Certification Insider: Microsoft Project Budgets and Costs

Budgets can make or break a project, and, as it turns out, could be the difference between pass or fail on the Project certification test. So it’s no surprise that controlling costs tests your prowess as a project manager and as a Microsoft Project maven. This column reviews several cost-related features in Project, because knowing the right feature for the job is a big part of answering test questions correctly.

In Project, it all starts with costs associated with resources, as you learned in my previous article, “Certification Insider: Resourcing Project Plans.” Project calculates task costs based on the rates and other expenses associated with the resources assigned. (Remember, you set the cost for a cost resource when you assign it to a task.) After the project begins, Project recalculates forecasts to incorporate actual costs for the work performed.

Viewing Costs

Whether you’re up to your elbows in planning or watching progress like a hawk, you can view cost information with a plethora of Project features. A snapshot of the bottom line is a good place to start when management has given you a price tag and you want to see whether the estimated cost is on target.

  • The project summary task rolls up the costs for all tasks into an overall total. The project summary task takes the pole position in the first row of the project task list. With a task-oriented view visible, on the Format tab, in the Show/Hide group, turn on the Project Summary Task checkbox. Apply the Cost table.
  • The Project Statistics dialog box shows bottom-line project information, such as when the project starts, when it’s forecast to finish, how much work it requires, and the cost estimate. On the right side of the File tab, click Project Information, and then click Project Statistics. The Cost cells show the current forecasted cost (Current), baseline cost, actual cost so far, and the remaining cost.
  • The Project Summary text-based report shows the same information available in the Project Statistics dialog box, but you can print the report more easily.

After you see the big picture, you probably want to check out task and assignment costs to find ways to reduce the project price tag.

  • Task cost: Apply the Cost table to a task view.
  • Resource cost: Display the Resource Sheet and then insert the Cost field in the table. The Cost value for a resource is the total cost for all of the assignments for the resource. This technique is a slick way to see how much you’re spending for cost resource, such as travel or training.
  • Assignment cost: Display the Task Usage view or Resource Usage view and apply the Cost table. The Cost field in an assignment row represents the cost for the individual assignment. The cost in the resource name row is the total cost for all assignments for the resource. In the Task Usage view, the cost in the resource name row is the cost for the assignment. The cost in the task name row is the total cost for the task.

Comparing Costs with Your Budget

Project’s budget resource feature lets you define a budget for different categories of expenses. You can compare your budgeted costs to your scheduled costs to see whether your project costs are toeing the line by category.

Budget resources make quick work of comparing the budget to planned costs for cost resources. For work resources, you enter budgeted work amounts, not costs, so you can’t accurately compare labor costs to a budgeted value.

Setting up a project to use the budget resource feature is a multi-step process:

1. Create budget resources and designate them as such. Create the resources in the Resource Sheet. In the Type field, choose Work, Material, or Cost. In the Resource Information dialog box, on the General tab, turn on the Budget checkbox.

Tip! Name budget resources so you can identify them as such. If you start budget resource names with a number, they appear at the top of a resource list that’s sorted alphabetically from A to Z.

2.  Assign the budget resources to the project summary task. A budget resource represents the overall amount for an expense category for an entire project. That’s why you assign them to the project summary task, not individual tasks. Use any method for assigning resources that you prefer. (Try as you might, you can’t assign a budget resource to anything except the project summary task.)

3.  Associate work, material, and cost resources with their budget type. You have to tell Project which work, material, and cost resources go with each budget category. You can use a text field or the Group or Code fields in the Resource Sheet. For every resource in the Resource Sheet (including budget resources), fill in the Group, Code, or text field with the name of the Budget category. That’s how you link resource costs and budget costs.

4. Enter budgeted cost and work amounts for budget resources. You can enter budget totals for the entire project in the Task Usage view. You add the values to the project summary task, which sits conveniently at the top of the list. Insert the Budget Cost field and Budget Work field to the table. If you want to enter budget values by time period, add the Budget Cost and Budget Work fields to the time-phased portion of the view (using the Detail Styles dialog box).

5.  Group resources in the Resource Usage view to compare budget cost and work with planned values. Set up a table to show budgeted (Budget Cost and Budget Work) and planned fields (Cost and Work). Group the view by your budget categories, as shown in the figure. With the Resource Usage view grouped by budget category, each group includes one budget resource and the work, material, and cost resources that apply to that budget category. In the group summary row, compare the Budget Cost or Budget Work values to the Cost or Work values.

Figure 1. To pass the Project 2007 exam, you’d better know how to categorize costs by budget category.

Biafore figure 1

Think You Know Budgets and Costs? Test Yourself!

You use several contractors for your project and the management team has given you a budget for external resources and travel. You want to compare your planned costs with the budget values you’ve been given. Which of the following steps help you achieve your goal?

A: Use a custom text field to associate each resource in your Resource Sheet with a budget category.
B: Create a custom cost field to store the budgeted costs for each task.
C: Create a cost resource for each budget category.
D: Create budget resources for work and cost.

No peeking! Scroll below the book ordering information to read the answer to this quiz.

Order the MCTS Self-Paced Training Kit (Exam 70-632): Managing Projects with Microsoft Office Project 2007.

To learn more about Microsoft certification, read, Microsoft Project Management Certification: How to Get Started.”


The Answer to Test Yourself!

A custom cost field doesn’t let you link resources to budget categories. A cost resource is a type of resource that represents project costs, not budgeted values. Instead, you create budget resources in Project and associate them with the other types of resources to compare budgeted and planned values. The correct answers are A and D.

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Written by Bonnie Biafore
Bonnie Biafore is the author of O'Reilly's Microsoft Project: The Missing Manual (2007, 2010, and 2013 editions) and Microsoft Press' Successful Project Management: Applying Best Practices and Real-World Techniques with Microsoft Project. She's recorded Project Essential Training (for 2010 and 2013), Project Management Fundamentals, Managing Small Projects, and other courses for lynda.com. As a consultant, she manages projects for clients and wins accolades for her ability to herd cats. She has also written a humorous novel about hitmen and stupid criminals. You can learn more at Bonnie's website or email her at bonnie.biafore@gmail.com.
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