As long as you have work items created and your developers keep them up to date, you can use MS Project to calculate project budget usage in real-time; this helps the project manager to determine the progress in term of $ which is what client really care about. Note: To have this working properly, you need VSTS 2010 because it has better MS Project integration.
Ms. Project Budget Cost & Tracking
Calculate the total cost for your release
Follow the steps below to save a baseline and track your project budget usage:
- Open MS Project and connect to your Team ProjectFigure: Click “Choose Team Project” and choose the project you want to track
- Query the work items from the team projectFigure: To select the work items that you want to use you should click on “Get Work Items” and choose a query
- Note: normally you want to create queries for each of your Releases, then you can quickly import them together.
- To Track progress, we will use the “Team System Task Sheet” view; this can be selected from the “View” menu.
- Your work items will be imported and arranged within a hierarchy. As we are trying to track the progress, we want to keep “Original Estimate”, “Remaining Work” and “Completed Work” together, so drag them after the Work Item Title.Figure: Arrange your work items so we can easily track their progress
- In order to have the cost calculated, we need to assign a rate to each of the resources. This can be done by going to “View | Resource Sheet”Figure: Assign resource rates
- When you switch back to “Team System Task Sheet”, you will want to add the following fields so we can see the cost status: a. Baseline Cost b. Remaining Cost c. Actual Cost
You will notice the “Remaining Cost” column has been calculated based on the “Remaining Work” column and the Rate we entered for each task.
- In order for MS Project to calculate and display a total cost for your current release you will need to add a summary task at the top level of the project tasks. Choose the 1st task in your project, right click and create a “New Task”Figure: Create a summary task at the top
Name the task as per your release name so you know what this plan is for; also you don’t want this task to be created in your TFS as a work item because it’s just a summary, set “Publish and Refresh” as “No”.
In order to make this a summary item you need to select all the other tasks and indent them. To achieve this click the little red forward arrow in the toolbar.
Now, your summary task is ready and it’s showing the total cost for your current release:
Baseline management
Baseline management is very important for every project manager as it helps you to determine the budget usage; once the client approves your initial estimate for the project it will become your baseline. So before you set a baseline in your MS Project, make sure the client approves it.
To set a baseline, choose “Tools, Tracking, Set Baseline” from the menu:
A handy feature of MS Project is its ability to handle multiple baselines. Use a new baseline to seek approval from clients when they alter the project scope.
Once your baseline is set, you will be able to see the “Baseline Cost” column is showing $
Track your project on the go
When your project is running, your developers will update the “Remaining Work” and “Completed Work” columns from TFS, they may not use MS Project so you will need to refresh your MS Project file to get these changes, and the $ will be calculated on the fly to give you up-to-date status.
To refresh your project file, simply click on the “Refresh” button in the toolbar.
Note: If you find that the values are not calculating properly, it may be that the calculation mode is set incorrectly. If pressing F9 updates the values you should change the setting “Tools | Options | Calculation” from “Manual” to “Automatic”.
What is the cost tracking process?
To best track costs, you should first create a budget by creating and entering cost values for budget resources that are assigned to the project summary task. You can then identify other resources and task costs that you want to track and measure against the budget resources. You can enter pay rates, per-use and fixed costs for tasks, resources, and, if necessary, assignments. Then, specify the estimated work or duration for tasks and assign resources to the tasks.
Only when all of these steps are complete can Project calculate the total estimated costs for the project. You might then want to refine your estimates. When you’re done, you can categorize and group all resources to compare them to the budgeted costs. You can also set a baseline with the budgeted costs, and use it to compare with actual costs as your project progresses.
After the project starts, you update task progress — the amount of work done on tasks or the percentage of the tasks that are complete. Project calculates costs for you based on task progress.
By combining the actual costs of completed work with the estimated costs for remaining work, Project calculates scheduled (projected) costs. More importantly, it calculates the difference between the scheduled and baseline costs. This difference, or cost variance, tells you whether your project is on budget.
You can do simple cost tracking by viewing the actual and scheduled (projected) costs for tasks, resources, assignments, and the project.
If you’ve created a budget through a baseline, you can do more extensive tracking by comparing the actual and scheduled costs against the baseline costs.
To determine whether you’re on budget or not, you can view the cost variances between scheduled costs and baseline costs. For example, if a task is budgeted to cost $50, but the task is half-way done and already costs $35, the scheduled cost is $60 (the $35 actual costs to date, plus the $25 expected costs for the remaining work on the task). The cost variance is $10 ($60 of actual cost minus the $50 of budget cost).
By monitoring cost variances regularly, you can take steps to make sure that your project stays close to its budget.
Can you give me an example of cost tracking?
You can enter the task called “Test the program” into your project plan and assign a contract tester to the task at $40 per hour (assume that the tester’s pay is the only contribution to the task cost). You enter a duration of 10 days (at 8 hours per day), and then save a baseline.
At the end of 5 days, you determine that the task is half finished, and you mark the task in Project as 50% complete. On the Task Sheet view, you apply the Cost table and see the following:
- In the Baseline field, Project displays the baseline cost of the task, $3,200, which it calculated by multiplying your original duration estimate of 10 days (or 80 hours) by the tester’s standard rate of $40 per hour.
- Because the task didn’t incur any unplanned costs in the first 5 days, the Actual field accurately displays the actual cost incurred to date. In this case, actual work is calculated by the formula Actual Work * Standard Rate = Actual Cost, or 40 hours * $40 per hour = $1,600. (Overtime, per-use costs, and fixed costs are not included in this example, but can be included in an actual cost.)
- The remaining cost is calculated by the formula Remaining Work * Standard Rate = Remaining Cost, or 40 hours * $40 per hour = $1,600.
- In the Total Cost field, Project displays the scheduled cost, which it calculates according to the formula Actual Cost + Remaining Cost = Scheduled Cost, or $1,600 + $1,600 = $3,200. Because the scheduled cost equals the baseline cost, the Variance field displays a cost variance (CV) of $0, which means that the task is exactly on budget.
How to use Microsoft Project for Budgeting.
To best track costs, you should first create a budget (budget: The estimated cost of a project that you establish in Project with your baseline plan.) by creating and entering cost values for budget resources (budget resource: A budget resource captures the maximum capacity for a project to consume money, work, or material units for a project. Budgets can only be applied at the project level by assigning a budget resource to the project summary task.) that are assigned to the project summary task (project summary task: A task that summarizes the duration, work, and costs of all tasks in a project. The project summary task appears at the top of the project, its ID number is 0, and it presents the project’s timeline from start to finish.). You can then identify other resources and task costs that you want to track and measure against the budget resources. You can enter pay rates (pay rate: Resource cost per hour. Project includes two types of pay rates: standard rates and overtime rates.), per-use (per-use cost: A set fee for the use of a resource that can be in place of, or in addition to, a variable. For work resources, a per-use cost accrues each time that the resource is used. For material resources, a per-use cost is accrued only once.) and fixed (fixed cost: A set cost for a task that remains constant regardless of the task duration or the work performed by a resource.) costs for tasks (task: An activity that has a beginning and an end. Project plans are made up of tasks.), resources (resources: The people, equipment, and material that are used to complete tasks in a project.), and, if necessary, assignments (assignment: A specific resource that is assigned to a particular task.). Then, specify the estimated work (work: For tasks, the total labor required to complete a task. For assignments, the amount of work to which a resource is assigned. For resources, the total amount of work to which a resource is assigned for all tasks. Work is different from task duration.) or duration (duration: The total span of active working time that is required to complete a task. This is generally the amount of working time from the start to finish of a task, as defined by the project and resource calendar.) for tasks and assign resources to the tasks.
Only when all of these steps are complete can Project 2007 calculate the total estimated costs for the project. You might then want to refine your estimates. When you’re done, you can categorize and group all resources to compare them to the budgeted costs. You can also set a baseline with the budgeted costs, and use it to compare with actual costs (actual cost: The cost that has actually been incurred to date for a task, resource, or assignment. For example, if the only resource assigned to a task gets paid $20 per hour and has worked for two hours, the actual cost to date for the task is $40.) as your project progresses.
After the project starts, you update task progress — the amount of work done on tasks or the percentage of the tasks that are complete. Project 2007 calculates costs for you based on task progress.
Note You can also choose to turn off automatic calculation of costs and enter actual costs yourself, in addition to task progress.
By combining the actual costs of completed work with the estimated costs for remaining work (remaining work: The amount of work, in terms of a time unit such as hours or days, that is left to be completed on a task. This is calculated as follows: Remaining Work = Work – Actual Work.), Project 2007 calculates scheduled (scheduled or current cost: The latest cost of tasks, resources, assignments, and the entire project, which is displayed in the cost field as cost or total cost. It is kept up to date with cost adjustments that you make and with the project’s progress.) (projected) costs. More importantly, it calculates the difference between the scheduled and baseline costs. This difference, or cost variance (CV: The difference between the budgeted cost of work performed [BCWP] on a task and the actual cost of work performed [ACWP]. If the CV is positive, the cost is currently under the budgeted amount; if the CV is negative, the task is currently over budget.), tells you whether your project is on budget.
You can do simple cost tracking by viewing the actual and scheduled (projected) costs for tasks, resources, assignments, and the project.
If you’ve created a budget through a baseline, you can do more extensive tracking by comparing the actual and scheduled costs against the baseline costs.
To determine whether you’re on budget or not, you can view the cost variances between scheduled costs and baseline costs. For example, if a task is budgeted to cost $50, but the task is half-way done and already costs $35, the scheduled cost is $60 (the $35 actual costs to date, plus the $25 expected costs for the remaining work on the task). The cost variance is $10 ($60 of actual cost minus the $50 of budget cost).
By monitoring cost variances regularly, you can take steps to make sure that your project stays close to its budget.
Note You can only view cost variances if you’ve entered initial costs and saved a baseline. For instance, if you didn’t enter pay rates for a resource before you saved the baseline, you won’t be able to view cost variances for that resource.
what are the different types of costs in Microsoft Project
Direct cost
Direct costs are those directly linked to doing the work of the project. For example, this could include hiring specialised contractors, buying software licences or commissioning your new building.
Indirect cost
These costs are not specifically linked to your project but are the cost of doing business overall. Examples are heating, lighting, office space rental (unless your project gets its own offices hired specially), stocking the communal coffee machine and so on.
Fixed cost
Fixed costs are everything that is a one-off charge. These fees are not linked to how long your project goes on for. So if you need to pay for one-time advertising to secure a specialist software engineer, or you are paying for a day of Agile consultancy to help you start the project up the best way, those are fixed costs.
Variable cost
These are the opposite of fixed costs – charges that change with the length of your project. It’s more expensive to pay staff salaries over a 12 month project than a 6 month one. Machine hire over 8 weeks is more than for 3 weeks. You get the picture.
Sunk cost
These are costs that have already been incurred. They could be made up of any of the types of cost above but the point is that they have happened. The money has gone. These costs are often forgotten in business cases, but they are essential to know about. Having said that, stop/continue decisions are often (wrongly) based on sunk costs. If you have spent £1m, spending another £200k to deliver something that the company doesn’t want is just wasting another £200k. Epstein and Maltzman write:
“Sunk cost is a loss which should not play any part in determining the future of the project.” Unfortunately, project sponsors and other senior executives (and even project managers) often value completion over usefulness and it does take courage to suggest to your sponsor that you stop a project that has already seen significant investment.
What other examples of these types of costs do you have on your projects? And have you ever taken the hit and stopped a project after incurring significant cost? Let us know in the comments.
Budget Cost fields
The Budget Cost fields are used to enter or review budget costs for budget cost resources. Budget resources are assigned only to the project summary task. You can use the Budget Cost fields to compare the current budgeted costs with the planned or actual costs for the project.
There are several categories of Budget Cost fields.
Budget Cost (task field)
Data Type Currency
Entry Type Calculated
How Calculated When you assign a cost resource that is a budget resource to a project summary task, and then enter a budget amount for the cost resource in either the Task Usage or Resource Usage view, Microsoft Project rolls up the total amount to the project summary task.
This information can then be used to review the overall budget cost information for the project. If the project is part of a master project or portfolio of projects, the project summary budget cost information can be compared and analyzed against other projects. The project summary task of the master project includes the value of its own budget resources plus the sum of the budget resources of its inserted projects.
Best Uses Add the Budget Cost field to a task view and show the project summary task when you want to review the total budget for cost resources. After you start tracking progress in your project plan, you can use the Budget Cost field to compare your budgeted costs against your actual costs.
Example With a budget of $15,000 for travel for a three-month project, you have identified “Travel” as a cost resource and a budget resource. You’ve assigned this cost resource to the project summary task, and entered the budget amount for travel in the Task Usage view. As work on the project continues, you enter actual progress information in the project plan. You compare any variances between your planned costs and actual costs to ensure that you’re on track and to make any necessary adjustments.
Remarks You can only enter information in the Budget Cost field for cost resources that are budget resources. (For work and material resources that are budget resources, you can enter information in the Budget Work fields.)
Budget Cost (resource field)
Data Type Currency
Entry Type Calculated
How Calculated When you assign a cost resource that is a budget resource to a project summary task, and then enter a budget amount for the cost resource in either the Task Usage or Resource Usage view, Project copies that budget amount to the Budget Cost resource field.
Best Uses Add the Budget Cost field to a resource view when you want to review the budget for cost resources, or to compare the budgets of cost resources to each other.
Example With a budget of $15,000 for travel for a three-month project, you have identified “Travel” as a cost resource and a budget resource. You’ve assigned this cost resource to the project summary task, and entered the budget amount for travel in the Task Usage view. When you add the Budget Cost field to the resource sheet, you see that the “Travel” cost resource reflects this budget of $15,000.
Remarks You can only enter information in the Budget Cost field for cost resources that are budget resources. (For work and material resources that are budget resources, you can enter information in the Budget Work fields.)
Budget Cost (assignment field)
Data Type Currency
Entry Type Entered
Best Uses Add the Budget Cost field to the Task Usage or Resource Usage view when you want to enter the budget amount for cost resources on assignments, or when you want to compare the budgets of cost resources to one another.
Example With a budget of $15,000 for travel for a three-month project, you have identified “Travel” as a cost resource and a budget resource. You’ve assigned this cost resource to the project summary task. You can now enter the lump-sum budget amount for travel in the sheet portion of the Task Usage view.
Remarks You can only enter information in the Budget Cost field for cost resources that are budget resources. (For work and material resources that are budget resources, you can enter information in the Budget Work fields.)
Budget Cost (task-timephased field)
Data Type Currency
Entry Type Calculated
How Calculated When you assign a cost resource that is a budget resource to a project summary task, and then enter a budget amount for the cost resource in either the Task Usage or Resource Usage view, Project rolls down the total amount to the task-timephased level.
Best Uses You can show the Budget Cost field in the timesheet portion of the Task Usage view by adding it in the Detail Styles dialog box. This shows the budget cost for the task and assignment(s) spread out over time.
After you start tracking progress in your project plan, you can use the Budget Cost field to compare your budgeted costs against your actual costs.
Example With a budget of $15,000 for travel for a three-month project, you have identified “Travel” as a cost resource and a budget resource. You’ve assigned this cost resource to the project summary task, and entered the budget amount for travel on the assignment in the Task Usage view. As work on the project continues, you enter actual progress information in the project plan. You compare any variances between your planned timephased costs and actual timephased costs to ensure that you’re on track and to make any necessary adjustments.
Remarks You can only enter information in the Budget Cost field for cost resources that are budget resources. (For work and material resources that are budget resources, you can enter information in the Budget Work fields.)
Budget Cost (resource-timephased field)
Data Type Currency
Entry Type Calculated
How Calculated When you assign a cost resource that is a budget resource to a project summary task, and then enter a budget amount for the cost resource in either the Task Usage or Resource Usage view, Project rolls down the total amount to the resource-timephased level.
Best Uses You can show the Budget Cost field in the timesheet portion of the Resource Usage view by adding it in the Detail Styles dialog box. This shows the budget cost for the resource and assignment(s) spread out over time.
Example With a budget of $15,000 for travel for a three-month project, you have identified “Travel” as a cost resource and a budget resource. You’ve assigned this cost resource to the project summary task, and entered the budget amount for travel on the assignment in the Resource Usage view. As work on the project continues, you enter actual progress information in the project plan. You compare any variances between your planned timephased costs and actual timephased costs to ensure that you’re on track and to make any necessary adjustments.
Remarks You can only enter information in the Budget Cost field for cost resources that are budget resources. (For work and material resources that are budget resources, you can enter information in the Budget Work fields.)
Budget Cost (assignment-timephased field)
Data Type Currency
Entry Type Entered
Best Uses You can show the Budget Cost field in the timesheet portion of the Task Usage or Resource Usage view by adding it in the Detail Styles dialog box. You can now enter or review the budget cost for the assignment spread out over time.
Example With a budget of $15,000 for travel for a three-month project, you have identified “Travel” as a cost resource and a budget resource. You’ve assigned this cost resource to the project summary task. You can now enter timephased or contoured budget amount for travel in the timesheet portion of the Task Usage or Resource Usage view.
Conclusion
Keeping your costs under control with the Ms. Project Budget can be a challenging task. However, by using the Ms. Project Budget to track your progress and adjust your plans as needed, it’s easy to stay on track and keep your project on budget. In addition, using tips for keeping your costs under control will help you remain successful in your Ms. Project venture.