Estimating Using Cost Rate Tables
In my experience, cost rate tables have become very useful for assisting me in providing budgetary estimates to clients. This approach is not for the novice Program Manager, or beginner in MS Project. I would recommend MS Excel for those individuals. However, if you are interested in understanding how you might be able to leverage built in Project Functionality in order to perform analysis on project estimates, please read on.
Prior to getting started, I want to mention a few assumptions you must understand as I discuss my approach.
Assumptions:
- The programs I have managed over the past 10 years have been of similar work, and thus I have implemented the use Project templates heavily to begin project work.
- Doing this type of similar work, I also have the need for similar skills in my resource pool. Let’s say Business Analysis (BA). Ex. There are a number of activities in most of my projects that require a BA to perform the work.
- Finally, I have been lucky enough to be able to look to a broad resource pool in order to get the most cost effective resource.
How I have used MS Project for estimating:
Using the cost rate tables in MS Project, you can load a generic resource into a template for a skill. You can then load the most common costs in each of the cost rate tables.
In Cost rate table “A” lets load the most expensive cost since MS Project defaults an assignment to that rate table. Let’s say $200/hr.
Now you could also bring this type of resource on a project for less when lucky, so load the second cost into cost rate table “B”. Let’s say $150/hr
Next, in the template, this generic BA resource is assigned to the typical tasks this role would perform. The cost is calculated as MS Project does per task (Hrs * $200). Again by default MS Project will use cost rate table “A” for cost calculations.
This next step is critical if you are interested in comparisons. Copy the cost column numbers into one of the available custom cost fields on both the Gantt Chart View and the Resource Usage Views in order to capture what cost rate table A calculated for the entire project.
In order to change the cost rate table on the assignments, use the Resource Usage View and insert the Cost Rate Table field. Now you can change the cost rate table on the resources assigned to the task simply by cutting and pasting the B into all fields on the assignments.
View the variances in cost right on this view, or jump back to the Gantt Chart to see the impact to the over all project costs. (You can even create a custom field to calculate the variance for you)
Armed with the understanding of how to use this feature in MS project, there is an unlimited number of ways in which you can analyze costs in estimates. Imagine the risk analysis in terms of cost you can perform having both the ability to change resource costs and project schedules all in one place.
