Microsoft Project Server 2007 -

Organizational Budget and Cost Modeling

Prepared for:

WW EPM Community

Prepared by:

EPM Global Practice Architecture Team

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Copyright

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Table of Contents

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

Example Set Up...............................................................................................................2

Department.......................................................................................................................3
Lookup Table – Department...............................................................................................3
Custom Field – Department................................................................................................4
Location............................................................................................................................5
Lookup Table – Location....................................................................................................5
Custom Field – Location....................................................................................................6
Budget Variance.................................................................................................................7
Custom Field – Budget Variance.........................................................................................7
Budget Indicator................................................................................................................8
Custom Field – Budget Indicator.........................................................................................8
Cost Resources..................................................................................................................9

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

Portfolio Budget and Cost Tracking...............................................................................11

Budget & Cost Alignment by Department View......................................................................11
Budget & Cost Alignment by Location View...........................................................................12
Data Analysis...................................................................................................................13
Budget vs Cost Analysis...................................................................................................13

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

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

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INTRODUCTION

Purpose
This 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 UP
An 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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Department
The 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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Location
The 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 Variance
The 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 Indicator
The 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 Resources
The 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.

Project
Budget

Cost
Resource

Work
Resource

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PORTFOLIO BUDGET AND COST TRACKING

Microsoft 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 Rates

A 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 Integration

In 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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