushed out. Quite logical isn’t it?