Project Management Tips

MS-Project provides a cost-effective balance between budget and schedule tracking tools to quickly and easily control project costs.

The Scenario
You are responsible for managing the schedule and budget for three software development projects. You have a fixed staff with various cost rates (standard and overtime rates). The team members will work on these multiple projects throughout the year.
 

As the projects are executed, common questions include:

• Can a team member work 16 hours of overtime on Saturday and Sunday to complete a task?
• What is the impact to the budget if a contracted resource is replaced by a more expensive resource? Can the budget contain the rate adjustment?
• What is the month end cost variance?

Spreadsheets and resource management packages can answer these questions. However, there are some inherent challenges.

• Complex spreadsheets require manual changes in a variety of cells and formulas.
• Adding resources requires inserting rows, assigning formulas and manual reformatting.
• Spreadsheets lack ability to include company calendars and individual resource schedules.
• Rate changes require manual formula changes.
• Formula and data changes are required to support "what if" analysis
• Calculating cost variances require comparing budgeted cost spreadsheet rows against actual costs rows.
• Complex resource management and time keeping systems need to support budget, burn-rate calculations and detailed reporting. Fully functional timekeeping and resource management systems are costly to implement and additional reporting requests often require change requests.

The Solution

Microsoft Project effectively addresses these challenges and provides support to report cost variances, track actual costs against baseline costs, manage individual resource calendars and change resource cost rates. In order to accurately track the budget, the schedule must be established, resources assigned and schedule baseline established.

The project budget can be established and controlled in MS-Project by following these four steps:

A. Establish Company and Project Calendars

B. Enter Team Resources and Costs

C. Create and Baseline Weekly Budget Schedule

D. Enter Project Actuals and Track Variances

A. Establish Company and Project Calendars

Every portfolio of projects is subject to the company's work calendar and holiday schedule. The company work calendar establishes the total number of work days and available hours in a given year. Other estimation methods use 2,080 workable hours, or 1,920 hours for vacation adjustments. MS-Project allows the project manager to establish a calendar based budget instead of estimated work days.

To Establish the Company/Project Calendar

1. Open a blank MS-Project plan and select Project - Project Information

2. Enter the Beginning of the Year for the Project Start Date

3. Select Tools – Change Working Time to setup the Project Calendar

4. Assign holidays and other non-work days based on the company calendar and select the non-working time radio button.

B. Establish Team Resources Costs
After the Company Calendar has been established, fixed and variable resource names and costs rates are entered. Variable resources include part-time resources that work on a project for a limited amount of time. These resource pools are typically estimated during the budget planning phase and the exact schedule dates are unknown.
 

1.    Select View – Resource Sheet

2.    Enter Team Resources and Cost Rates

Tip: Consider using abbreviated names for your team members (first name, corporate email id). The Resource Name has a field length limitation.

C. Create and Baseline Weekly Budget Schedule
The Project Work Breakdown Structure will be expressed in weeks instead the individual project related tasks.

1. Create Weekly Work Breakdown Structure

1. Select View – Gantt Chart
2. Select View – Table : Entry
3. Insert Type, Duration, and Work Columns
4. Enter each month as a task in MS-Project
5. Under each month, enter a subtask for each week in the month
6. Assign Duration in days according to the holiday calendar
7. Assign Predecessors at the week level and confirm Start/Finish dates are correct
8. Example:
   January

                                                               i.      Week 1 – (Week Ending Date)

1.       Project A

2.       Project B

3.       Project C

                                                             ii.      Week 2 – 01/14/04

1.       Project A

2.       Project B

3.       Project C

1. Repeat for remaining months
2. Set each Task type to Fixed Duration
   (Resources will be assigned and Work will be variable)
3. Validate the Start and Finish Dates match the calendar year.

2. Assign Resources to each project for each week in the calendar year. The Work Column will adjust to reflect the total hours assigned to the Weekly task.

When resources are assigned to project tasks, the resource can be split on multiple projects by adjusting the unit percentage.

Tip: When adjusting resource percentage, remember to verify the Work field is correct after adjusting the resource percentage.

The project manager can easily copy the block of resource names to subsequent tasks instead of manually entering these resources on each task.

3. Confirm the Weekly Hours and Budget Totals

1. Select Window - Split Screen and select View - Task Usage View in the lower window.
2. Click on the lower window and select the View – Table: Cost.
3. Click Line 1 in the upper window and view the total annual costs
4. Validate total hours, total project costs with any other project funding authorization documents
5. By showing and hiding subtasks, the project manager can view the budgeted hours and resources throughout the year.

4. Baseline the Budget by selecting Tools – Tracking – Save Baseline – Entire Project

Tip: Save this version as 2004 Budget – Baseline for future reference and reuse.

D. Enter Project Actuals and Track Variances
During the project execution, weekly timecards are submitted and actual hours are entered against the project plan. Each week enter project actual hours against the baselined project plan.

1. Tracking the Budget

a.       Select the Split Screen's lower window and select View - Task Usage View

b.       Select View – Table: Work Table

c.       On a Weekly basis, enter project actual hours in the Actual column against each weekly subtask.

d.       Assuming a resource has completed the week, set the Remaining Hours column to 0. The Percent Work Complete will change to 100%.

2. Change the lower window table to the Cost table to view cost variances.

3. Change the lower window table to the Work table to view hourly variances.

4. Click on the upper window and collapse/expand tasks to view yearly, monthly or weekly detail.

Entering actual hours each week and examining the cost baseline will quickly identify positive or negative cost variances. The ability to quickly determine a portfolio's financial status will allow the project manager to make decisions effectively.

Common Questions and Answers using MS-Project:

Can a team member work 16 hours of overtime on Saturday and Sunday to complete a task?
The project manager can quickly determine the weekly project burn rates under the Task Usage View and the Work/Cost tables. Depending on the budget cost variances, the project manager can quickly authorize the additional hours, request a funding adjustment, or raise a change request to extend the project date to accommodate the schedule change. Overtime rates and "what if" analysis can be quickly calculated and appropriate actions can be taken.

What is the impact to the budget if a contracted resource is replaced by a more expensive resource? Can the budget contain the rate adjustment?
The impact of adding a new resource to the project plan and subsequent tasks is quickly calculated. After entering the resource to the resource sheet and assigning resources to the remaining tasks, the budget impacts are automatically calculated and rolled up.

MS-Project allows project managers to enter effective dated hourly rate changes. If the resource hourly rates change midway through the year, the project effective dating allows the project manager to calculate the impact to the overall budget.

If a spreadsheet was used, a rate change would effect historical and future weeks. MS-Project allows the project manager to track the history of the budget as well as future forecasting.

What is the month end cost variance?
By leveraging the various views, expanding and combining tasks, the budgets weekly, monthly and yearly variances can be measured.

Conclusion
As projects and programs are executed, costs need to be controlled and analyzed. The ability to quickly make well-informed decisions allow project managers and team members to confidently execute faster. There are a variety of tools to choose from to manage project costs. MS-Project is a familiar project management tool and is well positioned for budget and schedule tracking.

The amount of time required to setup the budget baseline will depend on each individuals experience with MS-Project. The first time through the process a project manager will spend 2-3 hours setting up the schedule. However, the second and third time a project manager applies the process, the budget can be setup very quickly. The initial investment in planning the budget and creating a baseline will benefit the project manager throughout the year as costs are quickly controlled and managed.