Plusses and Minuses of Loading BOQ cost in “Resources” and “Expenses” in a primavera schedule. Mujahid Ishtiag PUPS | PSPS | PMI-SP®| AMPS Project Planner/Scheduler 17° February 2018. A PageContents Abstract . Introduction . Comparison... 1. Loading cost in “Resource... 2. Loading cost in “Expense... Conclusion 2] PageAbstract In our daily practice and here in GCC, normally we load BOQ costin schedule as lump sum by creating € global resource or an expense iter, First ofall it isnot a proper way to add one resource and assign it to all activities gving it weighted or lump sum calculated cost for each activity. Proper and recommended way is to develop a complete resource pool, with correct resource types, units and rates, Moreover Expense item is used to load only non-variable or fixed cost types. But as mentioned earlier, in GCC, distribution of BOQ costin schedule as lump sum for each activity has become normal practice. In this document some advantages and disadvantages of both options will be discussed and analysed. Introduction ‘When we go for cost loading, one finds couple of ways to load cost in schedule as follows 1. Bycreatinga global cost resource, assigning it to multiple activities, exporting budgeted cost column in excel, populating budgeted cost column in excel and importing it back to PE. 2. Creating one or multiple expense items, assigning them to respective activities, exporting expense column in excel, populating expense column with calculated budgeted cost for each activity and importing back to p6. Although common purpose can be achieved in both ways, but sometimes there are situations when one hasto select specific technique out of two. But itwe don’t know exactly what other benefits or facilities we may lose by selecting a specific technique or what additional benefits can we get from one method, we will not be able to get complete sense of paybacks of Primavera, Comparison Here, we will discussed both options and their plusses and minuses so that one may consider all these points before selection of a method to load cost in schedule.1, Loading cost in “Resource”: One of the best advantages of loading cost in schedule using Global Cost Resource is that you can extract your cash flow at both early and late dates called “Early Cash Flow” and “Late Cash Flow”. These two types of cash flow are sometimes extremely important especially for rrianagement while making financial decisions for multiple projects to get answer of question “what is delay tolerance available in providing funding to a certain project at a certain point?” Figure O1 Early and Late Cash Flow ‘These cash flows are based on “Early Start & Finish” and “Late Start & Finish” dates of schedule activities or in other words we can say that these cash flows count on on floats avilable in non-critical activities. Second advantage of loading cost through Global Cost Resource is “Resource Curves” ‘When resources perform work on an activity, you can choose how the resource units or costs are spread through time. done using a resource curve. To see this column, right-click con the Resources tab on an activity, customize the columns, and choose Curve See figure 02 given below. al Page‘A wealth of curves from which to choose is presented. These curves will determine how the ‘effort and cost of a resource is spread over . This could reflect expected cost for labor or the expected consumption of a material resource Figure 02 Recourse Curvesin Primavera. ‘To view and modify resource curves, choose the menu Enterprise] Resource Curves. A list of resource curves, much like the one shown in Figure 3-1, appears. This screen allows you ‘to modify, and delete curves. in the EPPM web dient, resource curves are defined in the Resource Curves section under the Administer | Enterprise Data. Because so many standard curves come standard with P6, there may be no need to define your own. Besides the preloaded curves available in primavera, there is also an option available to adda ‘customised curve or cost distribution along activity. To develop a customized curve, see figure 03-1 & figure 3-2 and follow given steps. S| PageWe +, 8O¥e +90, Baap =n | scent Figure-03-2 Adding a customized resource curve. ‘Auto compute actual is also a plus in loading cost using resource. Actual cost, remaining cost and at completion cost are auto-computed when you update activity by giving actual dates and remaining duration. To activate this option, you have to check Auto Compute Actuals option in resource details pan. See Figure-04. 6] Pageneste eran) me ovetme peer Figure-04 Auto Compute Actuals in Primavera Pé ‘= When you load cost in resources, you have access to different types of cost data as given below: Budgeted Cost ‘Actual Cost ‘Actual Overtime Cost ‘Actual Regular Cost ‘Actual This Period Cost Remaining Cost ‘At Completion Cost Staffed Remaining Cost Unstaffed Remaining Cost SERRE NLARNS All these costs are available in the form of spread sheets giving you multiple data forms to analyse with respect to time and you can copy this data to excel to create attractive graphs, and charts to present it to management. ‘Some planners fee! it easy to handle (I don't know why..2) 7| Page2, Loading costin “Expense’ ‘A drawback of loading cost using Global Cost Resources is that you cannot feed cost to any activity before it commences (like upfront payments of subcontractors) or after activity is completed (like retentions etc.) Actuals of cost in resources will only incur once activity has started and cannot be adjust after activity is complete. Another drawback of loading cost using Global Cost Resources is that you cannot assign resource to a milestone thus you cannot assign cost to @ milestone, which sometime is required in schedule. The cost zeroing out is sometimes a problem when Remaining Duration equals Zero as may happen with resources. As explained earlier, sometimes costs are incurred in a cost management system after an activity is complete due to back charges or retention etc. So expenses allow you to re-adjust your actuals and remainders even after you have finished playing with your activity. ‘An additional benefit of loading cost using expense items is that, unlike resources, it allows cost to be incurred or adjusted before an activity even commences, represer contractor's upfront payment. In loading cost using expense items, costs are not affected if remaining duration changes, which may happen with resources. Sometime cost to complete or remaining/actual cost has nothing to do with the remaining duration or % complete. So expenses give you option to manage cost regardless of how much duration is remaining or how much % of activity you have completed. Unlike resources, you can assign expenses, which is cost, to a milestone. Unavailability of Auto-compute actuals and remainders in expense items is sometimes considered a drawback as well, But itis not fact that expense items do not auto-compute actual, remaining and to complete cost, Expense items have ability to auto-compute actuals but this processis a litte bit hard to understand, As a brief, auto-compute option in expense items works with our old friends the Planned Start and Planned Finish dates. 8] PageFor example, if activity’s schedule % complete is 0% but performance % complete is 10%, expense will not auto compute actual cost because 0% of scheduled work shows that planned start of activity has not kicked in yet. Similarly, when other variances occur between planned and actual dates, expense items do not auto-compute actuals because it works with planned dates + In expense, there are very limited optionsto spread cost over activity duration. Unlike several pre-developed and customization options of resource curve in resources, expense give only 3 accrual types (At start, uniform, at end) + Unlike resources, In expense you have only following types of cast data: Y Budgeted Cost Y Actual Cost Y Remaining Cost ¥- At Completion Cost itmeans you will haveto summarize al types of cost before you load into expenses. Andlater on if you need to insert separately some different costs lke overtime cost etc. you cannot do that and you will have to merge it in actual cost Conclusion To get accurate planned and actual progress, it is a must to load cost in schedule, And ifit is required to load Lump sum BOQ cost in schedule, both methods can be used i.e by creating a global cost resource or expense item. Both methods have their plusses and minuses as discussed in this document, but ultimate goal of loading BOQ cost in schedule can be achieved both ways. The only difference lies in privilege of analysing data and getting multiple options for this analysis. Discussion shows that benefits of using resource for cost loading overcome those of expense. Conditions which rake expense to use for loading cost are rarely encountered. Regardless of everything, while loading cost in schedule one should positively look into the situation and conditions and should select the method which serves the purpose best.