Smart Tips for Preparing a Budget in MS Project

Knowing how to use Microsoft Project is only the most basic level of proficiency with the software. Advanced MS Project users have a clear understanding of all aspects of project management, which means a comprehensive knowledge of the small details. For example, to create an accurate project budget managers have to understand the three fundamental types of costs.

Fixed Costs
Fixed costs are the easiest budget items to understand and predict. Any resource that will cost the project a fee regardless of how frequently it is used or how long it will take is a fixed cost. For example, a contractor who charges a flat fee to produce the documentation for a new piece of software is a fixed cost.

Since these resources incur the same charge regardless of use they are easy to predict without advanced MS Project experience. Even if the project runs well past its completion date, these expenses won't increase and this part of the budget will remain stable.

Project can add fixed costs at the level of tasks, summary tasks, or even the entire project. Project automatically totals the costs of each sublevel in the hierarchy allowing the manager to easily see how these expenses will impact the project.

Per Use Costs
Any resource that incurs a fee each time it is used is a per use cost. Say a company is conducting water quality testing and contracting with an outside laboratory to analyze the samples. The lab charges a fee per sample, creating a per use cost.

The manager has to predict how much a resource will be used in order to create an accurate budget. Continuing the example above, if the company knows there are 100 wells to sample then the manager knows to budget for 100 lab tests. On the other hand, if there is provision for retesting wells that show contamination to verify the results, the manager must estimate how often this is likely to happen.

Advanced MS Project techniques allow the software to automatically track these expenses on the resource sheet.

Resource Rates
Any consumable resource such as fuel or building supplies will fall under this category. Employee hourly wages will also be included here as will any other expense that increases the longer it is used.

These are the hardest budget items for even advanced MS Project users to predict. This can be complicated further if the rate fluctuates, such as employees who get overtime after exceeding forty hours per week. If the project completion date exceeds the original estimate, resource rates are likely to be the largest budget increase.

As a project manager gains more experience, more accurate estimates of all three types of budget items are possible. Properly accounting for them in the Project software will make it easier to predict the cost impact of changes to the job.

Author is a freelance copywriter. For more information on advanced ms project, visit http://www.MicrosoftTraining.net/.
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