Cost (schedule) simulation capabilities of PM software
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Vladimir LiberzonMember for 25 years 8 months
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It is interesting to discuss what PM software cost and schedule simulation features required for creating good project plans are absent in different PM software. Maybe we just don’t know where to find them?
In recent discussion on Integration of Cost & Schedule
I wrote that:
Using Primavera it is impossible
- to simulate that resource is paid for the quantities that had been done, not for hours that were spent,
- to assign resource hour cost that consists of the salary, indirect costs, taxes and other components,
- to simulate project financing and to use cost constraints in project scheduling,
- to use parallel cost estimates (internal cost components, contract cost components, ...), etc.
In his response Dieter Wambach wrote:
Your answer on the P6 features is simply not correct. We use them.
I want to learn how to enter Resource Assignment Cost (fixed, per unit of quantity, etc.) in P6, how to create project schedule basing on financial constraints, etc.
I hope to receive some instructions here and suggest others to place here their questions on scheduling and budgeting functionality of PM tools.
Best Regards,
Vladimir
In recent discussion on Integration of Cost & Schedule
I wrote that:
Using Primavera it is impossible
- to simulate that resource is paid for the quantities that had been done, not for hours that were spent,
- to assign resource hour cost that consists of the salary, indirect costs, taxes and other components,
- to simulate project financing and to use cost constraints in project scheduling,
- to use parallel cost estimates (internal cost components, contract cost components, ...), etc.
In his response Dieter Wambach wrote:
Your answer on the P6 features is simply not correct. We use them.
I want to learn how to enter Resource Assignment Cost (fixed, per unit of quantity, etc.) in P6, how to create project schedule basing on financial constraints, etc.
I hope to receive some instructions here and suggest others to place here their questions on scheduling and budgeting functionality of PM tools.
Best Regards,
Vladimir
4 replies
Oldest first- 0Oliver Melling ·Vlad,
’to simulate that resource is paid for the quantities that had been done, not for hours that were spent’
This is done by using non-labour resources.
’to assign resource hour cost that consists of the salary, indirect costs, taxes and other components’
Multiple Price/unit settings can be set for each resource, first could be base rate, base rate+locol overheads, + corporate overheads and so on...
’to simulate project financing and to use cost constraints in project scheduling’
Cashflow can be predicted via baseline cost profiles and earned value/actual costs per month can also be captured.
IMHO planning software isn’t financial software, it just uses monetary values to comply with earned value management and isn’t mature enough to be all things to all men.
(i.e Primavera rounding errors make it unsuitable for use as a financial tool.)
’to use parallel cost estimates (internal cost components, contract cost components, ...), etc.’
The original cost estimate should be able to provide activity budgets based upon the different rates for internal external activity.
What would the benefit of cost profiles at different rates? They are used mainly to give confidence to control the project and to also ensure the customer that you can deliver.
Regards,
Ol - 0Vladimir Liberzon ·Hi Oliver!
Thank you for your answer.
Not everything is clear.
1. I did not understand how to simulate payments for quantities by using non-labor resources.
Let’s suppose that some worker was assigned to several jobs and will be paid $20 per one meter on the first activity and $5 per kg on the second job. I want to be able to have a report on each project resource planned and actual cost.
2. Is it true that setting multiple price/unit I will be able to receive reports on each component - total cost and totals for salaries, indirect costs, etc.?
3. Project planning among other things means creating project schedule that is adjusted to existing constraints. Usual constraints include resource constraints, financial constraints and supply constraints. It is nice to know the impact of delays with supplies and financing. Unfortunately financial software does not schedule, so PM packages shall do it.
4. Using several cost estimates in parallel we can analyze project performance from many points of view. We can estimate if we will meet internal targets, if management reserves are sufficient, if we will have profit from current contract, etc. It is useful.
Best Regards,
Vladimir
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