Microsoft Project Server 2007 - Organizational Budget and Cost Modeling

Prepared for:

WW EPM Community

Prepared by:

EPM Global Practice Architecture Team

2EPM Global Practices

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Copyright

The information contained in this document represents the current view of Microsoft Corporation on the issues discussed as of the date of publication. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information presented after the date of publication.

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Table of Contents

Introduction................................................................................................................1Purpose................................................................................................................................................1Audience..............................................................................................................................................1

Example Set Up...........................................................................................................2Department.........................................................................................................................................3

Lookup Table – Department...............................................................................................................3Custom Field – Department...............................................................................................................4

Location...............................................................................................................................................5Lookup Table – Location....................................................................................................................5Custom Field – Location.....................................................................................................................6

Budget Variance..................................................................................................................................7Custom Field – Budget Variance........................................................................................................7

Budget Indicator..................................................................................................................................8Custom Field – Budget Indicator........................................................................................................8

Cost Resources....................................................................................................................................9

Project Budget and Cost Tracking...............................................................................10

Portfolio Budget and Cost Tracking.............................................................................11Budget & Cost Alignment by Department View.................................................................................11Budget & Cost Alignment by Location View.......................................................................................12Data Analysis.....................................................................................................................................13

Budget vs Cost Analysis...................................................................................................................13

Additional Considerations..........................................................................................14Work Resource Rates.......................................................................................................................14External System Integration............................................................................................................14

References.................................................................................................................15

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INTRODUCTION

PurposeThis document is intended as a “how-to” guide for budget and cost modeling using Microsoft Office Project Server 2007. Microsoft Office Project Server 2007 is a great tool for coordinating and managing project schedules and resources. While many users know the schedule and resource management capabilities of Project Server 2007, most users are not familiar with the budget and cost management capabilities of Project Server 2007. With Project Server 2007, you can set a budget to a project, and track costs against the set budget. You can also group the projects so that budgets and costs can roll up to a program or portfolio level.

The budget and cost tracking model was used at a federal government agency client site and it can be applied at many organizations. The model enabled the agency to use Project Server 2007 to track budgets and costs at a program level in a central location. Previously, the agency had to access several separate systems (budget in one system, resource costs in another system, fixed costs in yet another system, etc…) in order to get all of the necessary information to see a clear picture of the program. Project Server 2007 enabled them to very easily capture and report the budget and cost information from one central location in addition to providing them day to day cost and schedule visibility out of the box.

Audience EPM Community including customers. This document is based on actual customer experience

and is intended to be used as a guide for any organization that wants to do budget and cost modeling using Project Server 2007.

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EXAMPLE SET UPAn example configuration will be used to better illustrate the budget and cost management capabilities of Project Server 2007. In this example, FOO is a software company. FOO makes COTS and custom software, and they have offices in North America and Europe. This guide will provide step by step instructions and explanations to create and analyze views such as displayed below.

Budget & Cost Alignment by Location View

Budget & Cost Alignment by Department View

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DepartmentThe Department lookup table and custom field represents whether the example project is a custom development software project or a Commercial Off The Shelf (COTS) software project. This field is used in the example to group and aggregate totals including budgets and costs.

Lookup Table – Department

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Custom Field – Department

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LocationThe Location lookup table and custom field represents the location of the software project such as United States or Canada. This field is used in the example to group and aggregate totals including budgets and costs.

Lookup Table – Location

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Custom Field – Location

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Budget VarianceThe budget variance field is a calculated field to measure the difference between the budget cost and the planned cost. A positive budget variance number indicates that the current planned cost is less than the budget cost. Conversely, a negative budget variance number indicates that the current planned cost is greater than the budget cost.

Custom Field – Budget Variance

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Budget IndicatorThe Budget Indicator is a stop light indicator field keyed on the value of the Budget Variance field. If Budget Variance is a positive number, then the indicator will display green. If the Budget Variance is a negative number, then the indicator will display red. This indicator can quickly show what projects may need more attention with regards to cost management.

Custom Field – Budget Indicator

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Cost ResourcesThe following cost resources were set up to capture and track the different types of costs in addition to the resource labor cost. You can add more resources or use less depending on the needs of your organization. You can also set up a budget category custom field with values such as hardware and software and then set each resource to the corresponding budget category in order to aggregate types of costs.

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PROJECT BUDGET AND COST TRACKING

Budget and cost can be managed and tracked at the individual project level.

The basic steps to manage budget and cost at the project level are:

1. Set project budget at the project summary row (you must be in Task Usage view). For detailed steps to creating a budget for your project, go to: http://office.microsoft.com/en-us/project/HA101632951033.aspx?pid=CH100666641033

2. Enter costs for resources and assign resources to tasks. You can have cost rates and per-use costs for work and material resources, as well as costs for cost resources. For detailed steps to entering costs, go to: http://office.microsoft.com/en-us/project/HA101921281033.aspx?pid=CH100666641033

3. Compare budget to cost. You can compare the baseline cost to the current planned cost or the actual cost. In addition, you can compare the current planned cost to the budget cost. You can track at the project summary level or at the task level.

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PORTFOLIO BUDGET AND COST TRACKINGMicrosoft Office Project Server 2007 allows you to manage budgets and costs at the program or portfolio level as well as at the project level.

Budget & Cost Alignment by Department View

View Setup

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Budget & Cost Alignment by Location View

View Setup

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Data Analysis Data Analysis views can be created to provide further analysis of budget and cost data. The example below, Budget vs Cost Analysis, illustrates a data analysis view that shows budget vs actual cost comparison for 2009 aggregated by department. The comparison is further broken down into the 4 quarters of 2009. This view can also provide project level analysis within the department as well as drilling down further into the months or weeks level.

Budget vs Cost Analysis

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ADDITIONAL CONSIDERATIONS

Work Resource RatesA limitation of Microsoft Office Project Server 2007 is that work resource rates cannot be selectively hidden. This means that if a PM has the permission to view enterprise resource data, then that PM can see the resources’ rates. This poses a dilemma with many organizations because resource rates are sensitive data that require strict and granular control. There are many ways to get around this issue but there is no out-of-the box solution. Solutions can involve the use of blended resource rates, macros to camouflage the work resource rates, or a custom database with custom permissions and SQL Server Reporting Services to provide reporting.

External System IntegrationIn many cases, a system of record already exists for budget and cost accounting. These external systems are useful for accounting purposes, but they rarely provide any utility in day-to-day management of budget and cost tracking. When a system of record already exists for an organization, an integration between the external system and Project Server 2007 provides validation to the budget and cost numbers as well as providing the day-to-day management capabilities. The Project Server Interface (PSI) provides a way to integrate any system to Project Server 2007. A simple interface can consist of pulling the budget cost from the system of record and setting it in Project Server 2007. The actual cost information can be pulled from the Project Server 2007 side and pushed to the system of record. You can also create much more sophisticated and complex integration utilizing the PSI.

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REFERENCES

Microsoft Enterprise Project Management home page: http://www.microsoft.com/epm

EPM Connect: http://www.epmconnect.com/US/Pages/home.aspx

Microsoft Enterprise Project Management Solutions : http://www.epmconnect.com/US/pages/epmsolutiontour.aspx

Microsoft Project Server TechCenter (TechNet): http://technet.microsoft.com/en-us/office/projectserver/default.aspx

Microsoft Project Developer Center (MSDN): http://msdn.microsoft.com/en-us/office/aa905469.aspx

Microsoft Project 2007 blog – http://blogs.msdn.com/project

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